Document:

Exhibit 4.17

 

 

AMENDED AND
RESTATED

 

TRUST
AGREEMENT

 

AMONG

 

ASSURED
GUARANTY US HOLDINGS INC.,

 

AS DEPOSITOR,

 

THE BANK OF
NEW YORK,

 

AS PROPERTY
TRUSTEE

 

THE BANK OF
NEW YORK (DELAWARE),

 

AS DELAWARE
TRUSTEE,

 

AND

 

THE
ADMINISTRATIVE TRUSTEES NAMED HEREIN

 

DATED AS OF                    ,
2005

 

ASSURED
GUARANTY CAPITAL TRUST [I][II]

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I.
            DEFINED TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.         ESTABLISHMENT
  OF THE TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  NAME

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.2

  	
  OFFICE OF THE DELAWARE TRUSTEE;
  PRINCIPAL PLACE OF BUSINESS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.3

  	
  INITIAL CONTRIBUTION OF TRUST
  PROPERTY; ORGANIZATIONAL EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.4

  	
  ISSUANCE OF THE PREFERRED SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.5

  	
  ISSUANCE OF THE COMMON SECURITIES;
  SUBSCRIPTION AND PURCHASE OF DEBENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.6

  	
  DECLARATION OF TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.7

  	
  AUTHORIZATION TO ENTER INTO CERTAIN
  TRANSACTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.8

  	
  ASSETS OF TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.9

  	
  TITLE TO TRUST PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.
         PAYMENT ACCOUNT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  PAYMENT ACCOUNT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.        CERTAIN
  TERMS OF THE TRUST SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2

  	
  REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.3

  	
  SUBORDINATION
  OF COMMON SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.4

  	
  PAYMENT
  PROCEDURES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.5

  	
  TAX RETURNS
  AND REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.6

  	
  PAYMENT
  OF TAXES, DUTIES, ETC. OF THE TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.7

  	
  PAYMENTS
  UNDER INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.         TRUST
  SECURITIES CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  INITIAL OWNERSHIP

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.2

  	
  THE
  TRUST SECURITIES CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.3

  	
  EXECUTION AND DELIVERY OF TRUST
  SECURITIES CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.4

  	
  REGISTRATION OF TRANSFER AND
  EXCHANGE OF PREFERRED SECURITIES CERTIFICATES

  	
   

  

 

i

 

	
  SECTION 5.5

  	
  MUTILATED, DESTROYED, LOST OR STOLEN
  TRUST SECURITIES CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.6

  	
  PERSONS DEEMED SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.7

  	
  ACCESS TO LIST OF SECURITYHOLDERS’
  NAMES AND ADDRESSES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.8

  	
  MAINTENANCE OF OFFICE OR AGENCY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.9

  	
  APPOINTMENT OF PAYING AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.10

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.11

  	
  OWNERSHIP OF COMMON SECURITIES BY
  DEPOSITOR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.12

  	
  BOOK-ENTRY PREFERRED SECURITIES
  CERTIFICATES; COMMON SECURITIES CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.13

  	
  NOTICES
  TO CLEARING AGENCY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.14

  	
  DEFINITIVE PREFERRED SECURITIES
  CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.15

  	
  RIGHTS OF SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.
            ACTS OF
  SECURITYHOLDERS; MEETINGS; VOTING

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  LIMITATIONS
  ON VOTING RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.2

  	
  NOTICE OF
  MEETINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.3

  	
  MEETINGS
  OF PREFERRED SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.4

  	
  VOTING RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.5

  	
  PROXIES, ETC

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.6

  	
  SECURITYHOLDER ACTION BY WRITTEN
  CONSENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.7

  	
  RECORD DATE FOR VOTING AND OTHER
  PURPOSES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.8

  	
  ACTS OF SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.9

  	
  INSPECTION OF RECORDS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.          
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  REPRESENTATIONS AND WARRANTIES OF
  THE PROPERTY TRUSTEE AND THE DELAWARE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.2

  	
  REPRESENTATIONS AND WARRANTIES OF
  DEPOSITOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.
             THE TRUSTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  CERTAIN
  DUTIES AND RESPONSIBILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2

