Document:

a2060218cto

EL  CONTRATO  DE  APERTURA  DE  CRÉDITO  EN              REVOLVING LINE OF CREDIT AGREEMENT           ENTERED  CUENTA  CORRIENTE       QUE  CELEBRAN  POR  UNA          INTO  BY  AND  BETWEEN         BANCO  DEL  BAJÍO,  PARTE   BANCO  DEL  BAJÍO,  SOCIEDAD  ANÓNIMA,           SOCIEDAD  ANÓNIMA,  INSTITUCIÓN  DE  BANCA  INSTITUCIÓN     DE     BANCA     MÚLTIPLE,      COMO     MÚLTIPLE  , AS LENDER, HEREINAFTER AND FOR THE  ACREDITANTE,  A  QUIEN  EN  LO  SUCESIVO  Y  PARA        PURPOSES  HEREOF  “THE  BANK,”  REPRESENTED  EFECTOS      DEL     PRESENTE       CONTRATO        SE   HEREIN BY ITS LEGAL REPRESENTATIVE, MR.         JULIO  DENOMINARÁ      “EL  BANCO”,  REPRESENTADO  EN           CÉSAR  MOLINA  VILLA    ,  AND,  AS  BORROWER,  THE  ESTE ACTO POR SU APODERADO LEGAL, EL SEÑOR               COMPANY    AVÍCOLA  PILGRIM’S  PRIDE  DE  MÉXICO,  JULIO  CESAR  MOLINA  VILLA    ;  Y  POR  LA  OTRA,  LA  SOCIEDAD     ANÓNIMA      DE   CAPITAL     VARIABLE   ,  EMPRESA  DENOMINADA       AVÍCOLA  PILGRIM’S  PRIDE      HEREINAFTER  AND  FOR  THE  PURPOSES  HEREOF  DE  MÉXICO,  SOCIEDAD  ANÓNIMA  DE  CAPITAL              “THE    BORROWER,”        THROUGH        ITS    LEGAL  VARIABLE  , A TRAVÉS DE SU APODERADO LEGAL, EL           REPRESENTATIVE,  MR.        HÉCTOR  RENÉ  DURÁN  SEÑOR   HÉCTOR  RENÉ  DURÁN  MANTILLA         ,  COMO    MANTILLA  ; APPEARING HEREIN AS THIRD PARTY THE  ACREDITADA,  A  QUIEN  EN  LO  SUCESIVO  Y  PARA         COMPANY     COMERCIALIZADORA  DE  CARNES  DE  EFECTOS      DEL     PRESENTE       CONTRATO        SE   MÉXICO, SOCIEDAD DE RESPONSABILIDAD LIMITADA  DENOMINARÁ    “LA  ACREDITADA”;  DE  UNA  TERCERA        DE  CAPITAL  VARIABLE      ,  THROUGH  ITS  LEGAL  PARTE  COMPARECE  LA  EMPRESA  DENOMINADA                REPRESENTATIVE,  MR.        HÉCTOR  RENÉ  DURÁN  COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,                MANTILLA  ,   THE    COMPANY      PILGRIM’S    PRIDE,  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE              SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE  CAPITAL  VARIABLE   ,  A  TRAVÉS  DE  SU  APODERADO      CAPITAL     VARIABLE   ,   THROUGH       ITS    LEGAL  LEGAL, EL SEÑOR    HÉCTOR RENÉ DURÁN MANTILLA         ,  REPRESENTATIVE,  MR.        HÉCTOR  RENÉ  DURÁN  LA   EMPRESA     DENOMINADA       PILGRIM’S    PRIDE,    MANTILLA  ,   AND     THE     COMPANY       PILGRIM’S  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE              OPERACIONES         LAGUNA   ,     SOCIEDAD         DE  CAPITAL  VARIABLE   ,  A  TRAVÉS  DE  SU  APODERADO      RESPONSABILIDAD         LIMITADA      DE     CAPITAL  LEGAL, EL SEÑOR    HÉCTOR RENÉ DURÁN MANTILLA         ,  VARIABLE  ,  THROUGH  ITS  LEGAL  REPRESENTATIVE,  Y    LA    EMPRESA        DENOMINADA        PILGRIM’S    MR. HÉCTOR RENÉ DURÁN MANTILLA         , HEREINAFTER  OPERACIONES         LAGUNA   ,     SOCIEDAD        DE    AND    FOR     THE     PURPOSES       HEREOF      THE  RESPONSABILIDAD         LIMITADA      DE     CAPITAL     “GUARANTORS,”      SUBJECT  TO  THE  FOLLOWING  VARIABLE  , A TRAVÉS DE SU APODERADO LEGAL, EL           RECITALS AND CLAUSES: ----------------------------------------   SEÑOR  HÉCTOR RENÉ DURÁN MANTILLA         , A QUIENES  EN  LO  SUCESIVO  Y  PARA  EFECTOS  DEL  PRESENTE  CONTRATO SE LES DENOMINARÁ LAS          “GARANTES”;  CONTRATO  EL  CUAL  SUJETAN  AL  TENOR  DE  LAS  SIGUIENTES DECLARACIONES Y CLÁUSULAS:---------    ------------------------- DECLARACIONES: -----------------------   I.- El  apoderado  legal  de “EL  BANCO”  declara,  bajo  ------------------------------- RECITALS: -----------------------------   protesta de decir verdad, que: -----------------------------------  I.- The legal representative of THE BANK  declares under  a)  Su representada es una sociedad anónima legalmente   affirmation that: ---------------------------------------------------------   constituida  con  autorización  para  realizar  funciones  de a)  Is  a  corporation  legally  organized  and  authorized  to  Banca  y  Crédito,  cuyos  datos  relativos  a  la  constitución, perform  banking  and  credit  functions,  the  details  of  the  objeto e inscripción en el Registro Público de la Propiedad incorporation,  purpose,  and  registration  in  the  Public  y  del  Comercio  se  mencionan  en  el  apartado  de    Register of Property and Commerce of which are listed in  personalidad de este Contrato. ----------------------------------  the personality section hereof. --------------------------------------   b)  Las  facultades  con  las  que  actúa  no  le  han  sido  revocadas ni restringidas, por lo que comparece en pleno b)  The authority under which he is acting herein has been  ejercicio de las mismas, según se desprende del documento neither revoked nor limited, and therefore he does so in full  público  que  se  detalla  en  el  apartado  de  personalidad  de exercise of the same, as evidenced by the public document  este Contrato. --------------------------------------------------------  listed in the personality section hereof. ---------------------------                                                                                                                     1  

 

c)  Su representada le ha informado a “LA ACREDITADA ”  y  las   “GARANTES” que  su  aviso  de  privacidad  de  datos  personales  se  encuentra  disponible  en  el  sitio  web c)  Has  informed   THE     BORROWER        and    the  www.bb.com.mx      y  que   se   entenderá   que   “LA   GUARANTORS      that  its  personal  data  privacy  notice  is  ACREDITADA”       y   las   “GARANTES”      consienten   available  at  the  website www.bb.com.mx   and  that  in  the  tácitamente  el  tratamiento  de  sus  datos  mientras  no absence of any objection therefrom, THE BORROWER and  manifiesten su oposición. ------------------------------------------  the GUARANTORS   will  be  understood  to  have  tacitly  II.- El representante legal de “LA  ACREDITADA ” declara, agreed to the processing of their data. ---------------------------   bajo protesta de decir verdad, que: -----------------------------   a)  Su  representada  es  una  persona  moral,  debidamente II.- The legal representative of THE BORROWER  declares  constituida de acuerdo con las leyes del país, cuyos datos under affirmation that:-------------------------------------------------   relativos a la constitución, objeto e inscripción en el Registro a)  His principal is a legal entity, duly organized under the  Público de la Propiedad y del Comercio, se mencionan en  laws of Mexico, the details of the incorporation, purpose, and  el apartado de personalidad de este Contrato. --------------  registration  in  the  Public  Register  of  Property  and  b)  Tiene  las  facultades  necesarias  para  celebrar  el Commerce  of  which  are  listed  in  the  personality  section  presente Contrato, mismas que no le han sido revocadas, ni hereof. --------------------------------------------------------------------   restringidas, por lo que comparece en pleno ejercicio de las b)  That  he  has  sufficient  authority  to  enter  into  this  facultades delegadas, según consta en el documento que   Agreement,  which  authority  has  been  neither  revoked  nor  se detalla en el apartado de personalidad de este Contrato.  limited,  and  therefore  he  does  so  in  full  exercise of  the  c)  A esta fecha su representada se encuentra al corriente powers granted [thereto], as shown in the document listed in  en el pago de sus obligaciones fiscales, no tiene instauradas the personality section hereof. --------------------------------------   en su contra demandas civiles, penales, mercantiles, ni de c)  That his principal is up to date in the payment of its tax  cualquier otra índole o situación alguna que pueda afectar obligations, has no civil, criminal, commercial or any other  la exigibilidad del presente Contrato. ---------------------------  kind of suit pending against it, nor is it involved in any matter  d)  Su  representada  ha  solicitado  a “EL  BANCO”  una that might affect the enforceability of this Agreement. --------   Apertura  de  Crédito  en  Cuenta  Corriente  hasta  por  la  cantidad  de   $1,500 ́000,000.00  (MIL  QUINIENTOS       d)  His principal has applied to THE BANK  for a Revolving  MILLONES  DE  PESOS  00/100  MONEDA  NACIONAL),          Line of Credit up to the amount of  MXN 1,500,000,000.00  para que sea destinado a los fines que se mencionan en el (ONE  BILLION  FIVE  HUNDRED  MILLION  MEXICAN  presente Contrato, mismo que en su caso, podrá contar con PESOS AND ZERO MEXICAN CENTS)       , to be used for the  garantías  de  Sociedades  Nacionales  de  Crédito  y/o  purposes listed herein, which amount may, if applicable, be  Fideicomisos  Públicos  constituidos  para  el  fomento  secured   by   Sociedades    Nacionales   de    Crédito   económico  que  realicen  actividades  financieras,  estos (government-controlled  development  banks)  and/or  Public  últimos  individual  o  conjuntamente  en  lo  sucesivo, “LA Trusts established for the purpose of promoting economic  FUENTE DE FINANCIAMIENTO”. -----------------------------  development  that  perform  financial  activities  (referred  to  e)  Los Estados Financieros de “LA ACREDITADA” que se    individually  and  jointly  hereinafter  as  “THE  FUNDING  proporcionaron  a “EL  BANCO”  para  la  elaboración  del SOURCE”). -------------------------------------------------------------   estudio de crédito respectivo y con base en los cuales se e)  The Financial Statements of THE BORROWER  provided  autorizó la celebración del presente Contrato, mismos que to THE  BANK   for  the  preparation  of  the  respective  credit  se encuentran debidamente firmados por su representante  analysis and based on which authorization was granted for  legal,  reflejan  razonablemente  la  condición  financiera  de the execution of this Agreement, and which have been duly  “LA ACREDITADA” y los resultados de sus operaciones a    signed  by  its  legal  representative,  reasonably  reflect  the  dichas fechas. Asimismo, declara que partir de la fecha de financial position of THE BORROWER  and the profit (loss)  emisión  de  dichos  Estados  Financieros,  no  ha  ocurrido from its operations at the dates stated. He further declares  cambio  adverso  alguno  que  sea  de  importancia  en  su that since said Financial Statements were issued, there has                                                           been no significant adverse change in its financial position,                                                                                                        2  

 

condición  financiera,  ni  en  sus  operaciones  y  no  existe or in its operations, and there is no reason to consider it to  razón por la cual se pudiera considerar que se encuentra en be in a state of insolvency that could result in commercial  un  estado  de  insolvencia  del  que  pudiera  derivar  su bankruptcy. --------------------------------------------------------------   concurso mercantil. -------------------------------------------------   III.- El  representante  legal  de  la  empresa  denominada  COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE              III.- The  legal  representative  of    the   company  CAPITAL  VARIABLE   ,  en  su  carácter  de “GARANTE”    COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,  declara, bajo protesta de decir verdad, que: ------------------  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE  a)  Su  representada  es  una  persona  moral,  debidamente CAPITAL  VARIABLE ,  in  its  capacity  as GUARANTOR,   constituida de acuerdo con las leyes del país, cuyos datos hereby declares under affirmation that: ---------------------------   relativos a la constitución, objeto e inscripción en el Registro a)  His principal is a legal entity, duly organized under the  Público de la Propiedad y del Comercio, se mencionan en  laws of Mexico, the details of the incorporation, purpose, and  el apartado de personalidad de este Contrato. --------------  registration  in  the  Public  Register  of  Property  and  b)  Tiene  las  facultades  necesarias  para  celebrar  el Commerce  of  which  are  listed  in  the  personality  section  presente Contrato, mismas que no le han sido revocadas, ni hereof. --------------------------------------------------------------------   restringidas, por lo que comparece en pleno ejercicio de las b)  That  he  has  sufficient  authority  to  enter  into  this  facultades delegadas, según consta en el documento que   Agreement,  which  authority  has  been  neither  revoked  nor  se detalla en el apartado de personalidad de este Contrato.  limited,  and  therefore  he  does  so  in  full  exercise of  the  c)  Su  representada  tiene  interés  en  el  otorgamiento  del powers granted [thereto], as shown in the document listed in  crédito  a  favor  de “LA  ACREDITADA”,  razón  por  la  cual the personality section hereof. --------------------------------------   comparece  a  este  acto,  toda  vez  que  tiene  intereses  en c)  His  principal  is  interested  in  the  granting  of  the  line  of  común con “LA ACREDITADA”, por lo que en virtud de ello  credit  to THE  BORROWER  ,  reason  for  which  he  is  here  y para obtener el crédito materia del presente Contrato, está today, its having interests in common therewith; therefore,  dispuesta a garantizar, en forma solidaria e ilimitadamente, and  to  obtain  the  line  of  credit  granted  hereunder,  his  el cumplimiento exacto y oportuno de todas y cada una de principal  is  willing  to  guarantee,  jointly,  severally,  and  las obligaciones de “LA  ACREDITADA”   conforme a este   without  limitation,  proper  and  timely  performance  of  each  Contrato. ---------------------------------------------------------------  and  every  one  of  the  obligations  of THE  BORROWER  IV.- El  representante  legal  de  la  empresa  denominada hereunder. ---------------------------------------------------------------   PILGRIM’S PRIDE, SOCIEDAD DE RESPONSABILIDAD  LIMITADA  DE  CAPITAL  VARIABLE    ,  en  su  carácter  de IV.- The  legal  representative  of  the  company PILGRIM’S  “GARANTE” declara, bajo protesta de decir verdad, que:   PRIDE,  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  a)  Su  representada  es  una  persona  moral,  debidamente DE CAPITAL VARIABLE , in its capacity as GUARANTOR,   constituida de acuerdo con las leyes del país, cuyos datos hereby declares under affirmation that: ---------------------------   relativos a la constitución, objeto e inscripción en el Registro a)  His principal is a legal entity, duly organized under the  Público de la Propiedad y del Comercio, se mencionan en  laws of Mexico, the details of the incorporation, purpose, and  el apartado de personalidad de este Contrato. --------------  registration  in  the  Public  Register  of  Property  and  b)  Tiene  las  facultades  necesarias  para  celebrar  el Commerce  of  which  are  listed  in  the  personality  section  presente Contrato, mismas que no le han sido revocadas, ni hereof. --------------------------------------------------------------------   restringidas, por lo que comparece en pleno ejercicio de las b)  That  he  has  sufficient  authority  to  enter  into  this  facultades delegadas, según consta en el documento que   Agreement,  which  authority  has  been  neither  revoked  nor  se detalla en el apartado de personalidad de este Contrato.  limited,  and  therefore  he  does  so  in  full  exercise of  the  c)  Su  representada  tiene  interés  en  el  otorgamiento  del powers delegated [thereto], as shown in the document listed  crédito  a  favor  de “LA  ACREDITADA”,  razón  por  la  cual in the personality section hereof. -----------------------------------   comparece  a  este  acto,  toda  vez  que  tiene  intereses  en                                                                                                        3  

 

común con “LA ACREDITADA    ”, por lo que en virtud de ello c)  His  principal  is  interested  in  the  granting  of  the  line  of  y para obtener el crédito materia del presente Contrato, está credit  to THE  BORROWER ,  reason  for  which  he  is  here  dispuesta a garantizar, en forma solidaria e ilimitadamente, today, its having interests in common therewith; therefore,  el cumplimiento exacto y oportuno de todas y cada una de and  to  obtain  the  line  of  credit  granted  hereunder,  his  las obligaciones de “LA  ACREDITADA”   conforme a este   principal  is  willing  to  guarantee,  jointly,  severally,  and  Contrato. ---------------------------------------------------------------  without  limitation,  proper  and  timely  performance  of  each  V.- El  representante  legal  de  la  empresa  denominada and  every  one  of  the  obligations  of THE  BORROWER  PILGRIM’S  OPERACIONES  LAGUNA       , SOCIEDAD  DE      hereunder. ---------------------------------------------------------------   RESPONSABILIDAD         LIMITADA      DE     CAPITAL  VARIABLE,   en su carácter de “GARANTE” declara, bajo    V.- The  legal  representative  of  the  company PILGRIM’S  protesta de decir verdad, que: -----------------------------------  OPERACIONES  LAGUNA ,   SOCIEDAD         DE  a)  Su  representada  es  una  persona  moral,  debidamente RESPONSABILIDAD      LIMITADA      DE     CAPITAL  constituida de acuerdo con las leyes del país, cuyos datos VARIABLE,   in  his  capacity  as GUARANTOR,   hereby  relativos a la constitución, objeto e inscripción en el Registro declares under affirmation that: ------------------------------------   Público de la Propiedad y del Comercio, se mencionan en  a)  His principal is a legal entity, duly organized under the  el apartado de personalidad de este Contrato. --------------  laws of Mexico, the details of the incorporation, purpose, and  b)  Tiene  las  facultades  necesarias  para  celebrar  el registration  in  the  Public  Register  of  Property  and  presente Contrato, mismas que no le han sido revocadas, ni Commerce  of  which  are  listed  in  the  personality  section  restringidas, por lo que comparece en pleno ejercicio de las hereof. --------------------------------------------------------------------   facultades delegadas, según consta en el documento que   b)  That  he  has  sufficient  authority  to  enter  into  this  se detalla en el apartado de personalidad de este Contrato.  Agreement,  which  authority  has  been  neither  revoked  nor  c)  Su  representada  tiene  interés  en  el  otorgamiento  del limited,  and  therefore  he  does  so  in  full  exercise of  the  crédito  a  favor  de “LA  ACREDITADA”,  razón  por  la  cual powers delegated [thereto], as shown in the document listed  comparece  a  este  acto,  toda  vez  que  tiene  intereses  en in the personality section hereof. -----------------------------------   común con “LA ACREDITADA”, por lo que en virtud de ello  c)  His  principal  is  interested  in  the  granting  of  the  line  of  y para obtener el crédito materia del presente Contrato, está credit  to THE  BORROWER ,  reason  for  which  he  is  here  dispuesta a garantizar, en forma solidaria e ilimitadamente, today, its having interests in common therewith; therefore,  el cumplimiento exacto y oportuno de todas y cada una de and  to  obtain  the  line  of  credit  granted  hereunder,  his  las obligaciones de “LA  ACREDITADA”   conforme a este   principal  is  willing  to  guarantee,  jointly,  severally,  and  Contrato. ---------------------------------------------------------------  without  limitation,  proper  and  timely  performance  of  each  Expuesto  lo  anterior,  los  comparecientes  otorgan  el and  every  one  of  the  obligations  of THE  BORROWER  presente Contrato de acuerdo a las siguientes: -------------  hereunder. ---------------------------------------------------------------    --------------------------- CLÁUSULAS: ----------------------------   PRIMERA.-   APERTURA  DE  CRÉDITO      .  “EL  BANCO”    Now  therefore,  the  parties  herein  execute  this  Agreement  establece en favor de “LA ACREDITADA” una Apertura de    pursuant to the following: --------------------------------------------   Crédito  en  Cuenta  Corriente  hasta  por  la  cantidad  de  ------------------------------- CLAUSES: -----------------------------   $1,500 ́000,000.00  (MIL  QUINIENTOS  MILLONES  DE        ONE.- LINE  OF  CREDIT  .  THE  BANK   hereby  extends  to  PESOS  00/100  MONEDA  NACIONAL)      de  acuerdo  a  la THE  BORROWER      a  Revolving  Line  of  Credit  up  to  the  disponibilidad de recursos de “EL  BANCO”. ----------------  amount  of MXN  1,500,000,000.00  (ONE  BILLION  FIVE  Dentro  del  límite  del  crédito  concedido  no  quedan HUNDRED  MILLION  MEXICAN  PESOS  AND  ZERO  comprendidos los intereses, comisiones y los gastos que se MEXICAN CENTS)  dependent upon the availability of funds  causen en virtud  de  este  Contrato  y  que deba cubrir “LA of THE BANK.  ----------------------------------------------------------   ACREDITADA”. -----------------------------------------------------  The credit limit granted does not include interest, fees, and  SEGUNDA.-   DESTINO  . “LA  ACREDITADA”  se  obliga  a   other costs incurred hereunder, which are to be covered by  destinar  el  importe  del  presente  crédito  para  apoyo  a  su THE BORROWER.  ----------------------------------------------------                                                                                                         4  

 

capital  de  trabajo  y/o   para   cubrir  necesidades  extraordinarias de tesorería. --------------------------------------   TERCERA   .- PLAZO . La duración de este Contrato será por TWO.- USE . THE BORROWER    agrees to use the credit to  5  cinco  años, siendo  revisable  en  forma anual por “EL bolster  its  working  capital  and/or  meet  any  extraordinary  BANCO”    previo  estudio  de  crédito,  por  parte  de  sus liquidity requirements.-------------------------------------------------   órganos resolutores facultados. No obstante lo anterior, “EL  BANCO”  podrá  dar  por  terminado  el  presente  Contrato THREE .- TERM .  This  Agreement  is  for  a  term  of 5  (five)  mediante aviso por escrito a “LA  ACREDITADA” cuando     years ,  reviewable annually by THE  BANK   subject  to  a  menos  con   120  ciento  veinte   días  naturales  de   credit analysis carried out by its authorized decision-making  anticipación. En tal caso, las disposiciones realizadas con bodies.  Notwithstanding  the  aforementioned, THE  BANK   anterioridad  se  pagarán  en  los  términos  y  plazos  may  terminate  this  Agreement  upon  at  least 120  (one  originalmente convenidos,  a menos que exista una causa  hundred and twenty)  calendar days’ written notice to THE  de  vencimiento  anticipado  en  términos  de  la  cláusula BORROWER.  In such event, all drawdowns made up to that  Décima Tercera del presente instrumento. -------------------  moment are to be repaid pursuant to the terms and maturity  CUARTA.-     DISPOSICIÓN      DEL    CRÉDITO.      “LA   periods originally agreed, unless there are any grounds for  ACREDITADA”  podrá  disponer  del  importe  del  crédito accelerated maturity pursuant to Clause Thirteen hereof. ---   concedido en una o varias disposiciones a plazos máximos  de 6 seis meses , mediante el libramiento de cheques y/o  transferencias electrónicas de fondos a través del servicio FOUR.- DRAWDOWNS.   THE BORROWER      may avail itself  Bajionet que tiene contratado con “EL BANCO”, con cargo  of  the  line  of  credit  granted  by  making  one  or  more  a una Cuenta de Depósito Bancario de Dinero a la Vista que drawdowns  with  maturities  of 6  (six)  months ,  either  by  se  abre  en “EL  BANCO”  específicamente  como  liga  al check  and/or  via  the  Bajionet  wire  transfer  service  it  has  presente  Contrato  bajo  el  número 233304910301  (dos, contracted  from THE  BANK  ,  charged  to  On-Demand  tres, tres, tres, cero, cuatro, nueve, uno, cero, tres, cero, Deposit Account number 233304910301 (two, three, three,  uno)    denominada     “Cuenta     Específica”.    “LA   three,  zero,  four,  nine,  one,  zero,  three,  zero,  one) ,  ACREDITADA” podrá solicitar por escrito a “EL BANCO”     referred  to  as  the  “Specific  Account,”  opened  at THE  que  la  operación  del  presente  crédito  se  realice  en  una BANK  specifically for the purposes of this Agreement. THE  cuenta distinta a la señalada, lo anterior quedará sujeto a BORROWER  may request in writing that THE BANK  use a  autorización  de “EL  BANCO”     si  no  existe  ningún  different account to that specified for the administration of  inconveniente  de  carácter  operativo,  en  cuyo  caso, los this  line  of  credit,  which  will  require  the  previous  pagos de las disposiciones que se realicen de conformidad authorization from THE BANK  and be dependent upon it not  a la presente, se llevarán a cabo a través de la misma. ---  causing any operational issues, in which case all drawdowns  Sin perjuicio de lo dispuesto en la Cláusula de Restricción y made hereunder will be paid through that account. -----------   Denuncia del presente Contrato, “EL BANCO” se reserva  el derecho de restringir a “LA ACREDITADA” los medios  disposición pactados en el párrafo anterior, mediante simple  comunicación por escrito, en cuyo caso, las disposiciones al Notwithstanding  the  provisions  of  the  Limitation  and  amparo del presente crédito se podrán documentar a través Unilateral Termination Clause hereof, THE BANK  reserves  de  pagarés,  en  los  cuáles  se  hará  constar  el  plazo de the right, upon simple written notice, to restrict the drawdown  disposición y la tasa de interés aplicable a la misma, en cuyo methods  available  to THE  BORROWER   as  agreed  in  the  caso no será aplicable lo previsto en los apartados B y C de previous paragraph, in which event it will be possible to draw  la  Cláusula  de  Comisiones,  Gastos  e  Intereses.  Los on the line of credit granted hereunder by documenting the  referidos pagarés serán de tipo causal y, en consecuencia, same  on  promissory  notes  stating  the  term  of  such  no  constituirán  novación,  modificación  o  extinción de  las drawdown and the interest rate applicable thereto, in which  obligaciones que “LA ACREDITADA” ha contraído en favor   case the provisions of sections B and C of the Fees, Costs,                                                                                                        5  