  	
  CERTAIN NOTICES

  	
   

  

 

ii

 

	
  SECTION 8.3

  	
  CERTAIN RIGHTS OF PROPERTY
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.4

  	
  NOT RESPONSIBLE FOR RECITALS OR
  ISSUANCE OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.5

  	
  MAY HOLD SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.6

  	
  COMPENSATION; INDEMNITY; FEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.7

  	
  CORPORATE PROPERTY TRUSTEE REQUIRED;
  ELIGIBILITY OF TRUSTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.8

  	
  CONFLICTING INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.9

  	
  CO-TRUSTEES AND SEPARATE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.10

  	
  ACCEPTANCE OF APPOINTMENT BY
  SUCCESSOR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.11

  	
  MERGER, CONVERSION, CONSOLIDATION
  OR SUCCESSION TO BUSINESS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.12

  	
  PREFERENTIAL COLLECTION OF CLAIMS
  AGAINST DEPOSITOR, DEBENTURE ISSUER OR TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.13

  	
  REPORTS BY PROPERTY TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.14

  	
  REPORTS TO THE PROPERTY TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.15

  	
  EVIDENCE OF COMPLIANCE WITH
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.16

  	
  NUMBER OF
  TRUSTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.17

  	
  DELEGATION OF
  POWER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.          
  DISSOLUTION, LIQUIDATION, TERMINATION AND MERGER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  DISSOLUTION UPON EXPIRATION DATE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.2

  	
  EARLY DISSOLUTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.3

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.4

  	
  LIQUIDATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.5

  	
  MERGERS, CONSOLIDATIONS,
  AMALGAMATIONS OR REPLACEMENTS OF THE TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.          
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
  LIMITATION OF RIGHTS OF
  SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.2

  	
  AMENDMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.3

  	
  SEPARABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.4

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.5

  	
  PAYMENTS DUE ON NON-BUSINESS DAY

  	
   

  

 

iii

 

	
  SECTION 10.6

  	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.7

  	
  HEADINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.8

  	
  REPORTS, NOTICES AND DEMANDS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.9

  	
  AGREEMENT NOT TO PETITION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.10

  	
  TRUST INDENTURE ACT; CONFLICT WITH
  TRUST INDENTURE ACT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.11

  	
  ACCEPTANCE OF TERMS OF TRUST
  AGREEMENT, GUARANTEE AND INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.          
  GUARANTEE BY ACE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1

  	
  TERM OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.2

  	
  WAIVER OF NOTICE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.3

  	
  NO IMPAIRMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.4

  	
  ENFORCEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.5

  	
  SUBROGATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.          
  BINDING EFFECT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.1

  	
  AMENDMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.2

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.3

  	
  GOVERNING LAW

  	
   

  

 

iv

 

AMENDED AND
RESTATED TRUST AGREEMENT, dated as of                           ,
2005, among (i) ASSURED GUARANTY US HOLDINGS INC., a corporation duly
organized and existing under the laws of the State of Delaware (including any
successors or assigns, the “Depositor”), (ii) THE BANK OF NEW YORK, a bank
duly organized and existing under the laws of the State of New York, as
property trustee (the “Property Trustee” and, in its individual capacity and
not in its capacity as Property Trustee, the “Bank”), (iii) THE BANK OF
NEW YORK (DELAWARE), a Delaware corporation, as Delaware trustee (in such
capacity, the “Delaware Trustee,”), (iv) •, an individual, and •, an individual, each of
whose address is c/o Assured Guaranty Corp., 1325 Avenue of the Americas, New
York, New York  10019 (each an “Administrative
Trustee” and collectively, the “Administrative Trustees”) (the Property
Trustee, the Delaware Trustee and the Administrative Trustees are referred to
collectively as the “Trustees”) and (v) the several Holders, as
hereinafter defined.