 

de “EL BANCO  ”. El plazo de disposición de los pagarés no and  Interest  Clause  shall  not  apply.  The  aforementioned  podrá exceder del plazo señalado en el párrafo precedente, promissory  notes  are  causal  in  nature  (i.e.,  agreement- ni  la  vigencia  del  presente  Contrato.  En  caso  de  que  las specific)  and,  therefore,  do  not  constitute  any  novation,  disposiciones  se  realicen  mediante  pagarés,  no  será modification  or  extinguishment  of  the  obligations  of THE  necesario que las “GARANTES” los firmen por aval, por lo BORROWER     to THE BANK.  The maturity of the promissory  que  reconocen  desde  ahora  todas  y  cada  una  de  las notes  must  not  exceed  that  specified  in  the  previous  disposiciones  que  se  documenten  en  dichos  pagarés, paragraph or the term of this Agreement. In the event that  garantizando solidariamente el pago de todas y cada una de drawdowns  are  made  through  promissory  notes,  the  las obligaciones que se deriven de las mismas. -------------  GUARANTORS will not be required to endorse these and,  En virtud de que el presente Contrato se pacta en cuenta therefore,  acknowledge  each  and  every  one  of  the  corriente,  durante  la  vigencia   del   mismo    “LA   drawdowns  hereafter  made  using  such  promissory  notes,  ACREDITADA” podrá volver a disponer de las cantidades    and  jointly  and  severally  guarantee  payment  of  each  and  del crédito dispuesto que hubiere pagado a “EL BANCO”    every obligation arising therefrom. ---------------------------------   anticipadamente  o  en  la  fecha  de  vencimiento  de  cada As  this  Agreement  involves  a  revolving  line  of  credit,  disposición,  siempre  y  cuando  no  exista  algún  adeudo throughout  its  term THE  BORROWER   may  reborrow  any  vencido derivado del mismo y sin que el monto total y plazo amounts drawn on the same and repaid to THE BANK  prior  de las disposiciones del crédito, puedan en ningún momento to, or on the maturity date of each drawdown, provided there  exceder el importe del crédito concedido. ---------------------  are no  outstanding sums owing thereon  and  that the total  Independientemente de los requisitos a que se refieren los sum and maturity of the drawdowns on the line of credit do  párrafos anteriores, será indispensable para la disposición not, at any time, exceed the total or maturity of the line of  del crédito que el presente instrumento se haya ratificado credit granted. ----------------------------------------------------------   ante Fedatario Público. --------------------------------------------   QUINTA  .-  AMORTIZACIÓN       DEL    CRÉDITO  .   “LA   Notwithstanding  the  requirements  referred  to  above,  it  is  ACREDITADA” se obliga a pagar a  “EL BANCO” el saldo     essential for this instrument to be ratified before a Certifying  total de las disposiciones de capital que hubiere hecho al Public Official before the line of credit can be drawn on. -----   amparo del presente Contrato, dentro de los 6 seis meses   siguientes a la fecha de la disposición de que se trate. Sin FIVE .- REPAYMENT OF THE CREDIT . THE BORROWER      perjuicio del derecho de “EL BANCO” para dar por vencido agrees to pay THE BANK   the full balance of the principal  anticipadamente  el  presente  crédito  y/o  restringir la drawn  hereunder  no  later  than 6  (six)  months   after  such  disposición  del  mismo,  en  caso  de  que  a  la  fecha  del drawdown is made. Notwithstanding the right of THE BANK  vencimiento  de  cualquier  amortización  de  capital  y/o to accelerate the maturity of this line of credit and/or limit the  intereses “LA ACREDITADA” no realice el pago respectivo  ability to draw thereon, in the event THE BORROWER  fails  y  no  tuviera  saldo  en  la  cuenta  señalada  en  la  Cláusula to  make  a  required  repayment  of  any  principal  and/or  Séptima, si existieran saldos no dispuestos al amparo del interest  payment  when  due  and  does  not  have  sufficient  presente  crédito, “LA  ACREDITADA”    autoriza  a “EL   funds in the account specified in Clause Seven, if there is  BANCO” para aplicar los saldos no dispuestos, al pago de any undrawn portion of the line of credit granted hereunder,  los saldos vencidos y no pagados, en el orden de prelación THE  BORROWER     authorizes THE  BANK   to  use  such  que corresponda. ----------------------------------------------------  undrawn balances to pay the overdue and unpaid balances,  “LA  ACREDITADA”  acepta  y  está  de  acuerdo  en  que  in the corresponding order of priority. -----------------------------   cualquier depósito que realice, en su caso, en la “cuenta  específica”,  será  considerado  como  pago  anticipado,  liquidándose hasta dónde alcancen los saldos insolutos del  crédito  en  la  forma  que  determine “EL  BANCO”  de   THE  BORROWER      accepts  and  agrees  that  all  deposits  conformidad al orden de prelación que corresponda. ------  made,  if  any,  into  the Specific  Account   will  be  deemed                                                           advance  payments  and  used  to  pay  off,  to  the  extent                                                                                                        6  

 

SEXTA. - COMISIONES, GASTOS E INTERESES       . Por las  possible, any unrepaid balances drawn on the line of credit  disposiciones que realice, “LA ACREDITADA” se obliga     as determined by THE BANK   in the corresponding order of  a  pagar  a  “EL  BANCO”  las  siguientes  comisiones  e priority. --------------------------------------------------------------------   intereses: -------------------------------------------------------------  SIX.-  FEES,  COSTS,  AND  INTEREST.  For  drawdowns  A.- COMISIONES Y GASTOS. ----------------------------------  made, THE BORROWER undertakes to pay THE BANK  a) Comisión  por  Apertura:  “LA  ACREDITADA”  se        the following fees and interest: ----------------------------------   obliga a pagar una comisión por este concepto del 0%  cero  por  ciento  sobre  el  monto  total  del  crédito, A.-  FEES AND COSTS. ---------------------------------------------   pagadera  al  momento  de  la  celebración  del  presente a) Commitment Fee: THE BORROWER agrees to pay a  Contrato. --------------------------------------------------------------  commitment fee equal to 0% (zero percent) of the total  b) Comisión     por     Renovación      Anual:     “LA   value of the line of credit, payable upon the execution  ACREDITADA”  se  obliga  a  pagar  una  comisión  anual  hereof. --------------------------------------------------------------------   por este concepto del 0% cero por ciento sobre el monto  total del crédito, la cual será pagadera cada año en la  b) Annual  Renewal  Fee:  THE  BORROWER  agrees  to  fecha de aniversario de la firma del presente Contrato.- pay an annual renewal fee equal to 0% (zero percent) of  c) Cualquier  otra  erogación  que  “EL  BANCO”  realice the total value of the line of credit, payable each year on  por  nombre  y  cuenta  de  la  “LA  ACREDITADA”  tales  the anniversary of the signing hereof. ------------------------   como,  en  forma  enunciativa  más  no  limitativa,  impuestos,   derechos     registrales,  penalizaciones   c) THE  BORROWER  hereby  authorizes  THE  BANK  to  establecidas  por  la  fuente  de  fondeo,  en  su  caso, charge all other amounts paid by THE BANK on behalf  honorarios,  en  su  caso,  comisiones  por  pago  de    of and for the account of THE BORROWER, including,  coberturas  de  tasas  de  intereses  con  “EL  BANCO”,  without  limitation,  taxes,  registration  fees,  penalties  seguros;  entre  otros,  facultando  ésta  a  “EL  BANCO” established  by  the  source  of  funding,  if  any,  para que la o las mismas sean cargadas en la Cuenta de   professional fees, if any, fees for covering THE BANK’s  Depósito Bancario de Dinero a la Vista que le opere o    own  interest  rates,  insurance  and  so  on  to  the  On- llegue a operarle y, en el supuesto de que dicha cuenta  Demand Deposit Account it holds or comes to hold with   no  tuviere  recursos  suficientes  para  cubrir  la  o  las THE BANK and, in the event of there being insufficient  cantidades   aplicadas    por   “EL   BANCO”,      “LA   funds in such account to cover the sum(s) disbursed by  ACREDITADA”  se  obliga  a  reembolsarlas  a  “EL        THE BANK, THE BORROWER agrees to reimburse THE  BANCO”  en  el  momento  en  que  se  las  requiera,  más BANK for the same as soon as it is required to do so  intereses moratorios a la tasa pactada para los recursos thereby, and pay default interest at the rate agreed for  propios de “EL BANCO”. ----------------------------------------  THE BANK’s own funds. -------------------------------------------   d) Las  partes  acuerdan  que  “EL  BANCO”  no  podrá      efectuar cargos por conceptos distintos a los referidos    en  este  Contrato,  a  menos  que  exista  consentimiento   previo y por escrito de “LA ACREDITADA”. --------------  d) The parties agree that THE BANK cannot charge any  B.- INTERESES ORDINARIOS. ---------------------------------  amounts not specified herein without the prior written  “LA  ACREDITADA”  se  obliga  a  pagar  a  “EL  BANCO”   consent of THE BORROWER. ------------------------------------   intereses ordinarios mensuales sobre el saldo insoluto  a su cargo, resultado de las disposiciones efectuadas a  B.- STANDARD INTEREST. ----------------------------------------   cargo  del  crédito  concedido,  a  razón  de  la  tasa  que THE  BORROWER  agrees  to  pay  THE  BANK  monthly  resulte de adicionar a la Tasa de Referencia del período standard interest on any unpaid balances owed thereby  de  cómputo  de  los  intereses  1.50  UNO  PUNTO        in connection with the drawdowns made hereunder, at  CINCUENTA      PUNTOS      PORCENTUALES,        siendo   a  rate  equal  to  the  Benchmark  Rate  for  the  interest  pagaderos  los  intereses  por  mensualidades  vencidas, calculation  period  plus  1.50  (ONE  POINT  FIVE  ZERO                                                           PERCENTAGE POINTS), payable monthly in arrears on                                                                                                       7  

 

precisamente  el último  día  de  cada  mes  calendario  a the  last  day  of  each  calendar  month  from  the  first  partir de la primera disposición. ------------------------------  drawdown. --------------------------------------------------------------   Para  los  efectos  de  este  Contrato  se  entenderá  por  “Tasa  de  Referencia”  la  Tasa  anual  de  Interés  Interbancaria  de  Equilibrio  (TIIE)  a  plazo  de  28  For  the  purposes  of  this  Agreement,  Benchmark  Rate  veintiocho  días,  que  publica  periódicamente  el  Banco shall  mean  the  28-(twenty-eight)  Day  Interbank  de México en el Diario Oficial de la Federación. La tasa Equilibrium Interest Rate (TIIE) published periodically in  de interés que se aplicará será la TIIE publicada el día the Official Federal Gazette by the Bank of Mexico. The  de la operación de que se trate, la cual será revisable  interest rate applied will be the TIIE published on the day  mensualmente  en  la  fecha  de  vencimiento  de  los    of  the  operation  concerned,  which  can  be  revised  intereses.  En  caso  de  que  la  fecha  de  vencimiento monthly on the interest maturity date. In the event that  ocurra en día inhábil o bien, no se dé a conocer la TIIE the maturity date falls on a non-business day or no TIIE  para la determinación de la tasa aplicable, se procederá is  published  to  enable  the  applicable  rate  to  be  a utilizar la TIIE vigente el día hábil inmediato siguiente.- determined,  the  TIIE  published  on  the  immediately  La tasa de interés será modificable hacia el alza o hacia following business day will be used. --------------------------   la  baja  conforme  a  las  variaciones  de  la  Tasa  de  Referencia    y    se    ajustará    automáticamente,    The interest rate can be either raised or lowered based  comprometiéndose desde ahora “LA  ACREDITADA” a          on changes in the Benchmark Rate and will be adjusted  pagar  intereses  conforme  a  la  nueva  tasa  desde  el automatically, THE BORROWER hereby undertaking to  momento en que se ajuste. -------------------------------------  pay  interest  at  the  new  rate  as  soon  as  any  such  Para el caso de que deje de existir la tasa de referencia adjustment is made. -------------------------------------------------   a que se refiere el párrafo anterior, “EL BANCO” y “LA  ACREDITADA” aceptan que podrá ser sustituida en el       In the event that the benchmark rate referred to in the  orden en que se menciona por las siguientes tasas: --    previous paragraph ceases to exist, THE BANK and THE  1.-  La  tasa  que  se  aplicará  será  aquella  que  por  sus BORROWER  agree  to  its  being  replaced,  in  the  order  características el propio Banco de México dé a conocer   they appear, by the following rates: ----------------------------   en sustitución de la TIIE.  ---------------------------------------  1.-  The  rate  applied  shall  be  that  which,  based  on its  2.-  La  tasa  anual  de  rendimiento  equivalente  a  la  de characteristics, the  Bank of Mexico announces as the  descuento  de  los  Certificados  de  la  Tesorería  de  la replacement for the TIIE. -------------------------------------------   Federación (CETES) de cualquier plazo, traídos a curva   2.-  The annual rate of return equal to the discount rate  de rendimiento de 28 veintiocho días en la colocación    of Federal Treasury Certificates (CETES) for any term,  primaria, considerando para estos efectos el resultado   on  a  28-(twenty-eight)  day  yield  curve  on  the  initial  de cada subasta semanal. --------------------------------------  placement,  considering  for  this  purpose  the  result of  3.-  El  Costo  de  Captación  a  Plazo  de  Pasivos  (CCP) each weekly auction. ------------------------------------------------   denominados  en  Moneda  Nacional  que  el  Banco  de      México   estime   representativo   del   conjunto   de   3.-  The  cost  of  term  deposits  (CCP)  of  liabilities  Instituciones  de  Banca  Múltiple  y  que  publique  en  el denominated in Mexican pesos that the Bank of Mexico  Diario Oficial de la Federación.--------------------------------  deems  representative  of  all  full-service  banking  4.-  En  todo  caso,  la  tasa  que  sustituya  a  la    institutions  and  publishes  in  the  Official  Federal  originalmente  pactada  se  le  adicionarán 1.50  UNO    Gazette. ------------------------------------------------------------------   PUNTO  CINCUENTA  PUNTOS  PORCENTUALES               e   4.-  In  any  event,  1.50  (ONE  POINT  FIVE  ZERO)  igualmente  será  modificable  hacia  el  alza  o  hacia  la PERCENTAGE  POINTS  will  be  added  to  the  rate  that  baja, conforme a las variaciones de la tasa sustitutiva y replaces that originally agreed, which likewise shall be  se  ajustará   automáticamente,    comprometiéndose      raised or lowered based on changes in the replacement  desde  ahora  “LA  ACREDITADA”  a  pagar  intereses      rate  and  adjusted  automatically,  THE  BORROWER                                                                                                        8  

 

conforme a la nueva tasa desde el momento en que s   e   hereby  undertaking  to  pay  interest  at  the  new  rate as  ajuste. ------------------------------------------------------------------  soon as any such adjustment is made. -----------------------   Los intereses se calcularán dividiendo la tasa anual de  interés  aplicable  a  la  operación  entre  360  trescientos  sesenta y multiplicando el resultado así obtenido por el Interest  shall  be  calculated  by  dividing  the  applicable  número de días del período en que se devenguen los       annual  interest  rate  by  360  (three  hundred  and  sixty)  intereses. -------------------------------------------------------------  and  multiplying  the  result  obtained  by  the  number  of  En caso de que  el día  en que deba hacerse cualquier    days in the period in which the interest is accrued. ------   pago  conforme  a  lo  establecido  en  esta  Cláusula  no  fuere hábil, el pago correspondiente deberá hacerse el   In the event that the due date for any payment under this  día hábil inmediato posterior, en el entendido de que, en Clause  falls  on  a  non-business  day,  the  payment  in  todo  caso,  los  intereses  que  devengue  el  crédito  se question  shall  be  made  on  the  next  business  day,  it  computarán  por  el  número  de  días  realmente         being understood that, in any event, all interest accrued  transcurridos. -------------------------------------------------------  on  the  line  of  credit  will  be  calculated  based  on  the  C.- INTERESES MORATORIOS. En  el supuesto de que         actual number of days elapsed. ---------------------------------   “LA  ACREDITADA”  incurriese  en  mora  en  el  cumplimiento  oportuno  de  sus  obligaciones  de  pago  C.- DEFAULT  INTEREST.  In  the  event  that  THE  contraídas en el presente Contrato, “LA ACREDITADA”      BORROWER fails to make timely payment on any of its  se obliga a pagar a “EL BANCO” intereses moratorios      obligations hereunder, THE BORROWER agrees to pay  sobre los saldos vencidos del crédito a la tasa que se   THE BANK,  from the date of default until such time as  obtenga de multiplicar la tasa ordinaria pactada en esta the  corresponding  payment  has  been  made  in  full,  Cláusula  por  2  dos  desde  la  fecha  en  que  ocurra  el default interest on the overdue balances on the line of  incumplimiento hasta su pago total. ------------------------  credit at the rate obtained by multiplying the standard  Dicha  tasa  moratoria  se  aplicará  también  sobre  el rate agreed upon in this Clause by 2 (two). ------------------   importe de otras obligaciones patrimoniales a cargo de  “LA ACREDITADA” que no sean por capital o intereses      The aforementioned default rate will also be applied to  si  no  fueren  cumplidas  en  los  términos  pactados  en the value of other non-principal/non-interest obligations  este Contrato. -------------------------------------------------------  assumed by THE BORROWER in relation to tangible or  Lo anterior es sin perjuicio de que “EL BANCO” pueda     intangible  property,  if  not  met  pursuant  to  the  terms  dar  por  vencido  anticipadamente  el  adeudo  en  los  agreed herein. ---------------------------------------------------------   términos de este Contrato. -------------------------------------  Notwithstanding the above, THE BANK may call in the  SÉPTIMA.- LUGAR Y FORMA DE PAGO DEL CRÉDITO           .  debt before maturity pursuant to the terms hereof. -------   Todas las cantidades que “LA ACREDITADA” deba pagar  por concepto de capital, comisiones, penas convencionales SEVEN.- PLACE AND METHOD OF PAYMENTS ON THE  e  intereses,  serán  pagaderas  en  el  domicilio  de “EL LINE  OF  CREDIT .  All  amounts  payable  by   THE  BANCO”,  señalado  en  la  Cláusula  de  Domicilios  de  este BORROWER   as  principal,  fees,  liquidated  damages,  and  Contrato  o  en  el  domicilio  que  éste  determine  con interest shall be paid at the address of THE BANK  listed in  posterioridad,  en  días  y  horas  hábiles  bancarios  sin the Addresses clause hereof or at the address subsequently  necesidad de requerimiento o cobro previos, a más tardar a stipulated  by  the  latter,  during  normal  banking  hours  on  las 17:00 diecisiete horas del centro de México del día en normal  banking  days  with  no  prior  request  or  collection  que deba realizarse el pago, de lo contrario dicho pago se [notice] being required, by 5:00 (five) p.m. Central Mexican  aplicará el día hábil bancario inmediato siguiente. ----------  Time on the day payment is due, otherwise the payment will  En este acto “LA ACREDITADA” faculta a   “EL BANCO”      be credited the next bank-business day. -------------------------   para cargar en su Cuenta de Depósito Bancario de Dinero  a  la  Vista  número 233304910301  (dos,  tres,  tres,  tres,                                                                                                        9  

 

cero, cuatro, nueve, uno, cero, tres, cero, uno) , que tiene THE BORROWER  hereby authorizes THE BANK  to charge  abierta  con “EL  BANCO”,  los  adeudos  de  capital,    all principal debts, fees, interest, and other costs hereunder  comisiones,  intereses  y  demás  gastos  derivados  de  este to  On-Demand  Deposit  Account  number 233304910301  Contrato. Lo anterior sin perjuicio de que en este acto “LA (two,  three,  three,  three,  zero,  four,  nine,  one,  zero,  ACREDITADA” y, en su caso, las “GARANTES”, autorizan     three, zero, one)  currently held thereby at THE BANK . The  a “EL BANCO” a cargar en cualquier Cuenta de Depósito    foregoing  notwithstanding, THE  BORROWER    and,  where  Bancario de Dinero y/o Inversión que tenga(n) abierta con applicable,  the GUARANTORS,  hereby  authorize  THE  “EL BANCO”, los saldos a su cargo derivados del presente BANK   to charge any balances owed thereby hereunder to  Contrato,  en  caso  de  que  no  se  realice  el  pago  a  su any  Deposit  and/or  Investment  Account  they  hold  at THE  vencimiento o no tuviera el saldo en la cuenta de Depósito BANK,  in the event of failure to make payment when due or  Bancario de Dinero a la Vista señalada. -----------------------  there  being  insufficient  funds  in  the  specified  On-Demand  Los  cargos  que  se  lleven  a  cabo  de  conformidad  a  lo Deposit Account. -------------------------------------------------------   dispuesto en esta Cláusula se podrán realizar sin necesidad  de requerimiento o aviso previo a “LA ACREDITADA” y, en  su caso, las “GARANTES”, a partir de la fecha en que sea Debits made pursuant to the provisions of this Clause can  exigible  el  pago  respectivo,  por  el  monto  de  los  saldos be  deducted  with  no  prior  request  or  notice  to THE  vencidos y no pagados (incluyendo las cantidades vencidas BORROWER     and,  where  applicable,  the GUARANTORS  anticipadamente),  y  subsistirá  mientras  existan  saldos being required, from the date on  which the corresponding  insolutos hasta su pago total. ------------------------------------  payment becomes due and payable, and in an amount equal  Lo anterior sin perjuicio de que, en caso de que los pagos to  the  overdue  and  unpaid  balances  (including  amounts  del presente crédito procedan de cheques y/u órdenes de  called  in  prior  to  maturity),  for  as  long  as  any  unpaid  transferencias  de  fondos  a  cargo  de  otras  Instituciones balances remain until such time as these have been paid in  Financieras nacionales, se apliquen de la siguiente manera: full. -------------------------------------------------------------------------   (i) tratándose de cheques depositados antes de las 16:00 Nevertheless, in the event of payments on the line of credit  dieciséis  horas,  se  acreditarán  a  más  tardar  el  día  hábil being  made  by  check  and/or  wire  transfers  through  other  siguiente de su depósito; y después de dicho horario, a más domestic  financial  institutions,  these  shall  be  applied  as  tardar el segundo día hábil siguiente, siempre que existan follows: (i) in the case of checks deposited before 4:00 (four)  fondos suficientes en la cuenta de la Institución librada; (ii) p.m.,  these  will  be  credited  no  later  than  the  following  tratándose de transferencias a través del Sistema de Pagos business  day;  if  deposited  after  that  time,  they  will  be  Electrónicos  Interbancarios  (SPEI)  se  aplicarán  el mismo credited no later than two business days after the deposit,  día si se reciben dentro de horas y días hábiles a más tardar provided  there  are  sufficient  funds  in  the  account of  the  a las 17:00 diecisiete horas del centro de México del día en issuing  institution;  (ii)  in  the  case  of  SPEI  (Electronic  que  deba  realizarse  el  pago  y  en  caso  contrario,  se Interbank  Payment  System)  wire  transfers,  these  shall  be  aplicarán al día hábil bancario siguiente; y (iii) si se trata de applied on their day of receipt, if received on a business day  transferencias a través de otros sistemas, a más tardar al during business hours by 5:00 (five) p.m. Central Mexican  día hábil bancario siguiente. --------------------------------------  Time on the day payment is due, or else the following bank- OCTAVA.- PRELACIÓN EN LA APLICACIÓN DE PAGOS.            business  day;  and  (iii)  in  the  case  of  other  types of  wire  Los  pagos  que  efectúe “LA  ACREDITADA”,  los  aplicará transfer, no later than the following bank-business day. -----   “EL BANCO” hasta donde alcancen, en el orden siguiente:   1.  Gastos y costas judiciales. ------------------------------------   2.  Comisiones no cubiertas. -------------------------------------  EIGHT.-  ORDER  OF  PRIORITY  OF  PAYMENTS.  3.  Impuestos y derechos. -----------------------------------------  Repayments made by THE BORROWER  shall be allocated  4.  Intereses moratorios. -------------------------------------------  by THE BANK,  as far as possible, in the following order: ---   5.  Intereses ordinarios. --------------------------------------------  1.  Court costs and expenses. --------------------------------------   6.  Capital vencido. --------------------------------------------------  2.  Unpaid fees. ---------------------------------------------------------                                                            3.  Taxes and duties. --------------------------------------------------                                                                                                       10  

 

7.  Capital por vencer. ----------------------------------------------  4.  Default interest -----------------------------------------------------   Sin perjuicio de lo anterior, en caso de que “EL BANCO”  5.  Standard Interest. --------------------------------------------------   aplique pagos en orden distinto a la prelación establecida 6.  Overdue principal. -------------------------------------------------   en   esta   Cláusula,  “LA    ACREDITADA”       acepta   7.  Unmatured principal. ----------------------------------------------   expresamente que ello no implicará en ningún caso que se Notwithstanding the above, in the event THE BANK  follows  extingue su obligación de pagar cualquier otro concepto que an  order  of  priority  in  its  allocation  of  the  payments  other  permanezca  insoluto,  ni  el  derecho  del “EL  BANCO”  de than  that  specified  in  this  Clause, THE  BORROWER   hacer exigible el pago de dichas cantidades. ----------------  expressly  agrees  that  this  shall  in  no  way  imply  an  NOVENA.-  OBLIGACIONES  DE  HACER  Y  NO  HACER       .  extinguishment of its obligation to pay any other outstanding  Durante  la  vigencia  del  presente   Contrato,   “LA   amounts  owed,  nor  of  the  right  of THE  BANK   to  require  ACREDITADA”    y las  “GARANTES”   deberán cumplir con   payment thereof. -------------------------------------------------------   las siguientes condiciones, salvo que exista dispensa previa NINE.-  POSITIVE  AND   NEGATIVE     COVENANTS    .  y por escrito de “EL BANCO”: ----------------------------------  Throughout the term of this Agreement, THE BORROWER  I.-  I.- De “LA ACREDITADA”: ----------------------------------  and  the GUARANTORS must  comply  with  the  following  OBLIGACIONES DE HACER. -----------------------------------  conditions,  unless  otherwise  waived  by THE  BANK   in  a)  Proporcionar  a “EL  BANCO”    Estados  Financieros  writing: --------------------------------------------------------------------   Internos  con  una  antigüedad  no  mayor  a   180  ciento I.- On the part of THE BORROWER : ----------------------------   ochenta días naturales , en forma semestral  dentro de los POSITIVE COVENANTS --------------------------------------------   60  sesenta  días  naturales  posteriores  al  cierre  del a)  To  provide THE  BANK   with six-monthly   Internal  semestre . -------------------------------------------------------------  Financial Statements no older than 180 (one hundred and  b)  Entregar  anualmente  a   “EL  BANCO”  Estados       eighty)  calendar days, within 60 (sixty) calendar days  of  Financieros  Internos  al  cierre  de  cada  ejercicio  fiscal  y the end of the corresponding six-month period . --------------   declaración anual del Impuesto Sobre la Renta dentro de los b)  To  provide THE  BANK   with  annual  Internal  Financial  120  ciento  veinte  días  naturales   siguientes  al  cierre  de Statements  at  the  end  of  each  tax  year  and  its  annual  cada  ejercicio  fiscal.  En  caso  de  contar  con  Estados Income Tax return within 120 (one hundred and twenty)  Financieros Dictaminados o estar obligada a dictaminarlos calendar days  of the end of each tax year. If it has Audited  conforme a la Legislación Aplicable, deberá proporcionar a Financial  Statements  or  is  required  to  audit  these under  “EL  BANCO”  Estados  Financieros  Dictaminados  anuales applicable  legislation,  it  shall  provide THE  BANK   with  dentro  de  los 210  doscientos  diez  días   naturales  annual  Audited  Financial  Statements  within 210  (two  siguientes al cierre de cada ejercicio fiscal. -------------------  hundred and ten)  calendar days of the end of the tax year.  c)  Proporcionar  a   “EL  BANCO” y/o  a “LA  FUENTE  DE c)  To provide THE BANK and/or THE FUNDING SOURCE  FINANCIAMIENTO” que intervenga en el presente crédito    involved in this line of credit with such financial, technical,  la información financiera, técnica, contable, legal o cualquier accounting,  legal  and  other  information  relating  to  its  otra  relacionada  con  su  negociación  o  con  el  destino  del business or the use of the line of credit as are requested of  crédito otorgado, que por escrito que le sea requerida. ---  it in writing. ---------------------------------------------------------------   d)  Notificar  a “EL  BANCO”  dentro  de  un  plazo  que  no d)  To  notify THE  BANK   within  no  more  than 15  (fifteen  exceda de 15 quince días naturales a partir de que haya  calendar days  of its becoming aware of the existence of any  tenido  conocimiento  de  la  existencia  de  cualquier  litigio  o litigation or proceeding brought against it that materially and  procedimiento  en  su  contra  que  afecte  o  pueda  llegar adversely affects or could affect its financial position. --------   afectar  en  forma  substancial  y  adversa  su  situación e)  To obtain every license and authorization [required] for  financiera. -------------------------------------------------------------  the performance of its normal activity and of this Agreement,  e)  Obtener  todas  las  licencias  y  autorizaciones  para and  to  comply  with  all  relevant  laws,  regulations, and  cumplir con su actividad ordinaria, con este Contrato y con resolutions applicable to it issued by any government body.  todas las leyes, normas y acuerdos aplicables emitidos por f)  To  allow  any  personnel  designated  by THE  BANK   cualquier entidad gubernamental que le sean aplicables. -  and/or THE  FUNDING  SOURCE    involved  in  this  line  of                                                                                                       11  

 

f)  Permitir el acceso al personal que “EL BANCO ” y/o a credit to carry out inspection visits during normal business  “LA FUENTE DE FINANCIAMIENTO” que intervenga en el       hours, and provide these with such accounting information,  presente crédito designen, efectuar las visitas de inspección documents,  and  data  as  may  be  requested  thereby  in  en  horario  normal  de  trabajo,  así  como  proporcionarles relation  to  the  use  of  the  line  of  credit  granted  to THE  información de la contabilidad, los documentos y datos que BORROWER   and to the execution of the respective projects  le soliciten en relación con la aplicación del crédito otorgado and programs. ----------------------------------------------------------   a “LA ACREDITADA” y con la ejecución de los proyectos    g)  To  comply,  in  the  projects  it  undertakes,  with  all  y programas respectivos. ------------------------------------------  environmental  laws;  environmental  conservation,  g)  Cumplir en los proyectos que desarrolle el ordenamiento restructuring,  and  improvement;  the  protection  of  natural  ecológico, la preservación, reestructuración y mejoramiento areas and wild and aquatic flora and fauna; the rational use  del ambiente; la protección de las áreas naturales y la flora of natural elements; air, water, and soil pollution forecasting  y faunas silvestres y acuáticas; el aprovechamiento racional and control, as well as all other provisions of the Ecological  de los elementos naturales; la previsión  y  el control  de la Balance and Environmental Protection Act [ Ley General de  contaminación del aire, agua y suelos; así como las demás Equilibrio Ecológico y Protección al Ambiente ]. ----------------   disposiciones  previstas  en  la  Ley  General  de  Equilibrio NEGATIVE COVENANTS -------------------------------------------   Ecológico y Protección al Ambiente.----------------------------  a)  To  not  invest  in  any  legal  entity,  be  it  Mexican  and/or  OBLIGACIONES DE NO HACER. ------------------------------  foreign,  that  is  not  a  subsidiary  or  affiliate  of THE  a)  Invertir en personas morales, nacionales y/o extranjeras, BORROWER or  not  a  member  of  the  same  group  of  que no sean subsidiarias o afiliadas de “LA ACREDITADA”  companies, without prior authorization from THE BANK . ----   o no pertenezcan al mismo grupo de empresas, sin previa  b)  To  not  make  any  material  change  in  its  administration  autorización de “EL BANCO ”. ------------------------------------  that  might  affect  the  going  concern  principle  of THE  b)  Efectuar  cualquier  cambio    sustancial  en   su   BORROWER    , without prior authorization from THE BANK .  administración que afecte el principio de negocio en marcha c)  To  not  enter  into  or  execute  any  joint  and  several  de “LA  ACREDITADA”,     sin  previa  autorización  de  “EL suretyship,  bond,  guarantee by endorsement or  any  other  BANCO  ”. --------------------------------------------------------------  kind of personal guaranty or security interest to secure third- c)  Otorgar  obligaciones  solidarias,  fianzas,  avales  o party  obligations  for  amounts  greater  than  MXN  cualquier  tipo  de  garantías  personales  o  reales,  para 500,000,000.00  (FIVE  HUNDRED  MILLION  MEXICAN  garantizar obligaciones de terceros por montos superiores PESOS AND ZERO MEXICAN CENTS). ------------------------   a $500’000,000.00 (QUINIENTOS MILLONES DE PESOS          d)  To  not  change  either  its  corporate  purpose  or  line  of  00/100 MONEDA NACIONAL). ----------------------------------  business,  nor  commence  any  dissolution  or  liquidation  d)  Cambiar  su  objeto  social  o  giro  comercial,  entrar  en process. ------------------------------------------------------------------   estado de disolución o liquidación. ------------------------------  II.- On  the  part  of  the  companies COMERCIALIZADORA  II.- De  las  sociedades   COMERCIALIZADORA        DE    DE    CARNES      DE     MÉXICO,     SOCIEDAD       DE  CARNES       DE      MÉXICO,       SOCIEDAD        DE    RESPONSABILIDAD         LIMITADA      DE     CAPITAL  RESPONSABILIDAD         LIMITADA      DE     CAPITAL     VARIABLE;     PILGRIM’S     PRIDE,    SOCIEDAD      DE  VARIABLE;     PILGRIM’S     PRIDE,   SOCIEDAD      DE    RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE  RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE             and PILGRIM’S  OPERACIONES  LAGUNA        , SOCIEDAD  y PILGRIM’S  OPERACIONES  LAGUNA      , SOCIEDAD  DE     DE  RESPONSABILIDAD  LIMITADA           DE   CAPITAL  RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE             VARIABLE   as GUARANTORS.     -----------------------------------   como “GARANTES”: ----------------------------------------------  POSITIVE COVENANTS --------------------------------------------   OBLIGACIONES DE HACER. -----------------------------------  a)  To  provide THE  BANK   with six-monthly   Internal  a)  Proporcionar  a “EL  BANCO”    Estados  Financieros  Financial Statements no older than 180 (one hundred and  Internos  con  una  antigüedad  no  mayor  a   180  ciento eighty) calendar days , within 60 (sixty) calendar days of  ochenta días naturales , en forma semestral  dentro de los the end of the corresponding six-month period . --------------                                                                                                        12  

 

60  sesenta  días  naturales  posteriores  al  cierre  del b)  To  provide THE  BANK   with  annual  Internal  Financial  semestre . -------------------------------------------------------------  Statements  at  the  end  of  each  tax  year  and  its  annual  b)  Entregar  anualmente  a   “EL  BANCO”  Estados       Income Tax return within 120 (one hundred and twenty)  Financieros  Internos  al  cierre  de  cada  ejercicio  fiscal  y calendar days  of the end of each tax year. If it has Audited  declaración anual del Impuesto Sobre la Renta dentro de los Financial  Statements  or  is  required  to  audit  these under  120  ciento  veinte  días  naturales   siguientes  al  cierre  de applicable  legislation,  it  shall  provide THE  BANK   with  cada  ejercicio  fiscal.  En  caso  de  contar  con  Estados annual  Audited  Financial  Statements  within 210  (two  Financieros Dictaminados o estar obligada a dictaminarlos hundred and ten) calendar days  of the end of the tax year.   conforme a la Legislación Aplicable, deberá proporcionar a TEN.-  LIMITATION  AND  UNILATERAL  TERMINATION     .  “EL  BANCO”  Estados  Financieros  Dictaminados  anuales Pursuant to Article 294 (two hundred and ninety-four) of the  dentro  de  los 210  doscientos  diez  días   naturales  Negotiable  Instruments  and  Credit  Transactions  Act [ Ley  siguientes al cierre de cada ejercicio fiscal. -------------------  General de Títulos y Operaciones de Crédito ], THE BANK  DÉCIMA.- RESTRICCIÓN Y DENUNCIA       . En los términos  reserves the right to limit the drawdown term or the term for  del  artículo  294  doscientos  noventa  y  cuatro  de  la Ley repaying undrawn amounts or the amount of the open line  General de Títulos y Operaciones de Crédito, “EL BANCO”  of credit or both or to unilaterally terminate this Agreement,  se reserva el derecho de restringir el plazo de disposición o upon  simple  written  notice  to THE  BORROWER , THE  el plazo  para amortizar las  cantidades  no dispuestas o  el BORROWER  hereby declaring its agreement therewith, in  importe del crédito abierto o ambos a la vez o denunciar el which event the undrawn portion of the line of credit shall be  presente  Contrato,  mediante  simple  comunicación  escrita extinguished. In the event of a limit being placed on the line  dirigida a “LA ACREDITADA”, para lo cual ésta expresa su of credit, THE BORROWER   shall not be entitled to draw the  conformidad,  en  cuyo  caso  se  extinguirá  el  crédito en  la remaining principal as provided herein. --------------------------   parte no dispuesta. En caso de que el importe del crédito se ELEVEN.- OVERSIGHT . Throughout the term of the line of  restrinja, “LA ACREDITADA” no podrá disponer del resto   credit, THE BANK  and/or any international credit institution  del capital según lo establecido en este Contrato. ----------  or  agency  involved  in  the  financing  shall  be  entitled  to  DÉCIMA  PRIMERA.-  VIGILANCIA     . “EL  BANCO”  y/o     appoint a supervisor to oversee the proper performance of  cualquier  institución  u  organismo  internacional  del  crédito the obligations of THE BORROWER , primarily in regard to  que haya intervenido en el financiamiento, tendrán durante the  investment  of  funds,  the  proper  functioning  of the  toda  la  vigencia  del  crédito  el  derecho  de  designar  a  un company, and, where applicable, the care and preservation  supervisor  que  cuide  el  exacto  cumplimiento  de  las of the guarantees provided. -----------------------------------------   obligaciones de “LA ACREDITADA”, principalmente en lo    TWELVE.-  ASSIGNMENT  OR  DISCOUNTING.            THE  que  se  refiere  a  la  inversión  de  fondos,  del  debido BORROWER  and the GUARANTORS    henceforth expressly  funcionamiento de la empresa y, en su caso, del cuidado y and  irrevocably  authorize THE  BANK ,  pursuant  to  Article  conservación de las garantías otorgadas. ---------------------  299  (two  hundred  and  ninety-nine)  of  the  Negotiable  DÉCIMA  SEGUNDA.-  CESIÓN  O  DESCUENTO.           “LA   Instruments  and  Credit  Transactions  Act,  to  assign or  ACREDITADA” y las   “GARANTES” desde este momento        discount, in whole or in part, including prior to the expiration  facultan de manera expresa e irrevocable a “EL BANCO”,   of  this  Agreement  or  maturity  of  the  drawdowns  made  conforme el artículo 299 doscientos noventa y nueve de la hereunder,  the  fees  payable  thereto  as  a  result  hereof,  Ley  General  de  Títulos  y  Operaciones  de  Crédito,  para including prior or subsequent to drawdowns being made on  ceder  o  descontar,  total  o  parcialmente,  aún  antes del the line of credit and, where applicable, on any negotiable  vencimiento  del  presente  Contrato  o  de  las  disposiciones instrument  used  for  that  purpose,  with  no  prior  notice  or  que se realicen al amparo del mismo, los derechos en su  consent on its part being required, and hereby authorize the  favor  derivados  del  mismo,  inclusive  antes  o  después  de syndication thereof. The assignment or discounting of this  dispuesto el crédito y, en su caso, de cualquier título que Agreement or of the drawdowns made hereunder shall be  documente las disposiciones del mismo, sin necesidad de  effective upon receipt of notice by THE BORROWER   and  previo  aviso  o  consentimiento  de  su  parte,  autorizando the GUARANTORS pursuant to the provisions of Article 390                                                                                                       13  

 

inclusive su sindicación. La cesión o descuento del presente (three hundred and ninety) of the Code of Commerce, and  Contrato o de las disposiciones que se realicen al amparo shall  include  any  ancillary  rights  such  as  bonds,  joint  and  del  mismo,  surtirá  efectos  una  vez  que  se  realice  la several  obligations,  mortgages,  pledges,  sources  of  notificación a “LA ACREDITADA” y a los “GARANTES” de     payment  or  special  privileges  corresponding  thereto.  If  conformidad  con  los  dispuesto  por  el  artículo  390 necessary, THE  BORROWER       and  the GUARANTORS      trescientos noventa del Código de Comercio e incluirá todos agree  to  execute  such  instruments  as  are  necessary to  los  derechos  accesorios,  como  la  fianza,  obligación formalize said assignment or discounting. -----------------------   solidaria,  hipoteca,  prenda,  fuente  de  pago  o  privilegio   especial  que  le  correspondan.  En  caso  de  que  fuera  necesario, “LA  ACREDITADA”  y  las  “GARANTES”     se   THIRTEEN.-     GROUNDS        FOR      ACCELERATED  comprometen a realizar los actos necesarios para darle la MATURITY.  Both parties agree that this Agreement shall be  formalidad requerida a dicha cesión o descuento. ----------  terminated  prematurely  and  all  drawdown  obligations  and  DÉCIMA  TERCERA.-  CAUSAS  DE  VENCIMIENTO               financing and other charges become immediately due and  ANTICIPADO  .  Ambas  partes  aceptan  que  el  presente payable in the event of any of the following: --------------------   Contrato se dará por vencido anticipadamente y el crédito  dispuesto  será  exigible  de  inmediato  en  su  totalidad  más a)  If THE BORROWER  fails to make one or more of the  sus  accesorios  legales,  en  cualquiera  de  los  siguientes payments of principal and/or interest and/or fees specified  casos: ------------------------------------------------------------------  herein  or  in  any  negotiable  instrument  documenting the  a)  Si “LA  ACREDITADA”  deja  de  pagar  oportunamente  same, when due. -------------------------------------------------------   una o más de las amortizaciones de capital y/o intereses y/o                                                           b)  If THE BORROWER    and/or the GUARANTORS fail to  comisiones,  establecidos  en  el  presente  Contrato  y en                                                           comply  with  any  of  the  positive  or  negative  covenants  cualquier título en que se documenten. ------------------------                                                            referred to herein. ------------------------------------------------------   b)  Si “LA  ACREDITADA”     y/o  las “GARANTES”     no  cumplen con cualesquiera de las obligaciones de hacer y no c)  If THE BORROWER  admits, in writing or otherwise, that  hacer a que se refiere el presente Contrato. -----------------  it  is  unable  to  pay  its  debts,  or  requests  suspension  of  c)  Si “LA  ACREDITADA”  admite  por  escrito  o  por    payments  or  commences  bankruptcy  or  reorganization  cualquier otro medio su incapacidad para pagar sus deudas proceedings, or any such proceeding is filed against it. ------   o solicita la suspensión de pagos, quiebra o concurso o se d)  If the funds drawn down hereunder are not used by THE  entabla cualquiera de dichos procedimientos en su contra.- BORROWER   for the precise purposes specified herein and  d)  Si  el  importe  del  crédito  no  es  empleado  por “LA instead  used,  either  in  whole  or  in  part,  for  any  other  ACREDITADA”  precisamente  en  los  fines  estipulados  en purpose. ------------------------------------------------------------------   este  Contrato,  desviando  parcial  o  totalmente  dichos  recursos con otro propósito. --------------------------------------  e)  If THE BORROWER  fails to cover, without cause, any  e)  Si “LA  ACREDITADA”  deja  de  pagar  sin  causa     employer  tax  liability,  contributions,  worker-employer  justificada  cualquier  adeudo  de  tipo  fiscal,  aportaciones, payments or dues. -----------------------------------------------------   pagos o cuotas obrero - patronales. ----------------------------  f)  If THE BORROWER  abandons the administration of its  f)  Si “LA ACREDITADA” abandona la administración de     business  or  fails  to  attend  to  it  with  the  level  of  care  and  su  negociación  o  no  la  atiende  con  el  debido  cuidado  y efficiency required.-----------------------------------------------------   eficiencia. --------------------------------------------------------------                                                            g)  If any information or statement provided heretofore or in  g)  Si alguna información o declaración que se proporcione                                                           connection  with  this  Agreement  is  incorrect  or  false  and  en ocasiones futuras o bien, que haya sido dada a conocer                                                           materially affects the risk assessment. ---------------------------   con  motivo  del  presente  Contrato,  es  incorrecta  o  falsa  y  afectase substancialmente la evaluación del riesgo. -------  h)  If THE BORROWER  changes its corporate purpose or                                                           line of business, commences any dissolution or liquidation                                                                                                       14  

 

h)  Si “LA  ACREDITADA  ” cambia su objeto social o giro process,  or  merges  with  or  spins  off  from  another  comercial,  entra  en  estado  de  disolución,  liquidación,  se corporation. --------------------------------------------------------------   fusiona o escinde con otra sociedad. ---------------------------                                                            i)  If,  for  any  reason, THE  BORROWER    and/or  the  i)  Si “LA  ACREDITADA”       y/o  las   “GARANTES”                                                           GUARANTORS      commence  any  legal  or  administrative  establecen  por  cualquier  causa  procedimiento  judicial  o                                                           proceeding against THE BANK.  -----------------------------------   administrativo en contra de “EL BANCO”. -------------------   j)  Si  en  cualquier  tiempo  y  por  cualquier  motivo  se j)  If  at  any  time  or  for  any  reason  this  Agreement is  denuncia el Contrato en los términos previstos. -------------  unilaterally terminated as provided. -------------------------------   k)  Si  se  presentan  conflictos  de  carácter  laboral  o k)  In the event of any labor dispute or any other situation  situaciones  de  cualquier  índole  que  afecten  el  buen that affects the proper functioning of the business or impairs  funcionamiento  de  la  negociación  o  menoscaben  las  the guarantees provided. ---------------------------------------------   garantías otorgadas. ------------------------------------------------   l)  Si  se  da  por  vencido  anticipadamente  cualquier  otro l)  If any other loan granted to THE BORROWER  by THE  crédito otorgado por “EL BANCO” u otorgado por cualquier BANK  or any other lender is called in before maturity. -------   otro acreedor a “LA ACREDITADA”. --------------------------  m)  If THE BORROWER  fails to make any payment  when  m)  Si “LA  ACREDITADA”   llegare  a  tener  algún  adeudo due on any loan from THE BANK.  --------------------------------   vencido, por cualquier tipo de crédito con “EL BANCO”.-                                                           n)  In general, in the event of any non-performance of the  n)  En general, en cualquier caso de incumplimiento de las                                                           obligations  hereunder  and  in  all  other  cases  where under  obligaciones contraídas por medio del presente instrumento                                                           law such obligations become immediately due. ----------------   y en todos los demás casos que conforme a la Ley deban  darse por vencidas dichas obligaciones. ----------------------  FOURTEEN.-  APPLICABLE  LAW,  JURISDICTION,  AND  DÉCIMA       CUARTA.-       LEYES        APLICABLES,     LEGAL PROCEEDINGS      . In regard to any dispute arising in  JURISDICCIÓN  Y  PROCEDIMIENTO  JUDICIAL      .  Para  el connection  with  the  construction,  performance,  and  conocimiento  de  cualquier  controversia  que  se  llegare  a execution of this Agreement, the parties  shall abide by the  suscitar  con  motivo  de  la  interpretación,  cumplimiento  y provisions of the Credit Institutions Act [ Ley de Instituciones  ejecución del presente Contrato, las partes  se  estarán a lo de  Crédit o],  the  Negotiable  Instruments  and  Credit  dispuesto  por  la  Ley  de  Instituciones  de  Crédito,  la  Ley Transactions Act [ Ley General de Títulos y Operaciones de  General de Títulos y Operaciones de Crédito y demás Leyes Crédito ], and other applicable legislation. Similarly, if such  aplicables. Asimismo, en caso de proceder judicialmente las matter goes to court, the parties hereby expressly waive any  partes  contratantes  renuncian  expresamente  a  cualquier [other] jurisdiction that may be applicable to them by reason  jurisdicción que pudiera corresponderles por razón territorial of territory and submit to the competence of the Courts of  y se someten a la competencia de los Tribunales radicados the  city  of Querétaro,  State  of  Querétaro.  All  fees  and  en  la  Ciudad  de Querétaro,  Estado  de  Querétaro.   Los costs  incurred  in  connection  with  the  judicial  proceeding  gastos y honorarios que se originen con motivo del trámite shall be borne by THE BORROWER.  ----------------------------   judicial serán a cargo de “LA ACREDITADA”. --------------    De  conformidad  con  el  artículo  1055  bis  mil  cincuenta  y Pursuant to Article 1,055 bis (one thousand and fifty-five bis)  cinco bis del Código de Comercio, “EL BANCO” se reserva  of the Code of Commerce, THE BANK   reserves the right to  la facultad de obtener el cobro de los saldos a cargo de “LA collect any balances owed by THE BORROWER  by filing, in  ACREDITADA”  ejercitando  la  vía  ejecutiva  mercantil  o  la no  specific  order,  either  an  expedited  commercial  que en su caso corresponda sin sujeción de orden,  en  la enforcement action or other applicable action, as applicable,  inteligencia  de  que  si  se  sigue  dicha  vía  ejecutiva, “EL in  the  understanding  that  if  it  chooses  the  former, THE  BANCO”  podrá  señalar  bienes  suficientes  para  embargo BANK   shall  be  entitled  to  specify  sufficient  property  to  sin  sujetarse  al  orden  que  establece  el  artículo  1,395  mil attach,  irrespective  of  the  order  specified  in  Article  1,395  trescientos  noventa  y  cinco  del  Código  de  Comercio, (one thousand three hundred and ninety-five) of the Code of  tomando en cuenta además que en ningún caso podrán “LA   Commerce, taking into account that under no circumstances                                                                                                       15  

 

ACREDITADA   ”  y  las  “GARANTES  ” ser  nombrada(os)   may  THE  BORROWER        and  the GUARANTORS       be  como depositaria(os) de los bienes, pudiendo en cambio el appointed as bailee(s) of the property, and instead the bailee  depositario nombrado por “EL BANCO” tomar posesión sin   appointed by THE BANK   may take possession thereof with  necesidad  de  otorgar  fianza.  Asimismo,  se  conviene no bond being required. Similarly, it is expressly agreed that  expresamente que el ejercicio de alguna de estas acciones the exercise of either of these actions shall not imply the loss  no  implicará  la  pérdida  de  la  otra  y  que  todas  las que [of the right to bring] the other and all those [actions] open to  competan a “EL BANCO” permanecerán íntegras en tanto     THE  BANK    shall  remain  available  thereto  in  their  entirety  no sea liquidada la totalidad del crédito y sus accesorios a until such time as the full amount of the line of credit and  cargo de “LA  ACREDITADA”, conservando las garantías     related sums owed by THE BORROWER      have been paid in  constituidas  y  su  preferencia,  aun  cuando  los  bienes full, and  THE BANK  shall keep any security interest created  gravados sean señalados para la práctica de la ejecución.- and preferential [lien], even when the encumbered property  DÉCIMA  QUINTA.-  DOMICILIOS.     Para  todos  los  efectos has been marked for the purposes of the enforcement. ------   judiciales  y  extrajudiciales  las  partes  señalan  como  sus FIFTEEN.-  ADDRESSES.   For  all  judicial  and  extrajudicial  domicilios  para  los  efectos  del  presente  Contrato  los purposes  in  connection  with  this  Agreement,  the  parties  siguientes: -------------------------------------------------------------  specify the following: --------------------------------------------------   “EL  BANCO”:  Boulevard  Bernardo  Quintana  número      THE  BANK:  Boulevard  Bernardo  Quintana  138  (one  138 ciento treinta y ocho, esquina Tabacaleros, Colonia  hundred and thirty-eight), esquina Tabacaleros, Colonia  Carretas,  código  postal  76050  setenta  y  seis  mil  Carretas,  C.P.  76050  (seventy-six  thousand  and  fifty),  cincuenta, en Querétaro, Querétaro. ------------------------  Querétaro, Querétaro. -----------------------------------------------   “LA ACREDITADA”: Privada de los Industriales número      THE BORROWER: Privada de los Industriales 115 (one  115  ciento  quince,  Fraccionamiento  Jurica,  código   hundred  and  fifteen),  Fraccionamiento  Jurica,  C.P.  postal  76100  setenta  y  seis  mil  cien,  en  Querétaro, 76100 (seventy-six thousand one hundred), Querétaro,  Querétaro. ------------------------------------------------------------  Querétaro. --------------------------------------------------------------   LAS “GARANTES”: ------------------------------------------------  THE GUARANTORS: ------------------------------------------------   COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,                COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE              SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE  CAPITAL  VARIABLE:  Privada  de  los  Industriales       CAPITAL  VARIABLE:  Privada  de  los  Industriales  115  número  115  ciento  quince,  Fraccionamiento  Jurica,   (one hundred and fifteen), Fraccionamiento Jurica, C.P.  código  postal  76100  setenta  y  seis  mil  cien,  en  76100 (seventy-six thousand one hundred), Querétaro,  Querétaro, Querétaro. --------------------------------------------  Querétaro. --------------------------------------------------------------   PILGRIM’S PRIDE, SOCIEDAD DE RESPONSABILIDAD             PILGRIM’S PRIDE, SOCIEDAD DE RESPONSABILIDAD  LIMITADA  DE  CAPITAL  VARIABLE:  Privada  de  los       LIMITADA  DE  CAPITAL  VARIABLE:  Privada  de  los  Industriales    número      115     ciento     quince,   Industriales  115    (one    hundred    and    fifteen),  Fraccionamiento Jurica, código postal 76100 setenta y    Fraccionamiento  Jurica,  C.P.  76100  (seventy-six  seis mil cien, en Querétaro, Querétaro. --------------------  thousand one hundred), Querétaro, Querétaro. ------------   PILGRIM’S  OPERACIONES  LAGUNA       , SOCIEDAD  DE      PILGRIM’S  OPERACIONES  LAGUNA       , SOCIEDAD  DE  RESPONSABILIDAD         LIMITADA      DE     CAPITAL     RESPONSABILIDAD         LIMITADA      DE     CAPITAL  VARIABLE:  Calle  Valle  de  Guadiana  número  294       VARIABLE: Calle Valle de Guadiana 294 (two hundred  doscientos  noventa  y  cuatro,  Cuatro  Ciénegas,  Zona and  ninety-four),  Cuatro  Ciénegas,  Zona  Industrial  Industrial  Centro,  código  postal  35078  treinta  y  cinco Centro,  C.P.  35078  (thirty-five  thousand  and  seventy- mil setenta y ocho, en Gómez Palacio, Durango. -------   eight), Gómez Palacio, Durango. --------------------------------   Mientras “LA  ACREDITADA”  y/o  las   “GARANTES”    no   Until  such  time  as  THE  BORROWER       and/or  the  notifiquen  por  escrito  a “EL  BANCO”  el  cambio  de  su GUARANTORS    notify THE  BANK    in  writing  of  any  respectivo  domicilio,  los  emplazamientos  y  demás    respective  change  of  address,  all  service  of  process  and                                                                                                       16  