 

WITNESSETH

 

WHEREAS,
Assured Guaranty US Holdings Inc., as original sponsor of the Trust (the “Depositor”)
and The Bank of New York (Delaware) (the “Original Trustee”) have heretofore
duly declared and established a business trust pursuant to the Delaware
Business Trust Act by the entering into of that certain Trust Agreement, dated
as of May 25, 2005 (the “Initial Trust Agreement”), and by the execution
by the Original Trustee and filing with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on May 25, 2005 (the “Certificate
of Trust”), attached as Exhibit A;

 

WHEREAS, the
Depositor and the Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Trust to the
Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the
Trust from the Debenture Issuer (as hereinafter defined) of all of the right, title
and interest in the Debentures and (iv) the appointment of additional
Administrative Trustees;

 

NOW THEREFORE,
in consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, each party, for the benefit of the other parties and for the
benefit of the Securityholders, hereby amends and restates the Original Trust
Agreement in its entirety and agrees as follows:

 

2

 

ARTICLE I.

 

DEFINED
TERMS

 

SECTION 1.1 
DEFINITIONS.

 

For all
purposes of this Trust Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

 

(a)           the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as
well as the singular;

 

(b)           all other terms used herein that are
defined in the Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;

 

(c)           unless the context otherwise
requires, any reference to an “Article” or a “Section” refers to an Article or
a Section, as the case may be, of this Trust Agreement; and

 

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

 

“Act” has the
meaning specified in Section 6.8.

 

“Additional
Amounts” means, with respect to Trust Securities of a given Liquidation Amount,
for a given period, the amount of any Additional Interest and any Additional
Amounts (as defined in the Indenture) paid by the Debenture Issuer or the
Debenture Guarantor on a Like Amount of Debentures for such period.

 

“Additional Interest” has the meaning specified in Section 1.1 of
the Indenture.

 

“Additional Sums” has the meaning specified in Section 10.9 of the
Indenture.

 

“Administrative
Trustee” means each of                                      ,
and                                  ,
solely in such Person’s capacity as Administrative Trustee of the Trust and not
in such Person’s individual capacity, or such Administrative Trustee’s
successor in interest in such capacity, or any successor trustee appointed as
herein provided.

 

“Affiliate” of
any specified Person means 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.

 

“Bank” has the
meaning specified in the preamble to this Trust Agreement.

 

3

 

“Bankruptcy
Event” means, with respect to any Person: (a) the entry of a decree or
order by a court having jurisdiction in the premises judging such Person a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in respect of
such Person under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of such Person or
of any substantial part of its property or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or (b) the
institution by such Person of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or the consent by
it to the filing of any such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or similar official) of such
Person or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.

 

“Bankruptcy
Law” has the meaning specified in Section 10.9.

 

“Board
Resolution” means a copy of a resolution, certified by the Secretary or an
Assistant Secretary of the Depositor to have been duly adopted by the Depositor’s
Board of Directors, or such committee of the Board of Directors or officers of
the Depositor to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, delivered to the appropriate Trustee or Trustees.

 

“Book-Entry
Preferred Securities Certificates” means a beneficial interest in the Preferred
Securities Certificates, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 5.11.

 

“Business Day”
means a day other than (a) a Saturday or Sunday, (b) a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed, or (c) a day on which the Property
Trustee’s Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.

 

“Certificate
Depository Agreement” means the agreement among the Trust, the Depositor and
DTC, as the initial Clearing Agency, dated as of the Closing Date, relating to
the Trust Securities Certificates, in the form required by DTC from time to
time.

 

“Certificate
of Trust” has the meaning specified in the recitals to this Trust Agreement.

 

“Clearing
Agency” means an organization registered as a “clearing agency” pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended. DTC will be the initial
Clearing Agency.

 

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

 

4

 

“Closing Time”
has the meaning specified in the Underwriting Agreement, which date is also the
date of execution and delivery of this Trust Agreement.

 

“Code” means
the Internal Revenue Code of 1986, as amended.

 

“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Securities Exchange Act of 1934, as amended, or, if at any
time after the execution of this instrument 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.

 

“Common
Security” means an undivided beneficial interest in the assets of the Trust,
having a Liquidation Amount of $       and having
the rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.