 

diligencias judiciales o extrajudiciales se practicarán  en el extrajudicial  notices  shall  be  made  and  delivered  to  the  domicilio señalado en la presente Cláusula. ------------------  address listed in this clause. ----------------------------------------   DÉCIMA  SEXTA.-  TÍTULO  EJECUTIVO       .  Las  partes    convienen  que  en  caso  de  ejecución  forzosa,  el  presente SIXTEEN.- WRIT OF EXECUTION. The parties agree that  Contrato junto con la certificación  del contador facultado de in the event of specific performance, this Agreement and the  “EL  BANCO”  harán  prueba  plena  en  juicio  y  llevarán certification by the authorized accountant of THE BANK  will  aparejada ejecución, conforme al artículo 68 sesenta y ocho serve  as  conclusive  evidence  in  court  and  entail  de la Ley de Instituciones de Crédito. --------------------------  enforcement, pursuant to Article 68 (sixty-eight) of the Credit  DÉCIMA  SÉPTIMA.-  GASTOS    .  “LA  ACREDITADA”  se     Institutions Act. ---------------------------------------------------------   obliga  a  pagar  todos  los  derechos,  gastos,  honorarios  e SEVENTEEN.-  COSTS .  THE  BORROWER   undertakes  to  impuestos que se originen con motivo de la celebración de pay  all professional and other fees, costs, and taxes arising  este  Contrato,  de  su  formalización  y,  en  su  caso,  de  su in  connection  herewith,  with  its  formalization,  and,  where  inscripción  en  el  Registro  Público  de  la  Propiedad y  del applicable, its registration in the Public Register of Property  Comercio, los de su cancelación, así como los efectuados and  Commerce,  its  cancellation,  as  well  as  any  paid  in  por cobranza extrajudicial o judicial. ----------------------------  -  connection with out-of-court or judicial collection. -------------   DÉCIMA      OCTAVA.-      CASO     FORTUITO   .    “LA   EIGHTEEN.- ACTS OF GOD.     THE BORROWER      and/or the  ACREDITADA”  y/o  las    “GARANTES”     se  obligan  al  GUARANTORS agree to comply with this Agreement even  cumplimiento del presente Contrato aún en caso fortuito o in the event of an Act of God or force majeure pursuant to  de  fuerza  mayor  en  términos  del  artículo  2,111  dos mil Article 2111 (two thousand one hundred and eleven) of the  ciento once del Código Civil para el Distrito Federal y sus Civil  Code  of  Mexico  City  and  its  correlatives  of  the  Civil  correlativos de los Códigos Civiles de los Estados de toda Codes of every state in Mexico. ------------------------------------   la República Mexicana. --------------------------------------------    DÉCIMA  NOVENA.-  FIANZA      .  Como  garantía  del     NINETEEN.- GUARANTEE     . To guarantee the performance  cumplimiento  de  todas  y  cada  una  de  las  obligaciones of each and every obligation arising herefrom, under law or  derivadas  de  este  Contrato,  de  la  Ley  o  de  resoluciones pursuant  to  judicial  rulings  against THE  BORROWER   in  judiciales  dictadas  en  favor  de “EL  BANCO”  a  cargo  de favor of THE BANK,  the company COMERCIALIZADORA  “LA ACREDITADA”, en este acto la empresa denominada      DE    CARNES      DE     MÉXICO,     SOCIEDAD       DE  COMERCIALIZADORA  DE  CARNES  DE  MÉXICO,                RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE            SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE              through  its  legal  representative,  the  company PILGRIM’S  CAPITAL VARIABLE     a través de su representante legal, la PRIDE,  SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  empresa denominada   PILGRIM’S PRIDE, SOCIEDAD DE        DE CAPITAL VARIABLE  through its legal representative,  RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE             and  the  company PILGRIM’S  OPERACIONES  LAGUNA      ,  a través de su representante legal y la empresa denominada SOCIEDAD  DE  RESPONSABILIDAD  LIMITADA  DE  PILGRIM’S  OPERACIONES  LAGUNA       , SOCIEDAD  DE      CAPITAL  VARIABLE     through  its  legal  representative,  in  RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE             their capacity as GUARANTORS   , hereby declare their full  a  través  de  su  representante  legal;  en  su  carácter de agreement to act as SURETIES for THE BORROWER , and  “GARANTES”     manifiestan  su  absoluta  conformidad  en hereby  guarantee,  each  severally,  absolutely,  jointly,  and  constituirse como constituirse como “FIADORAS” en favor  unconditionally, full payment upon maturity of the full amount  de “LA ACREDITADA”, garantizando, cada uno de ellos en   drawn  by THE BORROWER     on the line of credit, as well as  lo individual, de manera absoluta, solidaria e incondicional all  other  obligations  of THE  BORROWER   hereunder,  el pago total del crédito dispuesto por ella a su vencimiento, pursuant  to  the  provisions  of  Article  2794  (two  thousand  así  como  las  demás  obligaciones  contraídas  por “LA seven  hundred  and  ninety-four)  and  2827  (two  thousand  ACREDITADA”  conforme  al  presente  contrato,  de       eight hundred and twenty-seven) of the Federal Civil Code,  conformidad con lo dispuesto por el artículo 2,794 dos mil as well as the correlatives of the Civil Code of any Mexican  setecientos  noventa  y  cuatro  y  2827  dos  mil  ochocientos state. The SURETIES  hereby waive their right to have all                                                                                                       17  

 

veintisiete  del  Código  Civil  Federal  y  sus  correlativos  del remedies  first  exhausted  against  the  principal  and to  Código  Civil  de  cualquier  Estado  de  la  República.  Los force  the  creditor  to  sue  the  principal  debtor  first ,  “FIADORES”, renuncian en este acto a los beneficios de   pursuant to Articles 2814 (two thousand eight hundred and  orden y excusión  que les correspondan, de conformidad a fourteen) to 2823 (two thousand eight hundred and twenty- lo  señalado  en  los  artículos  2,814  dos  mil  ochocientos three) of the Federal Civil Code and other applicable articles,  catorce al 2,823 dos mil ochocientos veintitrés del Código as well as the correlatives of  the Civil Code of any state in  Civil  Federal  y  demás  relativos  aplicables,  así  como  sus Mexico.  -------------------------------------------------------------------   correlativos  del  Código  Civil  de  cualquier  Estado  de  la   República Mexicana. -----------------------------------------------   VIGÉSIMA.- TRADUCCIÓN      El presente Contrato se firma TWENTY.-  TRANSLATION     .  This  agreement  shall  be  en  español  e  inglés.  En  caso  de  controversia  en  su executed  in  Spanish  and  English.  In  the  event  of  any  interpretación y aplicación, incluso en caso de controversia controversy  regarding  its  construction  or  application,  judicial, prevaleceré la versión en español, toda vez que la including  any  legal  dispute,  the  Spanish  version  shall  versión  en  inglés  es  para  fines  informativos  de   “LA prevail,  the  English  version  being  purely  for  information  ACREDITADA”. -----------------------------------------------------  purposes for the convenience of THE BORROWER. ---------   LEÍDO  QUE  FUE  EL  PRESENTE  CONTRATO  Y  ENTERADAS  LAS  PARTES  DE  SU  CONTENIDO  Y             HAVING READ THIS AGREEMENT AND INFORMED AS  ALCANCE  LEGAL,  LO  FIRMAN  PARA  CONSTANCIA            TO ITS CONTENTS AND LEGAL SCOPE, THE PARTIES  POR  TRIPLICADO  AL  CALCE  Y  AL  MARGEN,  EN  LA       SIGN BELOW AND IN THE MARGIN FOR THE RECORD,  CIUDAD DE SANTIAGO DE QUERÉTARO, ESTADO DE               IN  TRIPLICATE,  IN  THE  CITY  OF  SANTIAGO  DE  QUERÉTARO EN FECHA _____ _______ DE DICIEMBRE            QUERÉTARO,  [IN  THE]  STATE  OF  QUERÉTARO,  ON  DE 2018 DOS MIL DIECIOCHO. --------------------------------  DECEMBER 14, 2018. -----------------------------------------------                                                                                                          /s/ Julio Cesar Molina Villa                                                                             BANCO DEL BAJÍO, SOCIEDAD ANÓNIMA, INSTITUCIÓN DE BANCA MÚLTIPLE                                           JULIO CESAR MOLINA VILLA                                                                                                        /s/ Hector Rene Duran Mantilla                  AVICOLA PILGRIM’S PRIDE DE MÉXICO, SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE                                         HÉCTOR RENÉ DURÁN MANTILLA                                                                                                    /s/ Hector Rene Duran Mantilla                                                            COMERCIALIZADORA DE CARNES DE MÉXICO, SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE                                         HÉCTOR RENÉ DURÁN MANTILLA                                                                                                    /s/ Hector Rene Duran Mantilla                                                                        PILGRIM’S PRIDE, SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE                                         HÉCTOR RENÉ DURÁN MANTILLA                                                                                                    /s/ Hector Rene Duran Mantilla                                                               PILGRIM’S OPERACIONES LAGUNA       , SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE                                               REPRESENTADA POR                                          HÉCTOR RENÉ DURÁN MANTILLA                                                                                                       18Exhibit

Exhibit 4.1
 
ORRSTOWN FINANCIAL SERVICES, INC.
 
As Issuer,
 
and
 
U.S. BANK, NATIONAL ASSOCIATION
 
As Trustee
 
INDENTURE
 
Dated as of December 19, 2018
 
6.0% Fixed-to-Floating Rate Subordinated Notes due 2028
 

TABLE OF CONTENTS
 
	
							
	 
	 
	 
	Page

	 
	 
	 
	 

	ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
	1

	 
	 

	Section 1.01
	 
	Definitions
	1

	Section 1.02
	 
	Compliance Certificates and Opinions
	7

	Section 1.03
	 
	Form of Documents Delivered to Trustee
	8

	Section 1.04
	 
	Acts of Holders
	8

	Section 1.05
	 
	Required Notices or Demands
	9

	Section 1.06
	 
	Language of Notices
	10

	Section 1.07
	 
	Incorporation by Reference of Trust Indenture Act; Conflicts
	10

	Section 1.08
	 
	Effect of Headings and Table of Contents
	11

	Section 1.09
	 
	Successors and Assigns
	11

	Section 1.10
	 
	Severability
	11

	Section 1.11
	 
	Benefits of Indenture
	11

	Section 1.12
	 
	Governing Law
	11

	Section 1.13
	 
	Legal Holidays
	11

	Section 1.14
	 
	Counterparts; Electronic Transmission
	11

	Section 1.15
	 
	Immunity of Certain Persons
	11

	Section 1.16
	 
	Waiver of Jury Trial
	12

	Section 1.17
	 
	Force Majeure
	12

	Section 1.18
	 
	USA Patriot Act
	12

	Section 1.19
	 
	No Sinking Fund
	12

	Section 1.20
	 
	Rules of Construction
	12

	 
	 
	 
	 

	ARTICLE II THE SUBORDINATED NOTES
	13

	 
	 

	Section 2.01
	 
	Forms Generally
	13

	Section 2.02
	 
	Definitive Subordinated Notes
	13

	Section 2.03
	 
	Global Subordinated Notes
	13

	Section 2.04
	 
	Restricted Subordinated Notes
	13

	Section 2.05
	 
	Execution and Authentication
	14

	Section 2.06
	 
	Registrar and Paying Agent
	14

	Section 2.07
	 
	Registration of Transfer and Exchange
	15

	Section 2.08
	 
	Exchange Offer
	17

	Section 2.09
	 
	Mutilated, Destroyed, Lost and Stolen Subordinated Notes
	18

	Section 2.10
	 
	Payment of Interest; Rights to Interest Preserved
	18

	Section 2.11
	 
	Persons Deemed Owners
	19

	Section 2.12
	 
	Cancellation
	19

	Section 2.13
	 
	Computation of Interest
	20

	Section 2.14
	 
	CUSIP Numbers
	20

	 
	 
	 
	 

	ARTICLE III SATISFACTION AND DISCHARGE OF INDENTURE
	20

	 
	 

	Section 3.01
	 
	Satisfaction and Discharge
	20

	
							
	Section 3.02
	 
	Defeasance and Covenant Defeasance
	21

	Section 3.03
	 
	Application of Trust Money
	23

	Section 3.04
	 
	Reinstatement
	23

	Section 3.05
	 
	Effect on Subordination Provisions
	23

	 
	 
	 
	 

	ARTICLE IV REMEDIES
	23

	 
	 

	Section 4.01
	 
	Events of Default; Acceleration
	23

	Section 4.02
	 
	Failure to Make Payments
	24

	Section 4.03
	 
	Trustee May File Proofs of Claim
	25

	Section 4.04
	 
	Trustee May Enforce Claims Without Possession of Subordinated Notes
	26

	Section 4.05
	 
	Application of Money Collected
	26

	Section 4.06
	 
	Limitation on Suits
	26

	Section 4.07
	 
	Unconditional Right of Holders to Payments
	27

	Section 4.08
	 
	Restoration of Rights and Remedies
	27

	Section 4.09
	 
	Rights and Remedies Cumulative
	27

	Section 4.10
	 
	Delay or Omission Not Waiver
	27

	Section 4.11
	 
	Control by Holders
	27

	Section 4.12
	 
	Waiver of Past Defaults
	27

	Section 4.13
	 
	Undertaking for Costs
	28

	 
	 
	 
	 

	ARTICLE V THE TRUSTEE
	28

	 
	 

	Section 5.01
	 
	Duties of Trustee
	28

	Section 5.02
	 
	Certain Rights of Trustee
	29

	Section 5.03
	 
	Notice of Defaults
	30

	Section 5.04
	 
	Not Responsible for Recitals or Issuance of Subordinated Notes
	30

	Section 5.05
	 
	May Hold Subordinated Notes
	30

	Section 5.06
	 
	Money Held in Trust
	31

	Section 5.07
	 
	Compensation and Reimbursement
	31

	Section 5.08
	 
	Corporate Trustee Required; Eligibility
	32

	Section 5.09
	 
	Resignation and Removal; Appointment of Successor
	32

	Section 5.10
	 
	Acceptance of Appointment by Successor
	33

	Section 5.11
	 
	Merger, Conversion, Consolidation or Succession to Business
	34

	Section 5.12
	 
	Appointment of Authenticating Agent
	34

	Section 5.13
	 
	Preferred Collection of Claims against Company
	35

	 
	 
	 
	 

	ARTICLE VI HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
	35

	 
	 

	Section 6.01
	 
	Holder Lists
	35

	Section 6.02
	 
	Preservation of Information; Communications to Holders
	35

	Section 6.03
	 
	Reports by Trustee
	36

	Section 6.04
	 
	Reports by Company
	36

	 
	 
	 
	 

	ARTICLE VII SUCCESSORS
	37

	 
	 

	Section 7.01
	 
	Merger, Consolidation or Sale of All or Substantially All Assets
	37

	Section 7.02
	 
	Successor Person Substituted for Company
	37

	
							
	 
	 
	 
	 

	ARTICLE VIII SUPPLEMENTAL INDENTURES
	37

	 
	 

	Section 8.01
	 
	Supplemental Indentures without Consent of Holders
	37

	Section 8.02
	 
	Supplemental Indentures with Consent of Holders
	38

	Section 8.03
	 
	Execution of Supplemental Indentures
	39

	Section 8.04
	 
	Effect of Supplemental Indentures
	39

	Section 8.05
	 
	Reference in Subordinated Notes to Supplemental Indentures
	39

	Section 8.06
	 
	Effect on Senior Indebtedness
	39

	Section 8.07
	 
	Conformity with Trust Indenture Act
	39

	 
	 
	 
	 

	ARTICLE IX COVENANTS
	40

	 
	 

	Section 9.01
	 
	Payment of Principal and Interest
	40

	Section 9.02
	 
	Maintenance of Office
	40

	Section 9.03
	 
	Money for Subordinated Notes Payments to Be Held in Trust
	40

	Section 9.04
	 
	Corporate Existence
	41

	Section 9.05
	 
	Maintenance of Properties
	41

	Section 9.06
	 
	Well-Capitalized
	41

	Section 9.07
	 
	Waiver of Certain Covenants
	42

	Section 9.08
	 
	Company Statement as to Compliance
	42

	Section 9.09
	 
	Tier 2 Capital
	42

	 
	 
	 
	 

	ARTICLE X REDEMPTION OF SECURITIES
	42

	 
	 

	Section 10.01
	 
	Applicability of Article
	42

	Section 10.02
	 
	Election to Redeem; Notice to Trustee
	43

	Section 10.03
	 
	Selection by Trustee of Subordinated Notes to be Redeemed
	43

	Section 10.04
	 
	Notice of Redemption
	43

	Section 10.05
	 
	Deposit of Redemption Price
	44

	Section 10.06
	 
	Subordinated Notes Payable on Redemption Date
	44

	Section 10.07
	 
	Subordinated Notes Redeemed in Part
	44

	 
	 
	 
	 

	ARTICLE XI SUBORDINATION OF SECURITIES
	45

	 
	 

	Section 11.01
	 
	Agreement to Subordinate
	45

	Section 11.02
	 
	Distribution of Assets
	45

	Section 11.03
	 
	Default With Respect to Senior Indebtedness
	47

	Section 11.04
	 
	No Impairment
	47

	Section 11.05
	 
	Effectuation of Subordination Provisions
	47

	Section 11.06
	 
	Notice to Trustee
	47

	Section 11.07
	 
	Trustee Knowledge of Senior Indebtedness
	48

	Section 11.08
	 
	Senior Indebtedness to Trustee
	48

	Section 11.09
	 
	Subordination Not Applicable to Trustee Compensation
	48

 

CROSS-REFERENCE TABLE
 
	
					
	Trust Indenture Act Section
	 
	Indenture Section

	§310
	(a)(1)
	 
	 
	5.08

	 
	(a)(2)
	 
	 
	5.08

	 
	(a)(3)
	 
	 
	Not applicable

	 
	(a)(4)
	 
	 
	Not applicable

	 
	(a)(5)
	 
	 
	5.08

	 
	(b)
	 
	 
	5.08, 5.09

	§311
	(a)
	 
	 
	5.05

	 
	(b)
	 
	 
	5.05

	§312
	(a)
	 
	 
	6.01

	 
	(b)
	 
	 
	6.02

	 
	(c)
	 
	 
	6.02

	§313
	(a)
	 
	 
	6.03

	 
	(b)(1)
	 
	 
	6.03

	 
	(b)(2)
	 
	 
	6.03

	 
	(c)
	 
	 
	6.03

	 
	(d)
	 
	 
	6.03

	§314
	(a)
	 
	 
	6.04

	 
	(a)(4)
	 
	 
	9.08

	 
	(b)
	 
	 
	Not applicable

	 
	(c)(1)
	 
	 
	1.02

	 
	(c)(2)
	 
	 
	1.02

	 
	(c)(3)
	 
	 
	Not applicable

	 
	(d)
	 
	 
	Not applicable

	 
	(e)
	 
	 
	1.02

	 
	(f)
	 
	 
	Not applicable

	§315
	(a)
	 
	 
	5.01, 5.02

	 
	(b)
	 
	 
	5.03

	 
	(c)
	 
	 
	5.01

	 
	(d)
	 
	 
	5.01, 5.02

	 
	(e)
	 
	 
	4.13

	§316
	(a)
	 
	 
	4.11, 4.12

	 
	(b)
	 
	 
	4.07

	 
	(c)
	 
	 
	1.04

	§317
	(a)(1)
	 
	 
	4.02

	 
	(a)(2)
	 
	 
	4.03

	 
	(b)
	 
	 
	9.03

	§318
	(a)
	 
	 
	1.07

	 
	(b)
	 
	 
	1.07

	 
	(c)
	 
	 
	1.07

 
Note: This Cross-Reference table will not, for any purpose, be deemed part of this Indenture.

This INDENTURE dated as of December 19, 2018 is between Orrstown Financial Services, Inc., a Pennsylvania corporation (the “Company”), and U.S. Bank, National Association, a national banking association duly organized and existing under the laws of the United States, as trustee.

RECITALS
 
WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for an issue of $32,500,000 in aggregate principal amount of 6.0% Fixed-to-Floating Rate Subordinated Notes due 2028, subject to the terms and conditions set forth in this Indenture.

NOW, THEREFORE, in order to declare the terms and conditions upon which the Subordinated Notes are authenticated, issued and delivered, and in consideration of the premises, and of the purchase and acceptance of the Subordinated Notes by the Holders thereof, the Company and the Trustee agree as follows for the benefit of each other and for the benefit of the respective Holders from time to time of the Subordinated Notes.
 
ARTICLE I 
DEFINITIONS AND INCORPORATION BY REFERENCE
 
Section 1.01    Definitions.

Except as otherwise expressly provided in this Indenture or unless the context otherwise requires, the terms defined in this Section for all purposes of this Indenture, any Company Order, any Board Resolution, and any indenture supplemental hereto will have the respective meanings specified in this Section.

“Act,” when used with respect to any Holders, is defined in Section 1.04.

“Additional Interest” has the meaning set forth in the Registration Rights Agreement.

“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Subordinated Note, the rules and procedures of the Depositary that apply to such transfer or exchange.

“Authenticating Agent” means any Person authorized by the Trustee in accordance with Section 5.12 to act on behalf of the Trustee to authenticate Subordinated Notes.
 
“Authorized Newspaper” means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are not Business Days in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same place meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication.

“Authorized Officer” means each of the Chairman of the Board, the Chief Executive Officer, the President, any Senior Executive Vice President and the Chief Financial Officer of the Company.

“Bank” means Orrstown Bank, a bank chartered under the laws of the Commonwealth of Pennsylvania.

“Bankruptcy Laws” mean Title 11, United States Code (11 U.S.C. §§101 et seq.) or any similar federal or state law for the relief of debtors.

“Bloomberg screen HP US003M” means the display page currently so designated on the Bloomberg screen HP US0003M (or such other service as may be nominated by the ICE Benchmark Administration Limited (“ICE”) 

- 1 -

or its successor, or such other entity assuming the responsibility of ICE or its successor in the event ICE or its successor no longer does so, as the successor service, for the purpose of displaying London interbank offered rates for US dollar deposits of major banks).

“Board of Directors” means, as to any Person, the board of directors, or similar governing body, of such Person or any duly authorized committee thereof.

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

“Business Day” means any day other than a Saturday, Sunday or other day on which banking institutions in the Commonwealth of Pennsylvania are authorized or obligated by law, regulation or executive order to close.

“Commission” means the U.S. Securities and Exchange Commission, as from time to time constituted, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Company” is defined in the preamble to this Indenture.

“Company Request” and “Company Order” mean, respectively, a written request or order, as the case may be, signed on behalf of the Company by an Authorized Officer and delivered to the Trustee.

“Corporate Trust Office” means the address of the Trustee specified in Section 1.05 or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the designated address of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

“Covenant Defeasance” is defined in Section 3.02(3).

“Defaulted Interest” is defined in Section 2.10.

“Definitive Subordinated Notes” means, individually and collectively, each Restricted Definitive Subordinated Note and each Unrestricted Definitive Subordinated Note, substantially in the form of Exhibit A-l hereto, issued under this Indenture.

“Depositary” means, with respect to any Subordinated Note issuable or issued in whole or in part in global form, the Person designated as depositary by the Company in accordance with this Indenture, and any and all successors thereto appointed as Depositary under this Indenture.

“Dollars” or “$” means a dollar or other equivalent unit of legal tender for payment of public or private debts in the United States.

“Event of Default” is defined in Section 4.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute thereto.

“Exchange Notes” means the Subordinated Notes issued in the Exchange Offer in accordance with Section 2.08.

“Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any successor regulatory authority with jurisdiction over bank holding companies.

“Fixed Interest Payment Date” means June 30 and December 30 of each year, beginning June 30, 2019.

- 2 -

“Floating Interest Payment Date” means March 30, June 30, September 30 and December 30 of each year, beginning December 30, 2023.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the statements and pronouncements of the Financial Accounting Standards Board and such other statements by such other entities (including the Commission) as have been accepted by a significant segment of the accounting profession, which are applicable at the date of this Indenture.

“Global Subordinated Notes” means, individually and collectively, each Restricted Global Subordinated Note and each Unrestricted Global Subordinated Note, substantially in the form of Exhibit A-2 hereto, issued under this Indenture.

“Government Obligations” means securities which are direct obligations of the United States in each case where the payment or payments thereunder are supported by the full faith and credit of the United States.

“Holder” means the Person in whose name the Subordinated Note is registered in the Subordinated Note Register.

“Indenture” means this Indenture, as amended and supplemented from time to time in accordance with its terms.

“Initial Notes” means the $32,500,000 in aggregate principal amount of the Company’s 6.0% Fixed-to-Floating Rate Subordinated Notes due 2028 issued under this Indenture on the date hereof.

“Interest Payment Date” means either a Fixed Interest Payment Date or a Floating Interest Payment Date, as applicable.

“Interest Period” means each three-month period beginning on December 30, 2023.

“Investment Company Event” means the receipt by the Company of a legal opinion from counsel experienced in such matters to the effect that there is more than an insubstantial risk that the Company is or, within 90 days of the date of such legal opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act of 1940, as amended.

“Legal Defeasance” is defined in Section 3.02(2).

“Letter of Transmittal” means the letter of transmittal to be prepared by the Company and sent to all Holders for use by such Holders in connection with an Exchange Offer.