 

“Common
Securities Certificate” means a certificate evidencing ownership of Common
Securities, substantially in the form attached as Exhibit B.

 

“Corporate
Trust Office” means the principal office of the Property Trustee located in New
York, New York.

 

“Date of
Delivery” has the meaning specified in the Underwriting Agreement.

 

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

 

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

 

“Debenture
Guarantor” means Assured Guaranty Ltd., a Bermuda company, in its capacity as
guarantor under the Indenture, and its successors.

 

“Debenture
Issuer” means Assured Guaranty US Holdings Inc., a Delaware corporation, in its
capacity as the issuer of the Debentures under the Indenture, and its
successors.

 

“Debenture
Redemption Date” means, with respect to any Debentures to be redeemed under the
Indenture, the date fixed for redemption under the Indenture.

 

“Debenture
Trustee” means The Bank of New York, a national banking association duly
organized and existing under the laws of the United States, in its capacity as
trustee under the Indenture, or any successor trustee appointed as therein
provided.

 

“Debentures”
means the aggregate principal amount of the Debenture Issuer’s    %
Junior Subordinated Deferrable Interest Debentures due                ,
issued pursuant to the Indenture.

 

“Definitive
Preferred Securities Certificates” means either or both (as the context
requires) of (a) Preferred Securities Certificates issued as Book-Entry
Preferred Securities

 

5

 

Certificates as provided in Section 5.11(a) and
(b) Preferred Securities Certificates issued in certificated, fully
registered form as provided in Section 5.13.

 

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

 

“Delaware
Trustee” means the corporation identified as the “Delaware Trustee” in the
first paragraph of this Trust Agreement solely in its capacity as Delaware Trustee
of the Trust and not in its individual capacity, or its successor in interest
in such capacity, or any successor trustee appointed as herein provided.

 

“Depositor”
has the meaning specified in the preamble to this Trust Agreement.

 

“Distribution
Date” has the meaning specified in Section 4.1(a).

 

“Distributions”
means amounts payable in respect of the Trust Securities as provided in Section 4.1.

 

“DTC” means
The Depository Trust Company.

 

“Early
Termination Event” has the meaning specified in Section 9.2.

 

“Event of
Default” means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body): (a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days; or (c) default by the Property Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable; or (d) default
in the performance, or breach, in any material respect, of any covenant or
warranty of the Trustees in this Trust Agreement (other than a covenant or
warranty a default in the performance or breach of which is dealt with in
clause (b) or (c) above) and continuation of such default or breach
for a period of 60 days after there has been given, by registered or certified
mail, to the defaulting Trustee or Trustees by the Holders of at least 25% in
aggregate liquidation preference of the Outstanding Preferred Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a “Notice of Default” hereunder; or (e) the
occurrence of a Bankruptcy Event with respect to the Property Trustee and the
failure by the Depositor to appoint a successor Property Trustee within 60 days
thereof.

 

“Expense
Agreement” means the Agreement as to Expenses and Liabilities between the
Depositor and the Trust, substantially in the form attached as Exhibit C,
as amended from time to time.

 

“Expiration
Date” has the meaning specified in Section 9.1.

 

“Guarantee”
means the Guarantee Agreement executed and delivered by the Preferred
Securities Guarantor and The Bank of New York, as trustee, contemporaneously
with the

 

6

 

execution and delivery of this Trust
Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.

 

“Indenture”
means the Subordinated Indenture, dated as of                        ,
2005, among the Debenture Issuer, the Debenture Guarantor and the Debenture
Trustee, as trustee, as amended or supplemented from time to time.

 

“Investment
Company Act” means the Investment Company Act of 1940, as amended.

 

“Lien” means
any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse
ownership interest, hypothecation, assignment, security interest or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever.

 

“Like Amount”
means (a) with respect to a redemption of Trust Securities, Trust
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture
the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Trust, Debentures having a principal amount equal to the Liquidation Amount
of the Trust Securities of the Holder to whom such Debentures are distributed.

 

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

 

“Liquidation
Date” means the date on which Debentures are to be distributed to Holders of
Trust Securities in connection with a dissolution and liquidation of the Trust
pursuant to Section 9.4(a).