“LIBOR” means, with respect to any Interest Period, the rate for deposits in US dollars for the three-month period which appears on Bloomberg screen HP US0003M (as defined below) at approximately 11:00 a.m., London time, on the applicable LIBOR Determination Date (as defined below); provided, however, that if the three-month USD LIBOR is less than zero then the three-month USD LIBOR shall be deemed to be zero. Notwithstanding the foregoing: if at any time while any Subordinated Notes are outstanding, the calculation agent determines on the applicable LIBOR Determination Date (as defined below) that LIBOR has been discontinued, then the calculation agent will use, at the direction of the Company, for each LIBOR Determination Date, the substitute or successor reference rate for LIBOR that has been selected by a central bank, reserve bank, monetary authority or any similar institution (including any committee or working group thereof) and whose use is consistent with then-accepted market practice for debt obligations such as the Subordinated Notes (the “Alternative Rate”) and may, after consultation with the Company, determine what business day convention to use, the definition of business day, the reference rate determination date to be used and any other relevant methodology for calculating such substitute or successor reference rate, including any adjustment factor needed to make such Alternative Rate comparable to the LIBOR in a manner that is consistent with industry-accepted practices for the use of such Alternative Rate for debt obligations such as the Subordinated Notes.  However, if the calculation agent determines, following consultation with the Company and the holders of the Subordinated Notes, that there is no clear market consensus as to whether any rate has replaced LIBOR in customary market usage, the Company will use reasonable endeavors to appoint in its sole discretion an independent financial advisor to determine an appropriate substitute reference rate, and the 

- 3 -

decision of the independent financial advisor will be binding on the Company, the calculation agent and the holders of the Subordinated Notes.  If the Company is unable to appoint an independent financial advisor, or the independent financial advisor appointed by it fails to determine an appropriate substitute reference rate, then the Company (in consultation with the holders of the Subordinated Notes to the extent practicable) may determine in good faith a substitute reference rate for purposes of determining the rate of interest for the applicable Interest Period; provided, however, that if the Company is unable or unwilling to determine a substitute reference rate prior to a LIBOR Determination Date in accordance with the immediately preceding clause, the rate of interest will be equal to the rate of interest in effect with respect to the immediately preceding LIBOR Determination Date or, in the case of the initial LIBOR Determination Date, the rate of interest will be equal to 6.0%; provided further, however, that if the Company is notified by Holders of a majority of the Subordinated Notes within five (5) business days after the receipt by all Holders of notice of such Alternative Rate selection that such Holders reasonably believe that such Alternative Rate is not consistent with the successor for LIBOR, including any spread adjustments, generally used in quarterly pay floating rate obligations, then the Alternative Rate shall be the rate selected by the Holders of majority of the Subordinated Notes, each using their commercially reasonable judgment in identifying an alternative rate that is consistent with the successor for LIBOR, including any spread adjustments, generally used in quarterly pay floating rate obligations.  In the event the Holders of a majority of the Subordinated Notes cannot reach agreement on such Alternative Rate within fifteen (15) business days of the Company’s notification of its proposed Alternative Rate under this Section, the Alternative Rate shall be the rate identified by the Holder of the largest principal amount of Subordinated Notes, selected based on such Holder’s commercially reasonable judgment as to the an alternative rate that is consistent with the successor for LIBOR, including any spread adjustments, generally used in quarterly pay floating rate obligations.  The Company will appoint an independent calculation agent for the Subordinated Notes prior to the commencement of the floating interest rate period; provided, however, the holders of a majority in principal amount of the then Outstanding Subordinated Notes may replace the calculation agent.  The Company may not appoint an affiliate of it as calculation agent.

“LIBOR Determination Date” means the second London Banking Day (as defined below) immediately preceding the first day of the relevant Interest Period.

“London Banking Day” means any day on which dealings in deposits in US dollars are transacted in the London interbank market.

“Maturity” means the date on which the principal of a Subordinated Note or an installment of principal becomes due and payable as provided in or under this Indenture or such Subordinated Note, whether at the Stated Maturity or by an acceleration of the maturity of such Subordinated Note in accordance with the terms of such Subordinated Note, upon redemption at the option of the Company, upon repurchase or repayment or otherwise, and includes a Redemption Date for such Subordinated Note and a date fixed for the repurchase or repayment of such Subordinated Note at the option of the Holder.

“Officer” means, with respect to any Person, the chairman of the board, vice chairman of the board, the chief executive officer, the president, the chief operating officer, the chief financial officer, the treasurer, any assistant treasurer, the controller, the secretary or any Vice President of such Person.

“Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer or the principal accounting officer of the Company, that complies with the requirements of Section 1.02 and is delivered to the Trustee.

“Opinion of Counsel” means a written opinion from legal counsel, which opinion meets the requirements of Section 1.02.  The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company.

“Outstanding,” when used with respect to any Subordinated Notes, means, as of the date of determination, all such Subordinated Notes theretofore authenticated and delivered under this Indenture, except (1) any such Subordinated Note theretofore cancelled by the Trustee or the Registrar or delivered to the Trustee or the Registrar for cancellation; (2) any such Subordinated Note for whose payment at the Maturity thereof money in the necessary amount has been theretofore deposited in accordance with this Indenture (other than in accordance with Section 3.02) with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company will act as its own Paying Agent) for the Holders of such Subordinated Notes, provided that, if such Subordinated Notes are to be redeemed, notice of such redemption has been duly given in 

- 4 -

accordance with this Indenture or provision therefor satisfactory to the Trustee has been made; (3) any such Subordinated Note with respect to which the Company has effected Legal Defeasance or Covenant Defeasance in accordance with Section 3.02, except to the extent provided in Section 3.02; and (4) any such Subordinated Note that has been paid in accordance with Section 2.09 or in exchange for or in lieu of which other Subordinated Notes have been authenticated and delivered under this Indenture, unless there will have been presented to the Trustee proof satisfactory to the Trustee that such Subordinated Note is held by a bona fide purchaser in whose hands such Subordinated Note is a valid obligation of the Company; provided, however, in all cases, that in determining whether the Holders of the requisite principal amount of Outstanding Subordinated Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder. Subordinated Notes owned by the Company or any Affiliate of the Company will be disregarded and deemed not to be Outstanding. Subordinated Notes so owned that will have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Subordinated Notes and that the pledgee is not the Company or an Affiliate of the Company.

“Participating Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

“Paying Agent” is defined in Section 2.06.

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

“Place of Payment,” with respect to any Subordinated Note, means the place or places where the principal of, or interest on, such Subordinated Note are payable as provided in or under this Indenture or such Subordinated Note.

“Private Placement Legend” means the legend set forth in Section 2.04 of this Indenture to be placed on all Subordinated Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.

“Purchase Agreement” means the Subordinated Note Purchase Agreement concerning the Subordinated Notes, dated December 19, 2018, by and among the Company and the purchasers identified therein.

“Redemption Date” with respect to any Subordinated Note or portion thereof to be redeemed, means the date fixed for such redemption by or under this Indenture or such Subordinated Note.

“Redemption Price” with respect to any Subordinated Note or portion thereof to be redeemed, means the price at which it is to be redeemed as determined by or under this Indenture or such Subordinated Note.

“Registrar” is defined in Section 2.06.

“Registration Rights Agreement” means the Registration Rights Agreement in the form attached as Exhibit B to the Purchase Agreement with respect to the Subordinated Notes, dated as of the date of this Indenture, by and among the Company and the purchasers of the Initial Notes identified therein.

“Regular Record Date,” with respect to any Interest Payment Date, means the close of business on the fifteenth calendar day prior to such Interest Payment Date, without regard to whether the Regular Record Date is a Business Day.

“Responsible Officer” means, when used with respect to the Trustee, any officer assigned to the Corporate Trust Office who has direct responsibility for the administration of this Indenture and, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of such Person’s knowledge of and familiarity with the particular subject.

“Restricted Definitive Subordinated Note” means a Definitive Subordinated Note bearing, or that is required to bear, the Private Placement Legend.

- 5 -

“Restricted Global Subordinated Note” means a Global Subordinated Note bearing, or that is required to bear, the Private Placement Legend.

“Restricted Subordinated Note” means a Restricted Global Subordinated Note or a Restricted Definitive Subordinated Note.

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

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

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute thereto.

“Senior Indebtedness” means the principal of, and premium, if any, and interest, including interest accruing after the commencement of any bankruptcy proceeding relating to the Company, on, or substantially similar payments the Company makes in respect of the following categories of debt, whether that debt was outstanding on the date of execution of this Indenture or thereafter incurred, created or assumed: (1) all indebtedness of the Company for borrowed money, whether or not evidenced by notes, debentures, bonds, securities or other similar instruments issued under the provisions of any indenture, fiscal agency agreement, debenture or note purchase agreement or other agreement, including any senior debt securities that may be offered; (2) indebtedness of the Company for money borrowed or represented by purchase money obligations, as defined below; (3) the Company’s obligations as lessee under leases of property whether made as part of a sale and leaseback transaction to which it is a party or otherwise; (4) reimbursement and other obligations relating to letters of credit, bankers’ acceptances and similar obligations and direct credit substitutes; (5) all obligations of the Company in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option contacts, commodity contracts and other similar arrangements; (6) all of the Company’s obligations issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business; (7) any other obligation of the Company to its general creditors; (8) all obligations of the type referred to in clauses (1) through (7) of other persons for the payment of which the Company is liable contingently or otherwise to pay or advance money as obligor, guarantor, endorser or otherwise; (9) all obligations of the types referred to in clauses (1) through (8) of other persons secured by a lien on any property or asset of the Company; and (10) deferrals, renewals or extensions of any of the indebtedness or obligations described above.

However, clauses (1) through (10) above exclude: (y) any indebtedness, obligation or liability that is subordinated to indebtedness, obligations or liabilities of the Company to substantially the same extent as or to a greater extent than the Subordinated Notes are subordinated; and (z) the Subordinated Notes and, unless expressly provided in the terms thereof, any indebtedness of the Company to its Subsidiaries.

As used above, the term “purchase money obligations” means indebtedness, obligations evidenced by a note, debenture, bond or other instrument, whether or not secured by a lien or other security interest, issued to evidence the obligation to pay or a guarantee of the payment of, and any deferred obligation for the payment of, the purchase price of property but excluding indebtedness or obligations for which recourse is limited to the property purchased, issued or assumed as all or a part of the consideration for the acquisition of property or services, whether by purchase, merger, consolidation or otherwise, but does not include any trade accounts payable as set forth in clause (6) above.

“Significant Subsidiary” means any Subsidiary of the Company that is a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X promulgated by the Commission (as such rule is in effect on the date of this Indenture).

“Special Record Date” for the payment of any Defaulted Interest on any Subordinated Note means a date fixed in accordance with Section 2.10.

“Stated Maturity” means December 30, 2028.

“Subordinated Note” or “Subordinated Notes” means the Initial Notes and the Exchange Notes and, more particularly, any Subordinated Note authenticated and delivered under this Indenture, including those Subordinated Notes issued or authenticated upon transfer, replacement or exchange.

- 6 -

“Subordinated Note Register” is defined in Section 2.06.

“Subordination Provisions” means the provisions contained in Article XI or any provisions with respect to subordination contained in the Subordinated Notes.

“Subsidiary” means a corporation, a partnership, business or statutory trust or a limited liability company, a majority of the outstanding voting equity securities or a majority of the voting membership or partnership interests, as the case may be, of which is owned or controlled, directly or indirectly, by the Company or by one or more other Subsidiaries of the Company.  For the purposes of this definition, “voting equity securities” means securities having voting power for the election of directors, managers, managing partners or trustees, as the case may be, whether at all times or only so long as no senior class of stock has voting power by reason of any contingency.

“Tax Event” means the receipt by the Company of a legal opinion from counsel experienced in such matters to the effect that there is more than an insubstantial risk that interest paid by the Company on the Subordinated Notes is not, or, within 90 days of the date of such legal opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.

“Tier 2 Capital” means Tier 2 capital for purposes of capital adequacy regulations of the Federal Reserve Board, as then in effect and applicable to the Company.

“Tier 2 Capital Event” means the receipt by the Company of a legal opinion from counsel experienced in such matters to the effect that the Subordinated Notes do not constitute, or within 90 days of the date of such legal opinion will not constitute, Tier 2 Capital (or its then equivalent if the Company were subject to such capital requirement).

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“Trustee” means U.S. Bank, National Association, as trustee, until a successor replaces it in accordance with the provisions of this Indenture and thereafter means the successor serving hereunder.

“United States” means the United States of America (including the states thereof and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

“Unrestricted Definitive Subordinated Note” means a Definitive Subordinated Note that does not bear, and is not required to bear, the Private Placement Legend.

“Unrestricted Global Subordinated Note” means a Global Subordinated Note that does not bear, and is not required to bear, the Private Placement Legend.

Section 1.02    Compliance Certificates and Opinions.

Except as otherwise expressly provided in or under this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company will furnish to the Trustee an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Each certificate or opinion with respect to which compliance with a condition provided for in this Indenture (other than an Officers’ Certificate provided under Section 9.08) must comply with the provisions of  Section 314(e) of the Trust Indenture Act and must include:

(1)     a statement that the person making such certificate or opinion has read such covenant or condition;

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(2)     a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3)     a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such condition has been satisfied; and

(4)      a statement as to whether or not, in the opinion of such person, such condition has been satisfied.

Section 1.03    Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based is erroneous.

Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture or any Subordinated Note, they may, but need not, be consolidated and form one instrument.

Section 1.04    Acts of Holders.

(1)    Any request, demand, authorization, direction, notice, consent, waiver or other action provided by or under this Indenture to be made, given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action will become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Subordinated Note, will be sufficient for any purpose of this Indenture and (subject to Section 5.01) conclusive in favor of the Trustee and the Company and any agent of the Trustee or the Company, if made in the manner provided in this Section.

(2)    The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine, and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section.

(3)    The ownership, principal amount and serial numbers of Subordinated Notes held by any Person, and the date of the commencement and the date of the termination of holding the same, will be proved by the Subordinated Note Register.

(4)     The Company may, in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, 

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notice, consent, waiver or take any other act authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, any such record date will be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation. If a record date is fixed, the Holders on such record date, and only such Persons, will be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action will be valid or effective if made, given or taken more than 90 days after such record date.

(5)    Any effective request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Subordinated Note will bind every future Holder of the same Subordinated Note and the Holder of every Subordinated Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee, any Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such Act is made upon such Subordinated Note.

(6)    Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Subordinated Note may do so with regard to all or any part of the principal amount of such Subordinated Note or by one or more duly appointed agents, each of which may do so in accordance with such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount in accordance with this paragraph will have the same effect as if given or taken by separate Holders of each such different part.

(7)    Without limiting the generality of this Section 1.04, a Holder, including a Depositary that is a Holder of a Global Subordinated Note, may make, give or take, by a proxy or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other Act provided in or under this Indenture or the Subordinated Notes to be made, given or taken by Holders, and a Depositary that is a Holder of a Global Subordinated Note may provide its proxy or proxies to the beneficial owners of interests in any such Global Subordinated Note through such Depositary’s Applicable Procedures.  The Company may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Subordinated Note entitled under the Applicable Procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, will be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date.  No such request, demand, authorization, direction, notice, consent, waiver or other action will be valid or effective if made, given or taken more than 90 days after such record date.

Promptly upon any record date being set in accordance with this Section 1.04, the Company, at its own expense, will cause notice of the record date, the proposed action by Holders and the expiration date to be given to the Trustee in writing and the Holders in the manner set forth in Section 1.05.

Section 1.05    Required Notices or Demands.

Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in Person or delivered by registered or certified mail (return receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to the other’s address:

If to the Company:

Orrstown Financial Services, Inc.
77 East King Street
P. O. Box 250
Shippensburg, Pennsylvania 17257
Attention:  Chief Financial Officer
Facsimile: (717) 532-4131

If to the Trustee:

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U.S. Bank, National Association
1021 East Cary Street, Suite 1850
Richmond, VA 23219
Facsimile: (804) 343-1572
Attention:  Global Trust Services

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

All notices and communications will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if delivered by mail; on the first Business Day after being sent, if sent by facsimile and the sender receives confirmation of successful transmission; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice required or permitted to be given to a Holder under the provisions of this Indenture will be deemed to be properly delivered by being deposited postage prepaid in a post office letter box in the United States addressed to such Holder at the address of such Holder as shown on the Subordinated Note Register. Any report in accordance with Section 313 of the Trust Indenture Act will be transmitted in compliance with subsection (c) therein. If the Company delivers a notice or communication to Holders, the Company will deliver a copy to the Trustee at the same time.

In any case where notice to Holders of Subordinated Notes is delivered by mail, neither the failure to deliver such notice, nor any defect in any notice so delivered, to any particular Holder of a Subordinated Note will affect the sufficiency of such notice with respect to other Holders of Subordinated Notes. Any notice that is delivered in the manner herein provided will be conclusively presumed to have been duly given or provided. In the case by reason of the suspension of regular mail service or by reason of any other cause it will be impracticable to give such notice by mail, then such notification as will be made with the approval of the Trustee will constitute a sufficient notification for every purpose hereunder.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver will be the equivalent of such notice. Waivers of notice by Holders of Subordinated Notes will be filed with the Trustee, but such filing will not be a condition precedent to the validity of any action taken in reliance upon such waiver.

Notwithstanding any other provision herein, where this Indenture provides for notice to any Holder of a Global Subordinated Note, or of an interest therein, such notice will be sufficiently given if given to the Depositary for such Global Subordinated Note (or its designee) according to the applicable procedures of such Depositary prescribed for giving such notice.

Section 1.06    Language of Notices.

Any request, demand, authorization, direction, notice, consent or waiver or other Act required or permitted under this Indenture will be in the English language, except that, if the Company so elects, any published notice may be in an official language of the country of publication.

Section 1.07    Incorporation by Reference of Trust Indenture Act; Conflicts.

Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture.  The Trust Indenture Act term “obligor” used in this Indenture means the Company and any successor obligor upon the Subordinated Notes.

All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by Commission rule under the Trust Indenture Act have the meanings so assigned to them as of the date of this Indenture.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture that is required to be included in this Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required provision will control If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by 

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Section 318(c) of the Trust Indenture Act, the duties imposed by Section 318(c) of the Trust Indenture Act will control.  If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provisions of the Trust Indenture Act will be deemed to apply to this Indenture as so modified or will be excluded, as the case may be.

Section 1.08    Effect of Headings and Table of Contents.

The Article and Section headings in this Indenture and the Table of Contents are for convenience only and will not affect the construction of this Indenture.

Section 1.09    Successors and Assigns.

All the covenants, stipulations, promises and agreements in this Indenture by or on behalf of the Company or the Trustee will bind its respective successors and permitted assigns, whether so expressed or not.

Section 1.10    Severability.

In case any provision in this Indenture or any Subordinated Note will be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not, to the fullest extent permitted by law, in any way be affected or impaired thereby.

Section 1.11    Benefits of Indenture.

Nothing in this Indenture or any Subordinated Note, express or implied, will give to any Person, other than the parties hereto, any Registrar, any Paying Agent and their respective successors hereunder and the Holders of Subordinated Notes, and the holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 1.12    Governing Law.

This Indenture and the Subordinated Notes will be deemed to be a contract made under the laws of the State of New York and will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to any laws or principles of conflict of laws that would apply the laws of a different jurisdiction.

Section 1.13    Legal Holidays.

Unless otherwise specified in or under this Indenture or any Subordinated Notes, in any case where any Interest Payment Date, Stated Maturity or Maturity of, or any other day on which a payment is due with respect to, any Subordinated Note will be a day that is not a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or any Subordinated Note other than a provision in any Subordinated Note or in the Board Resolution, Officers’ Certificate or supplemental indenture establishing the terms of any Subordinated Note that specifically states that such provision will apply in lieu hereof) payment need not be made at such Place of Payment on such date, but such payment may be made on the next succeeding day that is a Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, at the Stated Maturity or Maturity or on any such other payment date, as the case may be, and no interest will accrue on the amount payable on such date or at such time for the period from and after such Interest Payment Date, Stated Maturity, Maturity or other payment date, as the case may be, to the next succeeding Business Day.

Section 1.14    Counterparts; Electronic Transmission.

This Indenture may be executed in several counterparts, each of which will be an original and all of which will constitute but one and the same instrument. Any facsimile or electronically transmitted copies hereof or signature hereon will, for all purposes, be deemed originals.

Section 1.15    Immunity of Certain Persons.

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No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Subordinated Note, or because of any indebtedness evidenced thereby, will be had against any past, present or future shareholder, employee, officer or director, as such, of the Company or Trustee or of any predecessor or successor, either directly or through the Company or Trustee or any predecessor or successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Subordinated Notes by the Holders and as part of the consideration for the issue of the Subordinated Notes.

Section 1.16    Waiver of Jury Trial.

EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SUBORDINATED NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 1.17    Force Majeure.

In no event will the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee will use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 1.18    USA Patriot Act.

The Trustee hereby notifies the Company that in accordance with the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Trustee to identify the Company in accordance with the USA Patriot Act.

Section 1.19    No Sinking Fund.

The Subordinated Notes are not entitled to the benefit of any sinking fund.

Section 1.20    Rules of Construction.

Unless the context otherwise requires:

(1)    a term has the meaning assigned to it;

(2)    an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3)    “or” is not exclusive;

(4)    words in the singular include the plural, and in the plural include the singular;

(5)    “including” means including without limitation;

(6)    “will” will be interpreted to express a command;

(7)    provisions apply to successive events and transactions;

(8)    references to sections of, or rules under, the Securities Act will be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time;

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(9)    unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture; and

(10)    the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision.

ARTICLE II 
THE SUBORDINATED NOTES
 
Section 2.01    Forms Generally.

The Subordinated Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A-l, which is a part of this Indenture.  The Subordinated Notes may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company).  The Company will provide any such notations, legends or endorsements to the Trustee in writing.  Each Subordinated Note will be dated the date of its authentication.  The terms and provisions contained in the Subordinated Notes will constitute, and are hereby expressly made a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Subordinated Note irreconcilably conflicts with the express provisions of this Indenture, the provisions of this Indenture will govern and be controlling.

Section 2.02    Definitive Subordinated Notes.

Except as provided in Section 2.07, owners of beneficial interests in Global Subordinated Notes will not be entitled to receive physical delivery of Definitive Subordinated Notes and Holders of Definitive Subordinated Notes will not be entitled to transfer Definitive Subordinated Notes in exchange for beneficial interests in Global Subordinated Notes.

Section 2.03    Global Subordinated Notes.

Except as provided in Section 2.02, the Subordinated Notes will be issued only in book-entry form, will be represented by one or more Global Subordinated Notes registered in the name of or held by DTC or its nominee as the Depositary therefor.  Each Global Subordinated Note issued under this Indenture will be deposited with the Trustee at its Corporate Trust Office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee thereof, duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of any Global Subordinated Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided.  Any adjustment of the aggregate principal amount of a Global Subordinated Note to reflect the amount of any increase or decrease in the amount of outstanding Subordinated Notes represented thereby will be made by the Trustee in accordance with written instructions given by the Holder thereof as required by Section 2.07 hereof and will be made on the records of the Trustee and the Depositary.

Section 2.04    Restricted Subordinated Notes.

Each Restricted Definitive Subordinated Note and Restricted Global Subordinated Note will bear a legend in substantially the following form:
 
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER ANY APPLICABLE STATE SECURITIES LAW, THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE 

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COMPANY, IF REQUESTED, OR (II) UNLESS SOLD IN ACCORDANCE WITH RULE 144 UNDER SAID ACT.

The Private Placement Legend set forth above will be removed and a new Subordinated Note of like tenor and principal amount without such Private Placement Legend will be executed by the Company, and upon written request of the Company (together with an Officers’ Certificate and an Opinion of Counsel) given at least three Business Days prior to the proposed authentication date, the Trustee will authenticate and deliver such new Subordinated Note to the respective Holder, if legal counsel to the Holder or owner of beneficial interests requesting the removal of such Private Placement Legend deliver to the Trustee, any Registrar and Paying Agent (if a different Person than the Trustee) and the Company an Opinion of Counsel in compliance with this Indenture and additionally opining that the restrictive legend can be removed in connection with the transfer in accordance with the Securities Act.

Section 2.05    Execution and Authentication.

Subordinated Notes will be executed on behalf of the Company by any Authorized Officer and may (but need not) have the Company’s corporate seal or a facsimile thereof reproduced thereon. The signature of an Authorized Officer on the Subordinated Notes may be manual or facsimile. Subordinated Notes bearing the manual or facsimile signatures of individuals who were at the time of execution Authorized Officers of the Company will, to the fullest extent permitted by law, bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Subordinated Notes or did not hold such offices at the date of such Subordinated Notes.

The Trustee or an Authenticating Agent will authenticate and deliver the Initial Notes for original issue in an initial aggregate principal amount of up to $32,500,000 upon one or more Company Orders and an Opinion of Counsel.  In addition, the Trustee or an Authenticating Agent will upon receipt of a Company Order, Opinion of Counsel and Officers’ Certificate authenticate and deliver any Exchange Notes for an initial aggregate principal amount not to exceed $32,500,000 specified in such Company Order for Exchange Notes issued hereunder. The aggregate principal amount of the Outstanding Subordinated Notes to be issued hereunder may be increased at any time hereafter and the series may be reopened for issuances of additional Subordinated Notes upon Company Order without the consent of any Holder.  The Subordinated Notes issued on the date hereof and any such additional Subordinated Notes that may be issued hereafter shall be part of the same series of Subordinated Notes for all purposes under the Indenture.  Unless the context otherwise requires, the initial Subordinated Notes and the Exchange Notes shall constitute one series for all purposes under the Indenture, including with respect to any amendment, waiver, acceleration or other Act of the Holders or upon redemption of the Subordinated Notes.  The Subordinated Notes will be issued only in registered form without coupons and in minimum denominations of $1,000 and any integral multiple of $1,000 in excess thereof.

The Trustee will not be required to authenticate any Subordinated Notes if the issue of such Subordinated Notes under this Indenture will affect the Trustee’s own rights, duties or immunities under the Subordinated Notes and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee or if the Trustee, being advised by counsel, determines that such action may not lawfully be taken.

No Subordinated Note will be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Subordinated Note a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee or by the Authenticating Agent by the manual signature of one of its authorized signatories. Such certificate upon any Subordinated Note will be conclusive evidence, and the only evidence, that such Subordinated Note has been duly authenticated and delivered hereunder.

Section 2.06    Registrar and Paying Agent.

The Company will maintain an office or agency where Subordinated Notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where Subordinated Notes may be presented for payment (“Paying Agent”).  The Registrar will keep a register of the Subordinated Notes (“Subordinated Note Register”) and of their transfer and exchange.  The registered Holder of a Subordinated Note will be treated as the owner of the Subordinated Note for all purposes.  The Company may appoint one or more co-registrars and one or more additional paying agents.  The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Company may change any Paying Agent or Registrar 

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without prior notice to any Holder; provided that no such removal or replacement will be effective until a successor Paying Agent or Registrar will have been appointed by the Company and will have accepted such appointment.  The Company will notify the Trustee in writing of the name and address of any Registrar or Paying Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee will act as such.  The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

The Company initially appoints the Trustee to act as the Paying Agent and Registrar for the Subordinated Notes and, in the event that any Subordinated Notes are issued in global form, to initially act as custodian with respect to the Global Subordinated Notes. In the event that the Trustee will not be or will cease to be Registrar with respect the Subordinated Notes, it will have the right to examine the Subordinated Note Register at all reasonable times. There will be only one Subordinated Note Register.

Section 2.07    Registration of Transfer and Exchange.

(1)    Except as otherwise provided in or under this Indenture, upon surrender for registration of transfer of any Subordinated Note, the Company will execute, and the Trustee will authenticate and deliver, in the name of the designated transferee or transferees, one or more new Subordinated Notes denominated as authorized in or under this Indenture, of a like aggregate principal amount bearing a number not contemporaneously outstanding and containing identical terms and provisions.

Except as otherwise provided in or under this Indenture, at the option of the Holder, Subordinated Notes may be exchanged for other Subordinated Notes containing identical terms and provisions, in any authorized denominations (minimum denominations of $1,000 and any integral multiple of $1,000 in excess thereof), and of a like aggregate principal amount, upon surrender of the Subordinated Notes to be exchanged at any office or agency for such purpose. Whenever any Subordinated Notes are so surrendered for exchange, the Company will execute, and the Trustee will authenticate and deliver, subject to the terms hereof, the Subordinated Notes that the Holder making the exchange is entitled to receive.

All Subordinated Notes issued upon any registration of transfer or exchange of Subordinated Notes will be the valid obligations of the Company evidencing the same debt and entitling the Holders thereof to the same benefits under this Indenture as the Subordinated Notes surrendered upon such registration of transfer or exchange.

Every Subordinated Note presented or surrendered for registration of transfer or for exchange or redemption will (if so required by the Company or the Registrar for such Subordinated Note) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar for such Subordinated Note duly executed by the Holder thereof or his attorney duly authorized in writing.

No service charge will be made for any registration of transfer or exchange of Subordinated Notes, or any redemption or repayment of Subordinated Notes, or any conversion or exchange of Subordinated Notes for other types of securities or property, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Subordinated Notes from the Holder requesting such transfer or exchange.

Except as otherwise provided in or under this Indenture, the Company will not be required (i) to issue, register the transfer of or exchange any Subordinated Notes during a period beginning at the opening of business 15 days before the day of the selection for redemption of Subordinated Notes under Section 10.03 and ending at the close of business on the day of such selection, or (ii) to register the transfer of or exchange any Subordinated Note, or portion thereof, so selected for redemption, except in the case of any Subordinated Note to be redeemed in part, the portion thereof not to be redeemed.

Any Registrar appointed in accordance with Section 2.06 hereof will provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Subordinated Notes upon transfer or exchange of Subordinated Notes. No Registrar will be required to make registrations of transfer or exchange of Subordinated Notes during any periods designated in the Subordinated Notes or in this Indenture as periods during which such registration of transfers and exchanges need not be made.

The Trustee will have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any 

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interest in any Subordinated Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Subordinated Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Neither the Trustee nor any Paying Agent will have any responsibility for any actions taken or not taken by the Depositary.

(2)    When Definitive Subordinated Notes are presented by a Holder to the Registrar with a request to register the transfer of such Definitive Subordinated Notes or to exchange such Definitive Subordinated Notes for an equal principal amount of Definitive Subordinated Notes of other authorized denominations, the Registrar will register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Subordinated Notes surrendered for transfer or exchange will be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

(3)    A Global Subordinated Note may not be transferred except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Subordinated Notes will be exchanged by the Company for Definitive Subordinated Notes if: (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Subordinated Note or such Depositary has ceased to be a “clearing agency” registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days, (ii) the Company determines that the Subordinated Notes are no longer to be represented by Global Subordinated Notes and so notifies the Trustee, or (iii) an Event of Default has occurred and is continuing with respect to the Subordinated Notes and the Depositary or its participant(s) has requested the issuance of Definitive Subordinated Notes.

Any Global Subordinated Note exchanged in accordance with clause (i) or (ii) above will be so exchanged in whole and not in part, and any Global Subordinated Note exchanged in accordance with clause (iii) above may be exchanged in whole or from time to time in part as directed by the Depositary.

Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above, Definitive Subordinated Notes will be issued in fully registered form, without interest coupons, will have an aggregate principal amount equal to that of the Global Subordinated Note or portion thereof to be so exchanged, will be registered in such names and be in such authorized denominations as the Depositary will instruct the Trustee in writing and will bear such legends as provided herein.  Global Subordinated Notes also may be exchanged or replaced, in whole or in part, as provided in Section 2.09 hereof.  Every Subordinated Note authenticated and delivered in exchange for, or in lieu of, a Global Subordinated Note or any portion thereof, in accordance with this Section 2.07 or Section 2.09 hereof, will be authenticated and delivered in the form of, and will be, a Global Subordinated Note, except as otherwise provided herein.  A Global Subordinated Note may not be exchanged for another Subordinated Note other than as provided in this Section 2.07(3); however, beneficial interests in a Global Subordinated Note may be transferred and exchanged as provided in (4) hereof.

Any Global Subordinated Note to be exchanged in whole will be surrendered by the Depositary to the Trustee.  With regard to any Global Subordinated Note to be exchanged in part, either such Global Subordinated Note will be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Subordinated Note, the principal amount thereof will be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender or adjustment, the Trustee will authenticate and deliver the Subordinated Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

(4)    The transfer and exchange of beneficial interests in the Global Subordinated Notes will be effected through the Depositary in accordance with the Applicable Procedures and this Section 2.07.

(5)    A Definitive Subordinated Note may not be exchanged for a beneficial interest in a Global Subordinated Note unless the Company determines that the Subordinated Notes may be represented by Global Subordinated Notes and so notifies the Trustee. After the Company has determined that the Subordinated Notes may 

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be represented by Global Subordinated Notes and so notifies the Trustee in writing, then upon receipt by the Trustee of a Definitive Subordinated Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with written instructions from such Holder directing the Trustee to make, or to direct the Registrar to make, an adjustment on its books and records with respect to such Global Subordinated Note to reflect an increase in the aggregate principal amount of the Subordinated Notes represented by the Global Subordinated Note, such instructions to contain information regarding the Depositary account to be credited with such increase, the Trustee will cancel such Definitive Subordinated Note and cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Registrar, the aggregate principal amount of Subordinated Notes represented by the Global Subordinated Note to be increased by the aggregate principal amount of the Definitive Subordinated Note to be exchanged, and will credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Subordinated Note equal to the principal amount of the Definitive Subordinated Note so cancelled. If no Global Subordinated Notes are then outstanding, the Company will issue and the Trustee will authenticate, upon Company Order, a new Global Subordinated Note in the appropriate principal amount.

(6)    At such time as all beneficial interests in a particular Global Subordinated Note have been exchanged for Definitive Subordinated Notes or a particular Global Subordinated Note has been repurchased or canceled in whole and not in part, each such Global Subordinated Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.12 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Subordinated Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Subordinated Note or for Definitive Subordinated Notes, the principal amount of Subordinated Notes represented by such Global Subordinated Note will be reduced accordingly by adjustments made on the records of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Subordinated Note, such other Global Subordinated Note will be increased accordingly by adjustments made on the records of the Trustee to reflect such increase.

(7)    No Restricted Subordinated Note will be transferred or exchanged except in compliance with the Private Placement Legend or as provided in accordance with Section 2.08. In addition to the provisions for transfer and exchange set forth in this Section 2.07, the Trustee, any Registrar and Paying Agent (if a different Person than the Trustee) and the Company may, prior to effecting any requested transfer or exchange of any Restricted Subordinated Notes, other than an exchange in accordance with Section 2.08, require that legal counsel to the Holder or owner of beneficial interests requesting such transfer or exchange deliver to the Trustee, any Registrar and Paying Agent (if a different Person than the Trustee) and the Company, an Opinion of Counsel in compliance with this Indenture and additionally opining that the transfer or exchange is in compliance with the requirements of the Private Placement Legend and that the Subordinated Note issued to the transferee or in exchange for the Restricted Subordinated Note may be issued free of the Private Placement Legend.  Any untransferred or unexchanged balance of a Restricted Subordinated Note will be reissued to the Holder with the Private Placement Legend, unless the Private Placement Legend may be omitted in accordance with Section 2.04, as evidenced by the Opinion of Counsel.

Section 2.08    Exchange Offer.

Upon the occurrence of an Exchange Offer in accordance with the Registration Rights Agreement, the Company will issue and, upon receipt of a Company Order in accordance with Section 2.05 hereof, the Trustee will authenticate (i) Unrestricted Definitive Subordinated Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Subordinated Notes tendered in such Exchange Offer for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not Participating Broker-Dealers, (y) they are not participating in a distribution of the applicable Exchange Notes and (z) they are not Affiliates of the Company, and accepted for exchange in such Exchange Offer or, if permitted by the Company, (ii) one or more Unrestricted Global Subordinated Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Subordinated Notes tendered in such Exchange Offer for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not Participating Broker-Dealers, (y) they are not participating in a distribution of the applicable Exchange Notes and (z) they are not Affiliates of the Company, and accepted for exchange in such Exchange Offer.  Concurrently with the issuance of such Unrestricted Global Subordinated Notes upon exchange of Restricted Global Subordinated Notes, the Trustee will cause the aggregate principal amount of the applicable Restricted Global Subordinated Notes to be reduced accordingly, and the Company will execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of Restricted Definitive Subordinated Notes so accepted Unrestricted Definitive Subordinated Notes in the applicable principal amount.  Any 

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Subordinated Notes that remain outstanding after the consummation of such Exchange Offer, and Exchange Notes issued in connection with such Exchange Offer, will be treated as a single class of securities under this Indenture.

Section 2.09    Mutilated, Destroyed, Lost and Stolen Subordinated Notes.

If any mutilated Subordinated Note is surrendered to the Trustee, subject to the provisions of this Section 2.09, the Company will execute and the Trustee will authenticate and deliver in exchange therefor a new Subordinated Note containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding.

If there be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Subordinated Note, and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Subordinated Note has been acquired by a bona fide purchaser, the Company will execute and, upon the Company’s written request the Trustee will authenticate and deliver, in exchange for or in lieu of any such destroyed, lost or stolen Subordinated Note, a new Subordinated Note containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding.

Notwithstanding the foregoing provisions of this Section 2.09, in case the outstanding principal balance of any mutilated, destroyed, lost or stolen Subordinated Note has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article X hereof, the Company in its discretion may, instead of issuing a new Subordinated Note, pay or redeem such Subordinated Note, as the case may be.

Upon the issuance of any new Subordinated Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Subordinated Note issued in accordance with this Section in lieu of any destroyed, lost or stolen Subordinated Note will constitute a separate obligation of the Company, whether or not the destroyed, lost or stolen Subordinated Note will be at any time enforceable by anyone, and will be entitled to all the benefits of this Indenture equally and proportionately with any and all other Subordinated Notes duly issued hereunder.

The provisions of this Section, as amended or supplemented in accordance with this Indenture with respect to particular Subordinated Notes or generally, will (to the extent lawful) be exclusive and will preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Subordinated Notes.

Section 2.10    Payment of Interest; Rights to Interest Preserved.

Any interest on any Subordinated Note that will be payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person in whose name such Subordinated Note is registered on the Regular Record Date for such Interest Payment Date.

Any interest on any Subordinated Note that will be payable, but will not be punctually paid or duly provided for, on any Interest Payment Date for such Subordinated Note (herein called “Defaulted Interest”) will cease to be payable to the Holder thereof on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:

(1)    The Company may elect to make payment of any Defaulted Interest to the Person in whose name such Subordinated Note will be registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which will be fixed in the following manner:

The Company will notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on such Subordinated Note and the date of the proposed payment, and at the same time the Company will deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or will make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when so deposited to be held in trust for the benefit of the Person entitled to such Defaulted 

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Interest as in this clause provided. Thereupon, the Company will fix or cause to be fixed a Special Record Date for the payment of such Defaulted Interest, which will be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company), will cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be delivered to the Holder of such Subordinated Note at the Holder’s address as it appears in the Subordinated Note Register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been delivered as aforesaid, such Defaulted Interest will be paid to the Person in whose name such Subordinated Note will be registered at the close of business on such Special Record Date and will no longer be payable under the following clause (2).

(2)    The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Subordinated Note may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment under this Clause, such payment will be deemed practicable by the Trustee.

Unless otherwise provided in or under this Indenture or the Subordinated Notes, at the option of the Company, interest on Subordinated Notes that bear interest may be paid by mailing a check to the address of the Person entitled thereto as such address will appear in the Subordinated Note Register or by transfer to an account maintained by the payee with a bank located in the United States.

Subject to the foregoing provisions of this Section and Section 2.07, each Subordinated Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Subordinated Note will carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Subordinated Note.

Section 2.11    Persons Deemed Owners.

Prior to due presentment of a Subordinated Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Subordinated Note is registered in the Subordinated Note Register as the owner of such Subordinated Note for the purpose of receiving payment of principal of, and (subject to Section 2.07 and Section 2.10) interest on, such Subordinated Note and for all other purposes whatsoever, whether or not any payment with respect to such Subordinated Note will be overdue, and neither the Company, the Trustee or any agent of the Company or the Trustee will be affected by notice to the contrary.

No holder of any beneficial interest in any Global Subordinated Note held on its behalf by a Depositary will have any rights under this Indenture with respect to such Global Subordinated Note, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Subordinated Note for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Subordinated Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Notwithstanding the foregoing, nothing herein will prevent the Company, the Trustee, any Paying Agent or the Registrar from giving effect to any written certification, proxy or other authorization furnished by the applicable Depositary, as a Holder, with respect to a Global Subordinated Note or impair, as between such Depositary and the owners of beneficial interests in such Global Subordinated Note, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as the Holder of such Global Subordinated Note.

Section 2.12    Cancellation.

All Subordinated Notes surrendered for payment, redemption, registration of transfer or exchange will, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Subordinated Note, as well as Subordinated Notes surrendered directly to the Trustee for any such purpose, will be cancelled promptly by the Trustee.  The Company may at any time deliver to the Trustee for cancellation any Subordinated Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Subordinated Notes so delivered will be cancelled promptly by the Trustee. No Subordinated Notes will be authenticated in lieu of or in exchange for any Subordinated Notes cancelled as provided in this 

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Section, except as expressly permitted by or under this Indenture.  All cancelled Subordinated Notes held by the Trustee will be disposed of in accordance with its procedure for the disposition of cancelled Subordinated Notes, and the Trustee upon the written request of the Company will deliver to the Company a certificate of such disposition, unless by a Company Order the Company shall direct that cancelled Subordinated Notes shall be returned to the Company.

Section 2.13    Computation of Interest.

From and including the original issue date of the Subordinated Notes to but excluding December 30, 2023, the rate at which the Subordinated Notes shall bear interest shall be 6.0% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months and payable semiannually in arrears on each Fixed Interest Payment Date.  From and including December 30, 2023, to but excluding the Stated Maturity, the rate at which the Subordinated Notes shall bear interest shall be a floating rate equal to LIBOR for the applicable Interest Period plus 316 basis points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears on each Floating Interest Payment Date.  Any payment of principal of or interest on the Subordinated Notes that would otherwise become due and payable on a day which is not a Business Day will become due and payable on the next succeeding Business Day, with the same force and effect as if made on the date for payment of such principal or interest, and no interest will accrue in respect of such payment for the period after such day.

Section 2.14    CUSIP Numbers.

The Company may issue the Subordinated Notes with one or more “CUSIP” numbers (if then generally in use). The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers. The Trustee may use “CUSIP” numbers in notices (including but not limited to notices of redemption or exchange) as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Subordinated Notes or as contained in any notice (including any notice of redemption or exchange) and that reliance may be placed only on the other identification numbers printed on the Subordinated Notes, and any such notice will not be affected by any defect in or omission of such numbers.

ARTICLE III 
SATISFACTION AND DISCHARGE OF INDENTURE
 
Section 3.01    Satisfaction and Discharge.

This Indenture will cease to be of further effect, and the Trustee, on receipt of a Company Order, at the expense of the Company, will execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(1)    either

(a)    all Subordinated Notes theretofore authenticated and delivered (other than (i) Subordinated Notes that have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.09 and (ii) Subordinated Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 9.03) have been delivered to the Trustee for cancellation; or

(b)    all Subordinated Notes that have not been delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose, an amount sufficient to pay and discharge the entire indebtedness on such Subordinated Notes not theretofore delivered to the Trustee for cancellation, including the principal of, and interest on, such Subordinated Notes, to the date of such deposit (in the case of Subordinated Notes which have become due and payable) or to the Maturity thereof, as the case may be;

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(2)    the Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to the Outstanding Subordinated Notes; and

(3)    the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been satisfied.

Notwithstanding the satisfaction and discharge of this Indenture with respect to the Subordinated Notes, the obligations of the Company to the Trustee under Section 5.07 and, if money will have been deposited with the Trustee in accordance with Section 3.01(1)(b), the obligations of the Company and the Trustee with respect to the Subordinated Notes under Section 3.03 and Section 9.03 will survive.

Section 3.02    Defeasance and Covenant Defeasance.

(1)    The Company may at its option and at any time, elect to have Section 3.02(2) or Section 3.02(3) be applied to such Outstanding Subordinated Notes upon compliance with the conditions set forth below in this Section 3.02. Legal Defeasance and Covenant Defeasance may be effected only with respect to all, and not less than all, of the Outstanding Subordinated Notes.

(2)    Upon the Company’s exercise of the above option applicable to this Section 3.02(2), the Company will be deemed to have been discharged from its obligations with respect to such Outstanding Subordinated Notes on the date the conditions set forth in clause (4) of this Section 3.02 are satisfied (“Legal Defeasance”).  For this purpose, Legal Defeasance means that the Company will be deemed to have paid and discharged the entire indebtedness represented by such Outstanding Subordinated Notes, which will thereafter be deemed to be “Outstanding” only for the purposes of Section 3.02(5) and the other Sections of this Indenture referred to in clauses (i) through (iv) of this paragraph, and to have satisfied all of its other obligations under such Subordinated Notes and this Indenture insofar as such Subordinated Notes are concerned (and the Trustee, at the expense of the Company, will execute proper instruments acknowledging the same), except for the following which will survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of such Outstanding Subordinated Notes to receive, solely from the trust fund described in Section 3.02(4)(a) and as more fully set forth in this Section 3.02 and Section 3.03, payments in respect of the principal of and interest, if any, on, such Subordinated Notes when such payments are due, (ii) the obligations of the Company and the Trustee with respect to such Subordinated Notes under Section 2.07, Section 2.09, Section 9.02 and Section 9.03, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (iv) this Section 3.02 and Section 3.03.  The Company may exercise its option under this Section 3.02(2) notwithstanding the prior exercise of its option under Section 3.02(3) with respect to such Subordinated Notes.

(3)    Upon the Company’s exercise of the above option applicable to this Section 3.02(3), the Company will be released from its obligations under clauses (ii) and (iii) of Section 9.04 and under Section 9.05, Section 9.06 and Section 9.08 on and after the date the conditions set forth in Section 3.02(4) are satisfied (“Covenant Defeasance”), and such Subordinated Notes will thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with any such covenant, but will continue to be deemed “Outstanding” for all other purposes hereunder. For this purpose, such Covenant Defeasance means that with respect to such Outstanding Subordinated Notes, the Company may omit to comply with, and will have no liability in respect of. any term, condition or limitation set forth in any such Section or any such other covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or such other covenant or by reason of reference in any such Section or such other covenant to any other provision herein or in any other document and such omission to comply will not constitute a default, but, except as specified above, the remainder of this Indenture and such Subordinated Notes will be unaffected thereby.

(4)    The following will be the conditions to application of Section 3.02(2) or Section 3.02(3) to any Outstanding Subordinated Notes:

(a)    The Company will irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 5.08 who will agree to comply with the provisions of this Section 3.02 applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders, (i) an amount in Dollars, (ii) Government Obligations that through the scheduled payment of principal and interest in respect thereof in accordance with their 

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terms will provide, not later than one day before the due date of any payment of principal of and interest, if any, on such Subordinated Notes, money or (iii) a combination thereof, in any case, in an amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which will be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of and interest, if any, on, such Outstanding Subordinated Notes on the Stated Maturity of such principal or installment of principal or interest or the applicable Redemption Date, as the case may be.

(b)    Such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company or any Subsidiary is a party or by which it is bound.

(c)    No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Subordinated Notes will have occurred and be continuing on the date of such deposit, and, solely in the case of Legal Defeasance under Section 3.02(2), no Event of Default, or event which with notice or lapse of time or both would become an Event of Default, under Section 4.01 will have occurred and be continuing at any time during the period ending on and including the 91st day after the date of such deposit (it being understood that this condition to Legal Defeasance under Section 3.02(2) will not be deemed satisfied until the expiration of such period).

(d)    In the case of Legal Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of this Indenture there has been a change in applicable federal income tax law, in either case to the effect that, and based thereon such opinion of independent counsel will confirm that, the Holders of such Outstanding Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred.

(e)    In the case of Covenant Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Outstanding Subordinated Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred.

(f)    The Company will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the Legal Defeasance or Covenant Defeasance, as the case may be, under this Indenture have been satisfied.

(g)    If the moneys or Government Obligations or combination thereof, as the case may be, deposited under Section 3.02(4)(a) above are sufficient to pay the principal of, and interest, if any, on, such Subordinated Notes provided such Subordinated Notes are redeemed on a particular Redemption Date, the Company will have given the Trustee irrevocable instructions to redeem such Subordinated Notes on such date and to provide notice of such redemption to Holders as provided in or under this Indenture.

(h)    The Trustee will have received such other documents, assurances and Opinions of Counsel as the Trustee will have reasonably required.

(5)    Subject to the provisions of the last paragraph of Section 9.03, all money and Government Obligations deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 3.02(5), the “Trustee”) in accordance with Section 3.02(4)(a) in respect of any Outstanding Subordinated Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Subordinated Notes and this Indenture, to the payment, either directly or through any Paying Agent (other than the Company or any Subsidiary or Affiliate of the Company acting as Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal and interest but such money and Government Obligations need not be segregated from other funds, except to the extent required by law.

The Company will pay and indemnify the Trustee against any tax, fee or other charge, imposed on or assessed against the Government Obligations deposited in accordance with this Section 3.02 or the principal or 

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interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Subordinated Notes.

Section 3.03    Application of Trust Money.

Subject to the provisions of the last paragraph of Section 9.03, all money and Government Obligations deposited with the Trustee in accordance with Section 3.01 or Section 3.02 will be held in trust and applied by the Trustee, in accordance with the provisions of such Subordinated Notes subject to discharge under Section 3.01 or Legal Defeasance or Covenant Defeasance under Section 3.02, and this Indenture, to the payment, either directly or through any Paying Agent (including the Company, acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money has or Government Obligations have been deposited with or received by the Trustee; but such money and Government Obligations need not be segregated from other funds, except to the extent required by law.

Section 3.04    Reinstatement. 

If the Trustee (or other qualifying trustee appointed in accordance with Section 3.02(4)(a)) or any Paying Agent is unable to apply any moneys or Government Obligations deposited in accordance with Section 3.01(1) or Section 3.02(4)a) to pay any principal of, or interest, if any, on, the Subordinated Notes by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Subordinated Notes will be revived and reinstated as though no such deposit had occurred, until such time as the Trustee (or other qualifying trustee) or Paying Agent is permitted to apply all such moneys and Government Obligations to pay the principal of, and interest, if any, on the Subordinated Notes as contemplated by Section 3.01 or Section 3.02 as the case may be; provided, however, that if the Company makes any payment of the principal of, or interest if any on, the Subordinated Notes following the reinstatement of its obligations as aforesaid, the Company will be subrogated to the rights of the Holders of such Subordinated Notes to receive such payment from the funds held by the Trustee (or other qualifying trustee) or Paying Agent.

Section 3.05    Effect on Subordination Provisions.

The provisions of Article XI are expressly made subject to the provisions for, and to the right of the Company to effect, the satisfaction and discharge of all of the Subordinated Notes as set forth in and in accordance with Section 3.01 and the provisions for, and to the right of the Company to effect, Legal Defeasance and Covenant Defeasance of all of the Subordinated Notes as set forth in and in accordance with Section 3.02.  As a result, and anything herein to the contrary notwithstanding, if the Company complies with the provisions of Section 3.01 to effect the satisfaction and discharge of the Subordinated Notes or complies with the provisions of Section 3.02 to effect the Legal Defeasance or Covenant Defeasance, upon the effectiveness of such satisfaction and discharge in accordance with Section 3.01 or of Legal Defeasance or Covenant Defeasance in accordance with Section 3.02, in the case of satisfaction and discharge in accordance with Section 3.01, or, in the case of Legal Defeasance or Covenant Defeasance in accordance with Section 3.02, the Subordinated Notes as to which Legal Defeasance or Covenant Defeasance, as the case may be, will have become effective will thereupon cease to be so subordinated in right of payment to the Senior Indebtedness and will no longer be subject to the provisions of Article XI and, without limitation to the foregoing, all moneys and Government Obligations deposited with the Trustee (or other qualifying trustee) in trust in connection with such satisfaction and discharge. Legal Defeasance or Covenant Defeasance, as the case may be, and all proceeds therefrom may be applied to pay the principal of, and interest, if any, on, such Subordinated Notes as and when the same will become due and payable notwithstanding the provisions of Article XI without regard to whether any or all of the Senior Indebtedness then outstanding will have been paid or otherwise provided for.

ARTICLE IV 
REMEDIES
 
Section 4.01    Events of Default; Acceleration.

An “Event of Default” means any one of the following events (whatever the reason for such Event of Default and whether it will be voluntary or involuntary or be effected by operation of law or in accordance with any 

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judgment, decree, or order of any court or any order, rule, or regulation of any administrative or governmental body):

(1)    the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary case or proceeding under any applicable bankruptcy, insolvency, or reorganization law, now or hereafter in effect of the United States or any political subdivision thereof, and such decree or order will have continued unstayed and in effect for a period of 30 consecutive days;

(2)    the commencement by the Company of a voluntary case under any applicable bankruptcy, insolvency or reorganization law, now or hereafter in effect of the United States or any political subdivision thereof, or the consent by the Company to the entry of a decree or order for relief in an involuntary case or proceeding under any such law;

(3)    the failure of the Company to pay any installment of interest on any of the Subordinated Notes as and when the same will become due and payable, and the continuation of such failure for a period of 15 days;

(4)    the failure of the Company to pay all or any part of the principal of any of the Subordinated Notes as and when the same will become due and payable under this Indenture;

(5)    the failure of the Company to perform any other covenant or agreement on the part of the Company contained in the Subordinated Notes or in this Indenture, and the continuation of such failure for a period of 30 days after the date on which notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and demanding that the Company remedy the same, will have been given, in the manner set forth in Section 1.05, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Subordinated Notes at the time Outstanding; or the default by the Company under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company having an aggregate principal amount outstanding of at least $25,000,000, whether such indebtedness now exists or is created or incurred in the future, which default (i) constitutes a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period or (ii) results in such indebtedness becoming due or being declared due and payable prior to the date on which it otherwise would have become due and payable without, in the case of clause (i), such indebtedness having been discharged or, in the case of clause (ii), without such indebtedness having been discharged or such acceleration having been rescinded or annulled.

Upon becoming aware of any Event of Default, the Company will promptly deliver to the Trustee a written statement specifying the Event of Default.

If an Event of Default described in Section 4.01(1) or Section 4.01(2) occurs, then the principal amount of all of the Outstanding Subordinated Notes, and accrued and unpaid interest, if any, on all Outstanding Subordinated Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder, and the Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices. Notwithstanding the foregoing, because the Company will treat the Subordinated Notes as Tier 2 Capital, upon the occurrence of an Event of Default other than an Event of Default described in Section 4.01(1) or Section 4.01(2), neither the Trustee nor any Holder may accelerate the Maturity of the Subordinated Notes and make the principal of, and any accrued and unpaid interest on, the Subordinated Notes, immediately due and payable.