 

“Liquidation
Distribution” has the meaning specified in Section 9.4(d).

 

“Officers’
Certificate” means a certificate signed by the Chairman of the Board of
Directors, a Vice Chairman, the President, any Vice President, the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of the
Depositor, that complies with the requirements of Section 314(e) of
the Trust Indenture Act and is delivered to the appropriate Trustee or
Trustees.

 

“Opinion of
Counsel” means a written opinion of counsel, who may be counsel for the Trust,
the Property Trustee or the Depositor, as the case may be, or other counsel who
shall be reasonably acceptable to the Property Trustee, that, if required by
the Trust Indenture Act, complies with the requirements of Section 314(e) of
the Trust Indenture Act.

 

“Original
Trust Agreement” has the meaning specified in the recitals to this Trust
Agreement.

 

“Original
Trustees” has the meaning specified in the recitals to this Trust Agreement.

 

“Outstanding,”
when used with respect to Preferred Securities, means, as of the date of
determination, all Preferred Securities theretofore executed and delivered
under this Trust Agreement, except:

 

7

 

(a)           Preferred Securities theretofore
cancelled by the Property Trustee or delivered to the Property Trustee for
cancellation;

 

(b)           Preferred Securities for whose
payment or redemption money in the necessary amount has been theretofore
deposited with the Property Trustee or any Paying Agent for the Holders of such
Preferred Securities; provided that, if such Preferred Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Trust
Agreement; and

 

(c)           Preferred Securities which have been
paid or in exchange for or in lieu of which other Preferred Securities have
been executed and delivered pursuant to Sections 5.4, 5.5, 5.11 and 5.13,
unless there shall have been presented to the Property Trustee proof
satisfactory to it that such Preferred Security is held by a bona fide
purchaser in whose hand such Preferred Security is a valid obligation of the
Trust; provided, however, that in determining whether the Holders of the
requisite Liquidation Amount of the Outstanding Preferred Securities have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder or are present at a meeting of Securityholders for quorum purposes,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of
the Depositor or any Trustee, shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities that such Trustee knows to
be so owned shall be so disregarded and (b) the foregoing shall not apply
at any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee’s right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any Affiliate
of the Depositor.

 

“Owner” means
each Person who is the beneficial owner of a Book-Entry Preferred Securities
Certificate as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).

 

“Paying Agent”
means any paying agent or co-paying agent appointed pursuant to Section 5.9
and shall initially be the Bank.

 

“Payment
Account” means a segregated non-interest-bearing corporate trust account
maintained by the Property Trustee with the Paying Agent in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 4.1 and
4.2.

 

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

 

8

 

“Preferred
Security” means an undivided beneficial interest in the assets of the Trust,
having a Liquidation Amount of $       and having
the rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.

 

“Preferred
Securities Certificate” means a certificate evidencing ownership of Preferred
Securities, substantially in the form attached as Exhibit D.

 

“Preferred
Securities Guarantor” means Assured Guaranty Ltd., a Bermuda company, in its
capacity as guarantor under the Guarantee, and its successors.

 

“Property
Trustee” means the commercial bank or trust company identified as the “Property
Trustee” in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor property trustee
appointed as herein provided.

 

“Redemption
Date” means, with respect to any Trust Security to be redeemed, the date fixed
for such redemption by or pursuant to this Trust Agreement; provided that each
Debenture Redemption Date and the stated maturity of the Debentures shall be a
Redemption Date for a Like Amount of Trust Securities.

 

“Redemption
Price” means, with respect to any Trust Security, the Liquidation Amount of
such Trust Security plus accumulated and unpaid Distributions to the Redemption
Date, plus the related amount of the premium, if any, and any Additional
Amounts paid by the Debenture Issuer or the Debenture Guarantor upon the
concurrent redemption of a Like Amount of Debentures, allocated on a pro rata
basis (based on Liquidation Amounts) among the Trust Securities.

 

“Relevant
Trustee” shall have the meaning specified in Section 8.10.