If any Event of Default occurs and is continuing, the Trustee may also pursue any other available remedy to collect the payment of principal of, and interest on, the Subordinated Notes or to enforce the performance of any provision of the Subordinated Notes or this Indenture.

Section 4.02    Failure to Make Payments.

If an Event of Default described in Section 4.01(3) or Section 4.01(4) occurs, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Subordinated Notes, the whole amount then due and payable with respect to such Subordinated Notes, with interest upon the overdue principal, and, to the extent permitted by applicable law, upon any overdue installments of interest at the rate or respective rates, as the case may be, provided for or with respect to such Subordinated Notes or, if no such rate or rates are so provided, 

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at the rate or respective rates, as the case may be, of interest borne by such Subordinated Notes, and, in addition thereto, such further amount of money as will be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due to the Trustee under Section 5.07.

If the Company fails to pay the money it is required to pay the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Subordinated Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated.

The Trustee may proceed to protect and enforce its rights and the rights of the Holders of Subordinated Notes by such appropriate judicial proceedings as the Trustee will deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other proper remedy.

Upon the occurrence of a failure by the Company to make any required payment of principal or interest on the Subordinated Notes, the Company may not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock, make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank equal with or junior to the Subordinated Notes, or make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock; (ii) any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares of Company’s capital stock in accordance with the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans for Company’s directors, officers or employees or any of Company’s dividend reinvestment plans.

Section 4.03    Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the Company (or any other obligor upon the Subordinated Notes), its property or its creditors, the Trustee will be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee will be authorized to:

(1)    file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Subordinated Notes, of the principal and interest owing and unpaid in respect of such Subordinated Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents or counsel) and of the Holders of such Subordinated Notes allowed in such judicial proceeding, and

(2)    collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or other similar official in any such judicial proceeding is authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee will consent to the making of such payments directly to the Holders and to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents and counsel, and any other amounts due hereunder.

No provision of this Indenture will be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, or composition affecting the Subordinated Notes or the rights of any Holder or to authorize the Trustee to vote in respect of the claim of any 

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Holder in any such proceeding; provided, however, the Trustee may vote on behalf of the Holders for the election of a trustee in bankruptcy or similar official and may be a member of a creditors, or other similar committee.

Section 4.04    Trustee May Enforce Claims Without Possession of Subordinated Notes.

All rights of action and claims under this Indenture or the Subordinated Notes may be prosecuted and enforced by the Trustee without the possession of any of the Subordinated Notes or the production of such Subordinated Notes in any related proceeding, and any such proceeding instituted by the Trustee will be brought in its own name as trustee of an express trust, and any recovery of judgment will, after provision for the payment of the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered.

Section 4.05    Application of Money Collected.

Any money collected by the Trustee in accordance with this Article IV or, after an Event of Default, any money or other property distributable in respect of the Company’s obligations under this Indenture will be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any interest, upon presentation of the Subordinated Notes and the notation on such Subordinated Notes of the payment if only partially paid and upon surrender of such Subordinated Notes if fully paid:

FIRST: To the payment of all amounts due the Trustee (including the payment of Trustee’s agents, accountants, consultants, counsel and other experts employed by it in the exercise and performance of its powers and duties as Trustee), acting in any capacity hereunder, (including any predecessor trustee) under Section 5.07;

SECOND: To the payment of amounts then due and unpaid to the holders of Senior Indebtedness, to the extent required under the Subordination Provisions established with respect to the Subordinated Notes;

THIRD: To the payment of the amounts then due and unpaid for principal of and any interest on the Subordinated Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the aggregate amounts due and payable on such Subordinated Notes for principal and interest, respectively; and

FOURTH: The balance, if any, to the Person or Persons entitled thereto.

Section 4.06    Limitation on Suits.

No Holder of any Subordinated Note will have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or any Subordinated Notes, or for the appointment of a receiver or trustee, or for any other remedy under this Indenture, unless:

(1)    such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Subordinated Notes;
  
(2)    the Holders of not less than 25% in aggregate principal amount of the Outstanding Subordinated Notes will have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under the Indenture;

(3)    such Holder or Holders have provided to the Trustee security and indemnity reasonably satisfactory to the Trustee to bond against the costs, expenses, and liabilities to be incurred in compliance with such request;

(4)    the Trustee for 60 days after its receipt of such notice, request, and offer of indemnity has failed to institute any such proceeding; and

(5)    no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Subordinated Notes;

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it being understood and intended that no one or more of such Holders will have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb, or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner provided in this Indenture and for the equal and ratable benefit of all of such Holders.

Section 4.07    Unconditional Right of Holders to Payments.

Notwithstanding any other provision in this Indenture, the Holder of any Subordinated Note will have the right, which is absolute and unconditional, to receive payment of the principal of and (subject to Section 2.07 and Section 2.10) any interest on such Subordinated Note on the respective Stated Maturity or Maturities expressed in such Subordinated Note (or, in the case of redemption, on the Redemption Date), and to institute suit for the enforcement of any such payment and such rights will not be impaired without the consent of such Holder.

Section 4.08    Restoration of Rights and Remedies.

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

Section 4.09    Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost, or stolen Subordinated Notes in the last paragraph of Section 2.09, no right or remedy conferred in this Indenture upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy will, to the extent permitted by law, be cumulative and in addition to every other right and remedy given under this Indenture or now or in the future existing at law or in equity or otherwise. The assertion or employment of any right or remedy under this Indenture, or otherwise, will not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 4.10    Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Subordinated Notes to exercise any right or remedy accruing upon any Event of Default will impair any such right or remedy or constitute a waiver of or acquiescence in any such Event of Default. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 4.11    Control by Holders.

The Holders of a majority in aggregate principal amount of the Outstanding Subordinated Notes will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Subordinated Notes, provided that

(1)    such direction will not violate any rule of law or this Indenture or the Subordinated Notes,

(2)    the Trustee may take any other action deemed proper by the Trustee in its discretion which is not inconsistent with such direction, and

(3)    the Trustee will have the right to decline to follow any such direction if the Trustee in good faith will determine that the proceeding so directed would involve the Trustee in personal liability.

Section 4.12    Waiver of Past Defaults.

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The Holders of not less than a majority in aggregate principal amount of the Outstanding Subordinated Notes may on behalf of the Holders of all the Subordinated Notes waive any past default under this Indenture and its consequences, except a default in the payment of the principal of, or interest on, any Subordinated Note, or in respect of a covenant or provision of this Indenture which under Article VIII cannot be modified or amended without the consent of the Holder of each Outstanding Subordinated Note.

Upon any such waiver, such default will cease to exist, and any Event of Default arising from such default will be deemed to have been cured, for every purpose of this Indenture; but no such waiver will extend to any subsequent or other default or impair any consequent right.

Section 4.13    Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Subordinated Notes by his acceptance of such Subordinated Notes will be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered, or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorney’s fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 4.13 will not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Subordinated Notes, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest, if any, on any Subordinated Notes on or after the Stated Maturity or Maturities expressed in such Subordinated Notes (or, in the case of redemption, on or after the Redemption Date).
 
ARTICLE V 
THE TRUSTEE
 
Section 5.01    Duties of Trustee.

(1)    If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it hereby, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(2)    Except during the continuance of an Event of Default:

(a)    the duties of the Trustee will be determined solely by the express provisions hereof and the Trustee need perform only those duties that are specifically set forth herein and no others, and no implied covenants or obligations will be read into this Indenture against the Trustee. 

(b)    in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements hereof; however, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements hereof (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(3)    Whether or not therein expressly so provided, every provision hereof that in any way relates to the Trustee is subject to this Section 5.01 and to Section 5.02.

(4)    No provision hereof will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has provided to the Trustee security and indemnity reasonably satisfactory to it against any loss, liability or expense.

(5)    The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

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Section 5.02    Certain Rights of Trustee.

Subject to Section 315(a) through Section 315(d) of the Trust Indenture Act:

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

(2)    any request or direction of the Company mentioned herein will be sufficiently evidenced by a Company Request or a Company Order (unless other evidence in respect thereof be herein specifically prescribed) and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(3)    whenever in the administration of this Indenture the Trustee will deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence will be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate or Opinion of Counsel, or both, which will comply with Section 1.02;

(4)    before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care;

(5)    the Trustee will be under no obligation to exercise any of the rights or powers vested in it by or under this Indenture at the request or direction of any Holder(s) under this Indenture, unless such Holder(s) will have provided to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction;

(6)    the Trustee will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee may, but shall not be obligated to, make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee will determine to make such further inquiry or investigation, it will be entitled to examine, during business hours and upon reasonable notice, the books, records and premises of the Company, personally or by agent or attorney, at the sole cost of the Company and will incur no liability or additional liability of any kind by reason of such inquiry or investigation;

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

(8)    the Trustee will not be liable for any action taken, suffered or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(9)    in no event will the Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;

(10)    the Trustee will not be required to take notice or be deemed to have notice of any default or Event of Default, except failure by the Company to pay or cause to be made any of the payments required to be made to the Trustee, unless a Responsible Officer of the Trustee shall receive written notice of such default or Event of Default from the Company or from the Holders of at least 25% in aggregate principal amount of the then Outstanding Subordinated Notes delivered to the Corporate Trust Office of the Trustee and in the absence of such notice so delivered the Trustee may conclusively assume no default or Event of Default exists;

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(11)    the Trustee shall have no duty to monitor or confirm compliance by the Company with the terms of this Indenture or any Subordinated Note;

(12)    the Trustee shall not be bound to make any investigation into (i) the performance of or compliance with any of the covenants or agreements set forth herein, (ii) the occurrence of any default, or the validity, enforceability, effectiveness or genuineness of this Indenture or any other agreement, instrument or document;

(13)    the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and will be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed or appointed to act hereunder;

(14)    the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions under this Indenture;

(15)    the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;

(16)    the Trustee shall not be liable or responsible for any calculation in connection with the transactions contemplated hereunder nor for any information used in connection with such calculation; and

(17)    in no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

Section 5.03    Notice of Defaults.

Within 90 days after a Responsible Officer of the Trustee is notified of the occurrence of any default hereunder with respect to the Subordinated Notes, the Trustee will deliver to all Holders entitled to receive reports in accordance with Section 6.03(4), notice of such default hereunder known to the Trustee, unless such default will have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of or interest, if any, on, any Subordinated Note, the Trustee will be protected in withholding such notice if and so long as the Board of Directors or a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the best interest of the Holders. For the purpose of this Section, the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default with respect to Subordinated Notes.

Section 5.04    Not Responsible for Recitals or Issuance of Subordinated Notes.

The recitals contained herein and in the Subordinated Notes, except the Trustee’s certificate of authentication, will be taken as the statements of the Company and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Subordinated Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Subordinated Notes and perform its obligations hereunder and that the statements made by it in any Statement of Eligibility on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent will be accountable for the use or application by the Company of the Subordinated Notes or the proceeds thereof. The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Subordinated Notes, it will not be accountable for the Company’s use of the proceeds from the Subordinated Notes or any money paid to the Company or upon the Company’s direction under any provision hereof, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Subordinated Notes or any other document in connection with the sale of the Subordinated Notes or under this Indenture other than its certificate of authentication.

Section 5.05    May Hold Subordinated Notes.

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The Trustee, any Authenticating Agent, any Paying Agent, any Registrar or any other Person that may be an agent of the Trustee or the Company, in its individual or any other capacity, may become the owner or pledgee of Subordinated Notes and, subject to Section 310(b) and Section 311 of the Trust Indenture Act, may otherwise deal with the Company with the same rights that it would have if it were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other Person.

The Trustee is subject to Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of Trust Indenture Act to the extent indicated.

Section 5.06    Money Held in Trust.

Except as provided in Section 3.02(5), Section 3.03 and Section 9.03, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law and will be held uninvested. The Trustee will be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.

Section 5.07    Compensation and Reimbursement.

The Company agrees:

(1)    to pay to the Trustee from time to time compensation as agreed in writing among the parties hereto for all services rendered by the Trustee acting in any capacity hereunder (which compensation will not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(2)    except as otherwise expressly provided herein, to reimburse the Trustee promptly upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of Trustee’s agents, accountants, consultants, counsel and other experts employed by it in the exercise and performance of its powers and duties as Trustee), except any such expense, disbursement or advance as may be attributable to the Trustee’s gross negligence or willful misconduct; and

(3)    to indemnify, defend, protect and hold each of the Trustee acting in any capacity or any predecessor Trustee and their agents, accountants, consultants, counsel and other experts employed by it in the exercise and performance of its powers and duties as Trustee harmless from and against any and all losses, liabilities, damages, costs or expenses suffered or incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and defending itself against any claim (whether asserted by the Company, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or willful misconduct, and the fees and disbursements of the Trustee’s agents, legal counsel, accountants and experts and including taxes (other than taxes based upon, measured by or determined by the income of the Trustee).  The Trustee will notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Company will not relieve the Company of its obligations hereunder.  The Company will defend the claim and the Trustee will cooperate in the defense.  The Trustee may have separate counsel of its choosing and the Company will pay the reasonable fees and expenses of such counsel.  The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld, conditioned or delayed.

The obligations of the Company under this Section 5.07 will survive the satisfaction and discharge of this Indenture.

As security for the performance of the obligations of the Company under this Section, the Trustee will have a lien prior to the Subordinated Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, or interest on, Subordinated Notes. Such lien will survive the satisfaction and discharge hereof and the resignation or removal of the Trustee.

Any compensation or expense incurred by the Trustee after a default specified by Section 4.01 is intended to constitute an expense of administration under any then applicable bankruptcy or insolvency law. “Trustee” for 

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purposes of this Section 5.07 will include any predecessor Trustee, but the negligence or bad faith of any Trustee will not affect the rights of any other Trustee under this Section 5.07. The provisions of this Section 5.07 will, to the extent permitted by law, survive any termination of this Indenture (including, without limitation, termination in accordance with any Bankruptcy Laws) and the resignation or removal of the Trustee.

Section 5.08    Corporate Trustee Required; Eligibility.

(1)    There will at all times be a Trustee hereunder that is a corporation, organized and doing business under the laws of the United States, any state thereof or the District of Columbia, eligible under Section 310(a)(1) of the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000 and is subject to supervision or examination by federal or state authority. The Trustee will also satisfy the requirements of Section 310(a)(5) of the Trust Indenture Act. If at any time the Trustee will cease to be eligible in accordance with the provisions of this Section, it will resign immediately upon written request therefor by the Company or any Holder in the manner and with the effect hereinafter specified in this Article,

(2)    The Trustee will comply with Section 310(b) of the Trust Indenture Act; provided, however, that there will be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act this Indenture or any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

Section 5.09    Resignation and Removal; Appointment of Successor.

(1)    No resignation or removal of the Trustee and no appointment of a successor Trustee in accordance with this Article V will become effective until the acceptance of appointment by the successor Trustee in accordance with Section 5.10.

(2)    The Trustee may resign at any time with respect to the Subordinated Notes by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 5.10 will not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may, at the Company’s expense, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(3)    The Trustee may be removed at any time with respect to the Subordinated Notes by Act of the Holders of a majority in principal amount of the Outstanding Subordinated Notes, delivered to the Trustee and the Company.

If at any time:

(a)    the Trustee will fail to comply with the obligations imposed upon it under Section 310(b) of the Trust Indenture Act with respect to Subordinated Notes after written request therefor by the Company or any Holder who has been a bona fide Holder for at least six months,

(b)    the Trustee will cease to be eligible under Section 5.08 and will fail to resign after written request therefor by the Company or any such Holder, or

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

then, in any such case, (i) the Company, by or in accordance with a Board Resolution, may remove the Trustee with respect to the Subordinated Notes, or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Subordinated Notes and the appointment of a successor Trustee or Trustees.

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(4)    If the Trustee will resign, be removed or become incapable of acting, or if a vacancy will occur in the office of Trustee for any cause, with respect to the Subordinated Notes, the Company, by or in accordance with a Board Resolution, will promptly appoint a successor Trustee or Trustees with respect to the Subordinated Notes and will comply with the applicable requirements of Section 5.10. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Subordinated Notes shall have been appointed by Act of the Holders of a majority in principal amount of the Outstanding Subordinated Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed will, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 5.10, become the successor Trustee with respect to the Subordinated Notes and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Subordinated Notes will have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 5.10, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Subordinated Notes.

(5)    The Company will give notice of each resignation and each removal of the Trustee with respect to the Subordinated Notes and each appointment of a successor Trustee with respect to the Subordinated Notes by delivering written notice of such event by first-class mail, postage prepaid, to the Holders as their names and addresses appear in the Subordinated Note Register. Each notice will include the name of the successor Trustee with respect to the Subordinated Notes and the address of its Corporate Trust Office.

Section 5.10    Acceptance of Appointment by Successor.

(1)    Upon the appointment hereunder of any successor Trustee with respect to all Subordinated Notes, such successor Trustee so appointed will execute, acknowledge and deliver to the Company and the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee will become effective and such successor Trustee, without any further act, deed or conveyance, will become vested with all the rights, powers, trusts and duties hereunder of the retiring Trustee; but, on the request of the Company or such successor Trustee, such retiring Trustee, upon payment of its charges, will execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and, subject to Section 9.03, will duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 5.07.

(2)    Upon the appointment hereunder of any successor Trustee with respect to the Subordinated Notes, the Company, the retiring Trustee and such successor Trustee will execute and deliver an indenture supplemental hereto wherein each successor Trustee will accept such appointment and which (i) will contain such provisions as will be necessary or desirable to transfer and confirm to, and to vest in. such successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated Notes, (ii) if the retiring Trustee is not retiring with respect to all Subordinated Notes, will contain such provisions as will be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated Notes will continue to be vested in the retiring Trustee, and (iii) will add to or change any of the provisions of this Indenture as will be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture will constitute such Trustees co-trustees of the same trust, that each such Trustee will be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee will be responsible for any notice given to, or received by, or any act or failure to act on the part of any other Trustee hereunder, and, upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee will become effective to the extent provided therein, such retiring Trustee will have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture with respect to the Subordinated Notes other than as hereinafter expressly set forth, and such successor Trustee, without any further act, deed or conveyance, will become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated Notes; but, on request of the Company or such successor Trustee, such retiring Trustee, upon payment of its charges with respect to the Subordinated Notes and subject to Section 9.03 will duly assign, transfer and deliver to such successor Trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Subordinated Notes, subject to its claim, if any, provided for in Section 5.07.

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(3)    Upon request of any Person appointed hereunder as a successor Trustee, the Company will execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (1) or (2) of this Section, as the case may be.

(4)    No Person will accept its appointment hereunder as a successor Trustee unless at the time of such acceptance such successor Person will be qualified and eligible under this Article. No resigning or removed Trustee shall have any liability or responsibility for the action or inaction of any successor Trustee.

Section 5.11    Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee will be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, will be the successor of the Trustee hereunder (provided that such corporation will otherwise be 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. In case any Subordinated Notes will have been authenticated but not delivered by the Trustee then in office, any such successor to such authenticating Trustee may adopt such authentication and deliver the Subordinated Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Subordinated Notes. In case any Subordinated Notes will not have been authenticated by such predecessor Trustee, any such successor Trustee may authenticate and deliver such Subordinated Notes in either its own name or that of its predecessor Trustee.

Section 5.12    Appointment of Authenticating Agent.

The Trustee may appoint one or more Authenticating Agents acceptable to the Company with respect to the Subordinated Notes which will be authorized to act on behalf of the Trustee to authenticate Subordinated Notes issued upon original issue, exchange, registration of transfer, partial redemption, partial repayment, or in accordance with Section 2.09, and Subordinated Notes so authenticated will be entitled to the benefits of this Indenture and will be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Subordinated Notes by the Trustee or the Trustee’s certificate of authentication, such reference will be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.

Each Authenticating Agent will be reasonably acceptable to the Company and, except as provided in or under this Indenture, will at all times be a corporation that would be permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act, is authorized under applicable law and by its charter to act as an Authenticating Agent and has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000 and is subject to supervision or examination by federal or state authority. If at any time an Authenticating Agent will cease to be eligible in accordance with the provisions of this Section, it will resign immediately upon written request therefor by the Company or any Holder in the manner and with the effect specified in this Section.

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

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent will cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent that will be acceptable to the Company and will deliver written notice of such appointment by first-class mail, postage prepaid, to all Holders with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Subordinated Note Register. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, will become vested 

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with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent No successor Authenticating Agent will be appointed unless eligible under the provisions of this Section 5.12.

The Company agrees to pay each Authenticating Agent from time to time reasonable compensation for its services under this Section. If the Trustee makes such payments, it will be entitled to be reimbursed for such payments, subject to the provisions of Section 5.07.

The provisions of Section 2.11, Section 5.04 and Section 5.05 will be applicable to each Authenticating Agent.

If an Authenticating Agent is appointed under this Section, the Subordinated Notes may have endorsed thereon, in addition to or in lieu of the Trustee’s certificate of authentication, an alternate certificate of authentication in substantially the following form:

This is one of the Subordinated Notes of the series designated therein referred to in the within-mentioned Indenture.
 
	
			
	 
	U.S. Bank, National Association, as Trustee

	 
	 

	 
	By:
	 

	 
	Authenticating Agent

	 
	 

	 
	By:
	 

	 
	Name:
	 

	 
	Title:
	 

Section 5.13    Preferred Collection of Claims against Company.

If and when the Trustee will be or become a creditor of the Company (or any other obligor upon the Subordinated Notes), the Trustee will be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).
 
ARTICLE VI 
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
 

Section 6.01    Holder Lists.

The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Company will cause to be furnished to the Trustee at least semiannually on January 1 and July 1 a listing of the Holders dated within 10 days of the date on which the list is furnished and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

Section 6.02    Preservation of Information; Communications to Holders.

The Trustee will comply with the obligations imposed upon it in accordance with Section 312 of the Trust Indenture Act.

Every Holder of Subordinated Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, the Trustee, any Paying Agent or any Registrar will be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Subordinated Notes in accordance with Section 312(c) of the Trust Indenture Act, regardless of the source from which such information 

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was derived, and that the Trustee will not be held accountable by reason of delivering any material in accordance with a request made under Section 312(b) of the Trust Indenture Act.

Section 6.03    Reports by Trustee.

(1)    Within 60 days after July 15 of each year commencing with the first July 15 following the date of this Indenture, if required by Section 313(a) of the Trust Indenture Act, the Trustee will transmit, in accordance with Section 313(c) of the Trust Indenture Act, a brief report dated as of such July 15 with respect to any of the events specified in said Section 313(a) and Section 313(b)(2) that may have occurred since the later of the immediately preceding July 15 and the date of this Indenture.

(2)    The Trustee will transmit the reports required by Section 313(a) of the Trust Indenture Act at the times specified therein.

(3)    The Trustee shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act.

(4)    Reports under this Section will be transmitted in the manner and to the Persons required by Section 313(c) and Section 313(d) of the Trust Indenture Act.

Section 6.04    Reports by Company.

(1)    The Company, in accordance with Section 314(a) of the Trust Indenture Act, will:

(a)    file with the Trustee, within 15 days after the Company files the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission in accordance with Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports in accordance with either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required in accordance with Section 1.3 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

(b)    file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional certificates, information, documents and reports with respect to compliance by the Company, with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

(c)    transmit to the Holders within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company in accordance with paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(2)    The Company intends to file the reports referred to in Section 6.04(1) with the Commission in electronic form in accordance with Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval system. Compliance with the foregoing, or any successor electronic system approved by the Commission, will constitute delivery by the Company of such reports to the Trustee and Holders in compliance with the provision of Section 6.04(1) and Trust Indenture Act Section 314(a). Notwithstanding anything to the contrary herein, the Trustee will have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of the reports, information and documents to the Trustee in accordance with this Section 6.04(2) will be solely for the purposes of compliance with Section 6.04(1) and with Trust Indenture Act Section 314(a). The Trustee’s receipt of such reports, information and documents (whether or not filed in electronic form) is for 

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informational purposes only and the Trustee’s receipt of such will not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates). The Trustee shall have no liability or responsibility for the filing, content or timelines of any report hereunder aside from any report transmitted under Section 6.03 hereof.
 
ARTICLE VII 
SUCCESSORS
 
Section 7.01    Merger, Consolidation or Sale of All or Substantially All Assets.

The Company will not, in any transaction or series of related transactions, consolidate with or merge into any Person or sell, assign, transfer, lease or otherwise convey all or substantially all its properties and assets to any Person, unless:

(1)    either the Company will be the continuing Person (in the case of a merger), or the successor Person (if other than the Company) formed by such consolidation or into which the Company is merged or which acquires by sale, assignment, transfer, lease or other conveyance all or substantially all the properties and assets of the Company will be a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia and will expressly assume, by an indenture (or indentures, if at such time there is more than one Trustee) supplemental hereto, executed by such successor corporation and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, and interest on, all the Outstanding Subordinated Notes and the due and punctual performance and observance of every obligation in this Indenture and the Outstanding Subordinated Notes on the part of the Company to be performed or observed;

(2)    immediately after giving effect to such transaction and treating any indebtedness that becomes an obligation of the Company or any Subsidiary as a result of that transaction as having been incurred by the Company or any Subsidiary at the time of the transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, will have occurred and be continuing; and

(3)    either the Company or the successor Person will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease or other conveyance and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article VII and that all conditions precedent herein provided for relating to such transaction have been complied with.

For purposes of the foregoing, any sale, assignment, transfer, lease or other conveyance of all or any of the properties and assets of one or more Subsidiaries of the Company (other than to the Company or another Subsidiary), which, if such properties and assets were directly owned by the Company, would constitute all or substantially all of the Company’s properties and assets, will be deemed to be the transfer of all or substantially all of the properties and assets of the Company.
 
Section 7.02    Successor Person Substituted for Company.

Upon any consolidation by the Company with or merger of the Company into any other Person or any sale, assignment, transfer, lease or conveyance of all or substantially all of the properties and assets of the Company to any Person in accordance with Section 7.01, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer, lease or other conveyance is made will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and thereafter, except in the case of a lease, the predecessor Person will be released from all obligations and covenants under this Indenture and the Subordinated Notes.

ARTICLE VIII 
SUPPLEMENTAL INDENTURES
 
Section 8.01    Supplemental Indentures without Consent of Holders.

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Without the consent of any Holders of Subordinated Notes, the Company (when authorized by or in accordance with a Board Resolution) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(1)    to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company contained herein and in the Subordinated Notes;

(2)    to add to the covenants of the Company for the benefit of the Holders (as will be specified in such supplemental indenture or indentures) or to surrender any right or power herein conferred upon the Company with respect to the Subordinated Notes issued under this Indenture (as will be specified in such supplemental indenture or indentures);

(3)    to permit or facilitate the issuance of Subordinated Notes in uncertificated or global form, provided any such action will not adversely affect the interests of the Holders;

(4)    to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Subordinated Notes and to add to or change any of the provisions of this Indenture as will be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, in accordance with the requirements of Section 5.10;

(5)    to cure any ambiguity or to correct or supplement any provision herein that may be defective or that may be inconsistent with any other provision herein;

(6)    to make any other provisions with respect to matters or questions arising under this Indenture that will not adversely affect the interests of the Holders of then Outstanding Subordinated Notes;

(7)    to add any additional Events of Default (as will be specified in such supplemental indenture);

(8)    to supplement any of the provisions of this Indenture to such extent as will be necessary to permit or facilitate the Legal Defeasance, Covenant Defeasance and/or satisfaction and discharge of the Subordinated Notes in accordance with Article III, provided that any such action will not adversely affect the interests of any Holder;

(9)    to provide for the issuance of Exchange Notes;

(10)    to conform any provision in this Indenture to the requirements of the Trust Indenture Act; or

(11)    to make any change that does not adversely affect the legal rights under this Indenture of any Holder.

Section 8.02    Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than a majority in principal amount of the Outstanding Subordinated Notes, by Act of said Holders delivered to the Company and the Trustee, the Company (when authorized by or in accordance with a Board Resolution), and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of the Subordinated Notes or of modifying in any manner the rights of the Holders under this Indenture; provided, that no such supplemental indenture, without the consent of the Holder of each Outstanding Subordinated Note affected thereby, will:

(1)    reduce the rate of or change the time for payment of interest, including Defaulted Interest, on any Subordinated Notes;

(2)    reduce the principal of or change the Stated Maturity of any Subordinated Notes, or change the date on which any Subordinated Notes may be subject to redemption or reduce the Redemption Price therefore;

(3)    make any Subordinated Note payable in money other than Dollars;

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(4)    make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of and interest on such Subordinated Note on or after the due date thereof or to bring suit to enforce such payment;

(5)    reduce the percentage in principal amount of the Outstanding Subordinated Notes, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in Section 4.12 or Section 9.06 of this Indenture; or

(6)    modify any of the provisions of this Section 8.02, Section 4.12 or Section 9.06, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Subordinated Note affected thereby.

It will not be necessary for any Act of Holders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it will be sufficient if such Act will approve the substance thereof.

Section 8.03    Execution of Supplemental Indentures.

As a condition to executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article VIII or the modifications thereby of the trust created by this Indenture, the Trustee will be entitled to receive, and (subject to Section 5.01) will be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel to the effect that the execution of such supplemental indenture is authorized or permitted by this Indenture, that such supplemental indenture has been duly authorized, executed and delivered by, and is a valid, binding and enforceable obligation of, the Company, subject to customary exceptions, and that, to the extent applicable pursuant to Section 8.01, such supplemental indenture does not adversely affect the interests of the Holders. The Trustee may, but will not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Section 8.04    Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article VIII, this Indenture will be modified in accordance therewith, and such supplemental indenture will form a part of this Indenture for all purposes; and every Holder theretofore or thereafter authenticated and delivered hereunder.

Section 8.05    Reference in Subordinated Notes to Supplemental Indentures.

Subordinated Notes authenticated and delivered after the execution of any supplemental indenture in accordance with this Article VIII may, and will if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company will so determine, new Subordinated Notes so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Subordinated Notes.

Section 8.06    Effect on Senior Indebtedness. 

No supplemental indenture will directly or indirectly modify or eliminate the Subordination Provisions or the definition of “Senior Indebtedness” applicable with respect to the Subordinated Notes in any manner that might terminate or impair the subordination of such Subordinated Notes to such Senior Indebtedness without the prior written consent of each of the holders of such Senior Indebtedness.

Section 8.07    Conformity with Trust Indenture Act.

Every supplemental indenture executed in accordance with this Article will conform to the requirements of the Trust Indenture Act as then in effect.
 
ARTICLE IX 
COVENANTS
 

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Section 9.01    Payment of Principal and Interest.

The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of, and interest on, the Subordinated Notes, in accordance with the terms thereof and this Indenture. Principal and interest will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m., Eastern time, on any Interest Payment Date, an amount in immediately available funds provided by the Company that is designated for and sufficient to pay all principal and interest then due. The Company will pay all Additional Interest, if any, on the dates and in the amounts set forth in the Registration Rights Agreement.

If Additional Interest is payable by the Company in accordance with the Registration Rights Agreement and paragraph 2 of the Subordinated Notes, the Company will deliver to the Trustee a certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate or instruction or direction from the Holders in accordance with the terms of this Indenture, the Trustee may assume without inquiry that no Additional Interest is payable. The foregoing will not prejudice the rights of the Holders with respect to their entitlement to Additional Interest as otherwise set forth in this Indenture or the Subordinated Notes and pursuing any action against the Company directly or otherwise directing the Trustee to take such action in accordance with the terms of this Indenture and the Subordinated Notes. If the Company has paid Additional Interest directly to persons entitled to it, the Company will deliver to the Trustee a certificate setting forth the particulars of such payment.

Section 9.02    Maintenance of Office.

The Company will maintain an office or agency in the Borough of Manhattan, New York, New York or the City of Richmond, Virginia (which may be an office of the Trustee or an Affiliate of the Trustee or Registrar) where Subordinated Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Subordinated Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or agencies where the Subordinated Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, New York, New York or the City of Richmond, Virginia.  The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 9.02.

Section 9.03    Money for Subordinated Notes Payments to Be Held in Trust.

If the Company will at any time act as its own Paying Agent, it will, on or before each due date of the principal of, or interest on, any of the Subordinated Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in Dollars sufficient to pay the principal and interest, as the case may be, so becoming due until such sums will be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company will have one or more Paying Agents, it will, on or prior to each due date of the principal of, or interest on, any Subordinated Notes, deposit with any Paying Agent a sum in Dollars sufficient to pay the principal and interest, as the case may be, so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

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The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent will agree with the Trustee, subject to the provisions of this Section that such Paying Agent will:

(1)    hold all sums held by it for the payment of the principal of, or interest on, the Subordinated Notes in trust for the benefit of the Persons entitled thereto until such sums will be paid to such Persons or otherwise disposed of as provided in or under this Indenture;

(2)    give the Trustee notice of any default by the Company in the making of any payment of principal, or interest on, the Subordinated Notes; and

(3)    at any time during the continuance of any such default, upon the written request of the Trustee, pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent will be released from all further liability with respect to such sums.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on, any Subordinated Note and remaining unclaimed for two years after such principal or interest will have become due and payable will be paid to the Company upon a Company Request, or (if then held by the Company) will be discharged from such trust; and the Holder of such Subordinated Note will thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease.

Section 9.04    Corporate Existence.

Subject to Article VII, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect (i) the corporate existence of the Company, (ii) the existence (corporate or otherwise) of each Significant Subsidiary and (iii) the rights (charter and statutory), licenses and franchises of the Company and each of its Significant Subsidiaries, including without limitation the Company’s status as a bank holding company or financial holding company under the Bank Holding Company Act of 1956, as amended, and the Bank’s status as an “insured depository institution” under Section 3(c)(2) of the Federal Deposit Insurance Act, as amended; provided, however, that the Company will not be required to preserve the existence (corporate or other) of any of its Significant Subsidiaries or any such right, license or franchise of the Company or any of its Significant Subsidiaries if the Board of Directors of the Company determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Significant Subsidiaries taken as a whole and that the loss thereof will not be disadvantageous in any material respect to the Holders. Subject to Article VII, the Company shall not take any action, omit to take any action or enter into any transaction that would have the effect of the Company owning less than one hundred percent (100%) of the capital stock of the Bank.

Section 9.05    Maintenance of Properties.

The Company will, and will cause each Significant Subsidiary to, cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section will prevent the Company or any Significant Subsidiary from discontinuing the operation and maintenance of any of their respective properties if such discontinuance is, in the judgment of the Board of Directors of the Company or of any Significant Subsidiary, as the case may be desirable in the conduct of its business.

Section 9.06    Well-Capitalized.

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The Company shall not declare or pay any dividend or make any distribution on capital stock or other equity securities of any kind of the Company if either of the Company or the Bank are not “well capitalized” for regulatory capital purposes, both immediately prior to the declaration of such dividend or distribution and after giving effect to the payment of such dividend or distribution, other than: (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock; (ii) any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares of Company’s capital stock in accordance with the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans for Company’s directors, officers or employees or any of Company’s dividend reinvestment plans.

Section 9.07    Well-Capitalized.

The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 9.02 to Section 9.06, inclusive, with respect to the Subordinated Notes if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Subordinated Notes, by Act of such Holders, either will waive such compliance in such instance or generally will have waived compliance with such term, provision or condition, but no such waiver will extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver will become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition will remain in full force and effect.

Section 9.08    Company Statement as to Compliance.

The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate covering the preceding calendar year, stating whether or not, to the best of his or her knowledge, the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to notice requirements or periods of grace) and if the Company will be in default, specifying all such defaults and the nature and status thereof of which he or she may have knowledge.

Section 9.09    Tier 2 Capital.

If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Company will immediately notify the Trustee and the Holders thereof, and thereafter the Company and the Holders will work together in good faith, subject to the terms of this Indenture, to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital and the Company shall request, subject to the terms of this Indenture, that the Trustee execute and deliver all such agreements as may be reasonably necessary in order to effect any restructuring agreed to by the Company and the Holders; provided, however, that nothing contained in this Section 9.09 shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event pursuant to Section 10.01(3) hereof.
 
ARTICLE X 
REDEMPTION OF SECURITIES
 
Section 10.01    Applicability of Article.

(1)    Except as provided in this Section 10.01, the Subordinated Notes are not subject to redemption at the option of the Company. The Subordinated Notes are not subject to redemption at the option of the Holders.
 
(2)    Subject to the receipt of any required regulatory approvals, with corresponding written notice to the Trustee, the Company may, at its option, on any Interest Payment Date on or after December 30, 2023, redeem all or a portion of the Subordinated Notes.

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(3)    Subject to the receipt of any required regulatory approvals, the Company may, at its option, redeem all, but not a portion of the Outstanding Subordinated Notes at any time upon an Investment Company Event, a Tax Event or a Tier 2 Capital Event.

(4)    The Redemption Price with respect to any redemption permitted under this Indenture will be equal to 100% of the principal amount of the Subordinated Notes to be redeemed, plus accrued but unpaid interest and Additional Interest, if any, thereon to, but excluding, the Redemption Date.

Section 10.02    Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Subordinated Notes will be evidenced by a Company Order. In case of any redemption of less than all of the Subordinated Notes, the Company will, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice will be satisfactory to the Trustee, but in any event not less than 45 days prior to the Redemption Date), notify the Trustee, of such Redemption Date and of the principal amount of Subordinated Notes to be redeemed.

In the case of any redemption of Subordinated Notes (i) prior to the expiration of any restriction on such redemption provided in the terms of such Subordinated Notes or elsewhere in this Indenture or (ii) in accordance with an election of the Company that is subject to a condition specified in the terms of such Subordinated Notes or elsewhere in this Indenture, the Company will furnish to the Trustee an Officers’ Certificate evidencing compliance with such restriction or condition.

Section 10.03    Selection by Trustee of Subordinated Notes to be Redeemed.

If less than all of the Subordinated Notes are to be redeemed, the particular Subordinated Notes to be redeemed will be selected not more than 45 days prior to the Redemption Date by the Trustee from the Outstanding Subordinated Notes not previously called for redemption unless otherwise required by law or applicable depositary requirements, on a pro rata basis as to the Holders and which may provide for the selection for redemption of portions of the principal amount of Subordinated Notes; provided, however, that no such partial redemption will reduce the portion of the principal amount of a Subordinated Note not redeemed to less than the minimum denomination for a Subordinated Note established in or under this Indenture. In the event a pro rata redemption is not permitted under applicable law or applicable depositary requirements, the Subordinated Notes to be redeemed will be selected by lot or such method as the Trustee will deem fair and appropriate.

The Trustee will promptly notify the Company and the Registrar (if other than itself) in writing of the Subordinated Notes selected for redemption and, in the case of any Subordinated Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Subordinated Notes will relate, in the case of any Subordinated Notes redeemed or to be redeemed only in part, to the portion of the principal of such Subordinated Notes which has been or is to be redeemed.

Section 10.04    Notice of Redemption.

Notice of redemption will be given in the manner provided in Section 1.05, not less than 30 nor more than 60 days prior to the Redemption Date to the Holders of Subordinated Notes to be redeemed. Failure to give notice by delivering in the manner herein provided to the Holder of any Subordinated Notes designated for redemption as a whole or in part, or any defect in the notice to any such Holder, will not affect the validity of the proceedings for the redemption of any other Subordinated Notes or portions thereof.

Any notice that is delivered to the Holder of any Subordinated Notes in the manner herein provided will be conclusively presumed to have been duly given, whether or not such Holder receives the notice.

All notices of redemption will state:

(1)    the Redemption Date,

(2)    the Redemption Price,

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(3)    if less than all Outstanding Subordinated Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amount) of the particular Subordinated Note or Subordinated Notes to be redeemed,

(4)    that, in case any Subordinated Note is to be redeemed in part only, on and after the Redemption Date, upon surrender of such Subordinated Note, the Holder of such Subordinated Note will receive, without charge, a new Subordinated Note or Subordinated Notes of authorized denominations for the principal amount thereof remaining unredeemed,

(5)    that, on the Redemption Date, the Redemption Price will become due and payable upon each such Subordinated Note or portion thereof to be redeemed, together (if applicable) with accrued and unpaid interest and Additional Interest, if any, thereon (subject, if applicable, to the provisos to the first paragraph of Section 10.06), and, if applicable, that interest thereon will cease to accrue on and after said date,

(6)    the place or places where such Subordinated Notes are to be surrendered for payment of the Redemption Price and any accrued interest pertaining thereto, and

(7)    the section hereunder providing for such redemption.

The notice of redemption shall include the CUSIP number reference numbers of such Subordinated Notes, if any (or any other numbers used by a Depositary to identify such Subordinated Notes).

Notice of redemption of Subordinated Notes to be redeemed at the election of the Company will be given by the Company or, at the Company’s request delivered at least 10 days before the date such notice is to be given (unless a shorter period will be acceptable to the Trustee), by the Trustee in the name and at the expense of the Company.

Section 10.05    Deposit of Redemption Price.

On or prior to 11:00 a.m., Eastern time, on any Redemption Date, the Company will deposit, with respect to the Subordinated Notes called for redemption in accordance with Section 10.04, with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.03) an amount sufficient to pay the Redemption Price of, and (except if the Redemption Date will be an Interest Payment Date) any accrued interest on, all such Subordinated Notes or portions thereof which are to be redeemed on that date.

Section 10.06    Subordinated Notes Payable on Redemption Date.

Notice of redemption having been given as provided above, the Subordinated Notes so to be redeemed will, on the Redemption Date, become due and payable at the Redemption Price therein specified, together with accrued and unpaid interest and Additional Interest, if any, thereon and from and after such date (unless the Company will default in the payment of the Redemption Price and accrued interest, if any) such Subordinated Notes will cease to bear interest. Upon surrender of any such Subordinated Note for redemption in accordance with said notice, such Subordinated Note will be paid by the Company at the Redemption Price, together with any accrued and unpaid interest and Additional Interest, if any, thereon to but excluding the Redemption Date; provided, however, that installments of interest on Subordinated Notes whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Subordinated Notes registered as such on the Regular Record Dates therefor according to their terms and the provisions of Section 2.10.

If any Subordinated Note called for redemption will not be so paid upon surrender thereof for redemption, the principal, until paid, will bear interest from the Redemption Date at the rate prescribed therefor in the Subordinated Note or, if no rate is prescribed therefor in the Subordinated Note, at the rate of interest, if any, borne by such Subordinated Note.

Section 10.07    Subordinated Notes Redeemed in Part.

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Any Subordinated Note which is to be redeemed only in part will be surrendered at any office or agency for such Subordinated Note (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company will execute and the Trustee will authenticate and deliver to the Holder of such Subordinated Note without service charge, a new Subordinated Note or Subordinated Notes, containing identical terms and provisions, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Subordinated Note so surrendered. If a Global Subordinated Note is so surrendered, the Company will execute, and the Trustee will authenticate and deliver to the Depositary for such Global Subordinated Note as will be specified in the Company Order with respect thereto to the Trustee, without service charge, a new Global Subordinated Note in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Subordinated Note so surrendered.

Upon surrender of a Subordinated Note that is redeemed in part, the Company will issue and the Trustee will authenticate for the Holder at the expense of the Company a new Subordinated Note equal in principal amount to the unredeemed portion of the Subordinated Notes Note surrendered representing the same indebtedness to the extent not redeemed. Notwithstanding anything in this Indenture to the contrary, only a Company Order and not an Opinion of Counsel or an Officers’ Certificate of the Company is required for the Trustee to authenticate such new Subordinated Note.
 
ARTICLE XI 
SUBORDINATION OF SECURITIES
 
Section 11.01    Agreement to Subordinate.

The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of Subordinated Notes by the Holder’s acceptance thereof, likewise covenants and agrees, that the payment of the principal of and interest on each and all of the Subordinated Notes is and will be expressly subordinated in right of payment to the prior payment in full of all Senior Indebtedness.

Section 11.02    Distribution of Assets.

(1)    Upon any distribution of assets of the Company upon any termination, winding up, liquidation or reorganization of the Company, whether in bankruptcy, insolvency, reorganization or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company or otherwise (subject to the power of a court of competent jurisdiction to make other equitable provision reflecting the rights conferred upon the Senior Indebtedness and the holders thereof with respect to the Subordinated Notes and the Holders thereof by a lawful plan of reorganization under applicable bankruptcy law):

(a)    holders of all Senior Indebtedness will first be entitled to receive payment in full in accordance with the terms of such Senior Indebtedness of the principal thereof, premium, if any, and the interest due thereon (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) before the Holders of the Subordinated Notes are entitled to receive any payment upon the principal of or interest on indebtedness evidenced by the Subordinated Notes;

(b)    any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders would be entitled except for the provisions of this Article XI, including any such payment or distribution that may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Subordinated Notes, will be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, in accordance with the priorities then existing among holders of Senior Indebtedness for payment of the aggregate amounts remaining unpaid on account of the principal, premium, if any, and interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law now or hereafter in effect) on the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all 

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Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; it being understood that if the Holders fail to file a proper claim in the form required by any proceeding referred to in this Section 11.02(1)(b) prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness are hereby authorized to file an appropriate claim or claims for and on behalf of the Holders, in the form required in any such proceeding; and

(c)    in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution that may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinate to the payment of the Subordinated Notes will be received by the Trustee or the Holders before all Senior Indebtedness is paid in full, such payment or distribution will be paid over to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment of assets of the Company for all Senior Indebtedness remaining unpaid until all such Senior Indebtedness will have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness,

(2)    Subject to the payment in full of all Senior Indebtedness, the Holders will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the principal of and interest on the Subordinated Notes will be paid in full and no such payments or distributions to holders of such Senior Indebtedness to which the Holders would be entitled except for the provisions hereof of cash, property or securities otherwise distributable to the holders of Senior Indebtedness will, as between the Company, its creditors, other than the holders of Senior Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. It is understood that the provisions of this Article XI are intended solely for the purpose of defining the relative rights of the Holders of the Subordinated Notes, on the one hand, and the holders of Senior Indebtedness, on the other hand. Nothing contained in this Article XI or elsewhere in this Indenture or any supplemental indenture issued in accordance with Article VIII of this Indenture or in the Subordinated Notes is intended to or will impair, as between the Company, its creditors, other than the holders of Senior Indebtedness, and the Holders, the obligation of the Company, which is unconditional and absolute, to pay to the Holders the principal of and interest on the Subordinated Notes as and when the same will become due and payable in accordance with their terms or to affect the relative rights of the Holders and creditors of the Company, other than the holders of the Senior Indebtedness, nor, except as otherwise expressly provided in this Indenture and the Subordinated Notes with respect to the limitation on the rights of the Trustee and the Holders, to accelerate the maturity of the Subordinated Notes and pursue remedies upon such an acceleration, will anything herein or in the Subordinated Notes prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon any Event of Default under the Indenture occurring, subject to the rights, if any, under this Article XI of the holders of Senior Indebtedness, in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XI, the Trustee and the Holders will be entitled to rely upon any order or decree of a court of competent jurisdiction in which such termination, winding up, liquidation or reorganization proceeding is pending or upon a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount hereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI. In the absence of any such liquidating trustee, agent or other person, the Trustee will be entitled to rely upon a written notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of Senior Indebtedness (or is such a trustee or representative). If the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person, as a holder of Senior Indebtedness, to participate in any payment or distribution in accordance with this Article XI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, as to the extent to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article XI, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness will be read into this Indenture against the Trustee. The Trustee, however, will not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness by reason 

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of the execution of this Indenture, or any other supplemental indenture entered into in accordance with Article VIII of this Indenture, and will not be liable to any such holders if it will in good faith mistakenly pay over or distribute to or on behalf of the Holders or the Company moneys or assets to which any holders of Senior Indebtedness will be entitled by virtue of this Article XI or otherwise.

Section 11.03    Default With Respect to Senior Indebtedness.

In the event and during the continuation of any default in the payment of principal of, or premium, if any, or interest on, any Senior Indebtedness, beyond any applicable grace period, or if any event of default with respect to any Senior Indebtedness will have occurred and be continuing, or would occur as a result of the payment referred to hereinafter, permitting the holders of such Senior Indebtedness (or a trustee on behalf of the holders thereof) to accelerate the maturity thereof, then, unless and until such default or event of default will have been cured or waived or will have ceased to exist, no payment or principal of or interest on the Subordinated Notes, or in respect of any retirement, purchase or other acquisition of any of the Subordinated Notes, will be made by the Company.

Section 11.04    No Impairment. 

Nothing contained in this Indenture, any other supplemental indenture entered into in accordance with Article VIII of this Indenture, or in any of the Subordinated Notes will: (i) impair, as between the Company and the Holders, the obligations of the Company, to make, or prevent the Company from making, at any time except as provided in Section 11.02 and Section 11.03, payments of principal of, or interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on, the Subordinated Notes, as and when the same will become due and payable in accordance with the terms of the Subordinated Notes; (ii) affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness; (iii) except as otherwise expressly provided in this Indenture and the Subordinated Notes with respect to the limitation on the rights of the Trustee and the Holders, to accelerate the maturity of the Subordinated Notes and pursue remedies upon such an acceleration, prevent the Holder of any Subordinated Notes or the Trustee from exercising all remedies otherwise permitted by applicable law upon default thereunder, subject to the rights, if any, under this Article XI of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of such remedy; or (iv) prevent the application by the Trustee or any Paying Agent of any moneys deposited with it hereunder to the payment of or on account of the principal of, or interest on, the Subordinated Notes or prevent the receipt by the Trustee or any Paying Agent of such moneys, if, prior to the third Business Day prior to such deposit, the Trustee or such Paying Agent did not have written notice of any event prohibiting the making of such deposit by the Company.

Section 11.05    Effectuation of Subordination Provisions. 

Each Holder by his acceptance of any Subordinated Notes authorizes and expressly directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to effectuate the Subordination Provisions, and appoints the Trustee such Holder’s attorney-in-fact for such purposes, including, in the event of any termination, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors by the Company, a marshalling of the assets and liabilities of the Company or otherwise) tending toward the liquidation of the property and assets of the Company, the filing of a claim for the unpaid balance of the Subordinated Notes in the form required in those proceedings.

Section 11.06    Notice to Trustee. 

The Company will give prompt written notice to the Trustee of any fact known to the Company that would prohibit the Company from making any payment to or by the Trustee in respect of the Subordinated Notes in accordance with the provisions of this Article XI. The Trustee will not be charged with the knowledge of the existence of any default or event of default with respect to any Senior Indebtedness or of any other facts that would prohibit the making of any payment to or by the Trustee or any Paying Agent unless and until a Responsible Officer of the Trustee has received a written notice specifying such default, event of default or other facts signed by an Authorized Officer, or by a holder of Senior Indebtedness or a trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee will, subject to Article V of this Indenture, be entitled to assume that no such facts exist; provided that, if the Trustee will not have received the notice provided for in this Section 11.06 at least two 

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Business Days prior to the date upon which, by the terms of the Indenture, any monies will become payable for any purpose (including, without limitation, the payment of the principal of or interest on any Subordinated Note), then, notwithstanding anything herein to the contrary, the Trustee will have full power and authority to receive any monies from the Company and to apply the same to the purpose for which they were received, and will not be affected by any notice to the contrary that may be received by it on or after such prior date except for an acceleration of the Subordinated Notes prior to such application. The foregoing will not apply if the Paying Agent is the Company. The Trustee will be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Indebtedness (or a trustee on behalf of, or agent of, such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or agent on behalf of any such holder.

In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution in accordance with this Article XI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XI and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending such evidence being furnished to the Trustee or a judicial determination that such Person has the right to receive such payment.

Section 11.07    Trustee Knowledge of Senior Indebtedness. 

Notwithstanding the provisions of this Article XI or any other provisions of this Indenture or any other supplemental indenture issued in accordance with Article VIII of this Indenture, neither the Trustee nor any Paying Agent will be charged with knowledge of the existence of any Senior Indebtedness or of any event that would prohibit the making of any payment of moneys to or by the Trustee or such Paying Agent, unless and until a Responsible Officer of the Trustee or such Paying Agent has received written notice thereof from the Company or from the holder of any Senior Indebtedness or from the representative of any such holder.

Section 11.08    Senior Indebtedness to Trustee. 

The Trustee will be entitled to all of the rights set forth in this Article XI in respect of any Senior Indebtedness at any time held by it in its individual capacity to the same extent as any other holder of such Senior Indebtedness, and nothing in this Indenture or any other supplemental indenture issued in accordance with Article VIII of this Indenture will be construed to deprive the Trustee of any of its rights as such holder.

Section 11.09    Subordination Not Applicable to Trustee Compensation. 

Nothing contained in this Article XI will apply to the claims of, or payments to, the Trustee under Section 5.07 of this Indenture.

The Trustee hereby accepts the trusts in this Indenture upon the terms and conditions set forth herein.
 
[Signature Page Follows]
 

- 48 -

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly signed as of the date first written above.

 
	
			
	 
	COMPANY

	 
	 ORRSTOWN FINANCIAL SERVICES, INC.

	 
	 

	 
	By:
	/s/ Thomas R. Quinn, Jr.

	 
	Name:
	Thomas R. Quinn, Jr.

	 
	Title:
	President and Chief Executive Officer

	 
	 
	 

	 
	

TRUSTEE
 

	 
	U.S. Bank, National Association

	 
	As Trustee

	 
	 
	 

	 
	 
	 

	 
	By:
	/s/ Monique L. Green

	 
	Name:
	Monique L. Green

	 
	Title:
	Vice President

 

[Signature Page to Indenture]

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