 

“Securities
Register” and “Securities Registrar” have the respective meanings specified in Section 5.4.

 

“Securityholder”
or “Holder” means a Person in whose name a Trust Security or Securities is
registered in the Securities Register; any such Person being a beneficial owner
within the meaning of the Delaware Business Trust Act; provided, however, that
in determining whether the Holders of the requisite amount of Preferred
Securities have voted on any matter provided for in this Trust Agreement, then
for purposes of any such determination, so long as Definitive Preferred Securities
Certificates have not been issued, the term Securityholders or Holders as used
herein shall refer to the Owners.

 

“Time of
Delivery” means, collectively, the Closing Time and each Date of Delivery.

 

“Trust” means
the Delaware business trust created by the Original Trust Agreement and the
Certificate of Trust and continued hereby and identified on the cover page to
this Trust Agreement.

 

9

 

“Trust
Agreement” means this Amended and Restated Trust Agreement, as the same may be
modified, amended or supplemented in accordance with the applicable provisions
hereof, including all exhibits hereto, including, for all purposes of this
Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and
govern this Trust Agreement and any such modification, amendment or supplement,
respectively.

 

“Trust
Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as
of which this instrument was executed; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act”
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.

 

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

 

“Trust
Security” means any one of the Common Securities or the Preferred Securities.

 

“Trust
Securities Certificate” means any one of the Common Securities Certificates or
the Preferred Securities Certificates.

 

“Trustees”
means, collectively, the Property Trustee, the Delaware Trustee and the
Administrative Trustees.

 

“Underwriting
Agreement” means the Underwriting Agreement, dated as of             ,
2005, among the Trust, the Depositor, Assured Guaranty Ltd. and the
Underwriters named therein.

 

ARTICLE II.

 

ESTABLISHMENT
OF THE TRUST

 

SECTION 2.1 
NAME.

 

The Trust
continued hereby shall be known as “Assured Guaranty Capital Trust [I][II],” as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may conduct the business of the Trust,
make and execute contracts and other instruments on behalf of the Trust and sue
and be sued.

 

SECTION 2.2 
OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS.  The address of the Delaware
Trustee in the State of Delaware is White Clay Center, Route 273, Newark ,
Delaware 19711, or such other address in the State of Delaware as the Delaware Trustee
may designate by written notice to the Depositor. The principal executive
office of the Trust is c/o Assured Guaranty Corp., 1325 Avenue of the Americas,
New York, New York  10019.

 

10

 

SECTION 2.3  INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES.  The Trustees
acknowledge receipt in trust from the Depositor in connection with the Original
Trust Agreement of the sum of $10, which constituted the initial Trust
Property. The Depositor shall pay organizational expenses of the Trust as they
arise or shall, upon request of any Trustee, promptly reimburse such Trustee
for any such expenses paid by such Trustee. The Depositor shall make no claim
upon the Trust Property for the payment of such expenses.

 

SECTION 2.4  ISSUANCE OF THE PREFERRED SECURITIES.  The Depositor, on behalf of the Trust and as
successor Trust sponsor under the Original Trust Agreement, has executed and
delivered the Underwriting Agreement. At the Closing Time, an Administrative
Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2
and deliver to the Underwriters named in the Underwriting Agreement Preferred
Securities Certificates, registered in the name of the nominee of the initial
Clearing Agency, in an aggregate amount of                  
Preferred Securities having an aggregate Liquidation Amount of $                   ,
against receipt of such aggregate purchase price of such Preferred Securities
of $                 ,
which amount such Administrative Trustee shall promptly deliver to the Property
Trustee. On each Date of Delivery, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 5.2 and deliver to the
Underwriters named in the Underwriting Agreement Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of up to                   
Preferred Securities (less such number of Preferred Securities evidenced by
Preferred Securities Certificates executed and delivered on any prior Dates of
Delivery) having an aggregate Liquidation Amount of up to $                 
(less the aggregate Liquidation Amount of any Preferred Securities evidenced by
Preferred Securities Certificates executed and delivered on any prior Dates of
Delivery), against receipt of such aggregate purchase price of such Preferred
Securities of $               
(less the aggregate Liquidation Amount of any Preferred Securities evidenced by
Preferred Securities Certificates executed and delivered on any prior Dates of
Delivery), which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.

 

SECTION 2.5 
ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF DEBENTURES.

 

(a)           At the Closing Time, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.2 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of                 
Common Securities having an aggregate Liquidation Amount of $                ,
against payment by the Depositor of such amount, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.
Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Debenture Issuer Debentures,
registered in the name of the Trust and having an aggregate principal amount
equal to $                  ,
and, in satisfaction of the purchase price for such Debentures, the Property
Trustee, on behalf of the Trust, shall deliver to the Debenture Issuer the sum
of $                  .
On each Date of Delivery, an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 5.2 and deliver to the Depositor
Common Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of up to                       
Common Securities (less such number of Common Securities evidenced by Common
Securities

 

11

 

Certificates executed and
delivered on any prior Dates of Delivery) having an aggregate Liquidation
Amount of up to $                     
(less the aggregate Liquidation Amount of any Common Securities evidenced by Common
Securities Certificates executed and delivered on any prior Dates of Delivery),
against payment by the Depositor of such amount, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.

 

(b)           At the Closing Time and on each Date
of Delivery, an Administrative Trustee, on behalf of the Trust, shall subscribe
to and purchase from the Debenture Issuer Debentures, registered in the name of
the Trust and having an aggregate principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities and Common Securities issued and
sold on such date, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Debenture Issuer the amount received on such date from one of the
Administrative Trustees pursuant to the last sentence of Section 2.4.

 

SECTION 2.6 
DECLARATION OF TRUST. 
The exclusive purposes and functions of the Trust are (a) to issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Debentures, and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property upon and subject to the
conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Trustees set forth herein except as required by the
Delaware Business Trust Act. The Delaware Trustee shall be one of the Trustees
of the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807(a) of the Delaware Business Trust Act.

 

SECTION 2.7  AUTHORIZATION TO ENTER INTO CERTAIN
TRANSACTIONS.  (a) The Trustees
shall conduct the affairs of the Trust in accordance with the terms of this
Trust Agreement. Subject to the limitations set forth in paragraph (b) of
this Section and Article VIII, and in accordance with the following
provisions (i) and (ii), the Administrative Trustees shall have the
authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the
following:  (i) As among the
Trustees, each of the Administrative Trustees, acting singly or together, shall
have the power and authority to act on behalf of the Trust with respect to the
following matters:

 

(A) the
issuance and sale of the Trust Securities;

 

(B) to
cause the Trust to enter into, and to execute, deliver and perform on behalf of
the Trust, the Expense Agreement and the Certificate Depository Agreement and
such other agreements as may be necessary or desirable in connection with the
purposes and function of the Trust;

 

12

 

(C) to
assist in the registration of the Preferred Securities under the Securities Act
of 1933, as amended, and under state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust indenture under the Trust Indenture
Act;

 

(D) to
assist in the listing of the Preferred Securities upon such securities exchange
or exchanges as shall be determined by the Depositor and the registration of
the Preferred Securities under the Securities Exchange Act of 1934, as amended,
and the preparation and filing of all periodic and other reports and other
documents pursuant to the foregoing;

 

(E) the
sending of notices (other than notices of default) and other information
regarding the Trust Securities and the Debentures to the Securityholders in
accordance with this Trust Agreement;

 

(F) the
appointment of a Paying Agent, authenticating agent and Securities Registrar in
accordance with this Trust Agreement;

 

(G) the
establishment of a record date for any of the purposes contemplated by Section 6.7
hereof;

 

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

 

(I) unless
otherwise determined by the Depositor, the Property Trustee or the
Administrative Trustees, or as otherwise required by the Delaware Business
Trust Act or the Trust Indenture Act, to execute on behalf of the Trust (either
acting alone or together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to execute pursuant
to this Trust Agreement; and

 

(J) the taking
of any action incidental to the foregoing as the Trustees may from time to time
determine is necessary or advisable to give effect to the terms of this Trust
Agreement for the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder).  (ii) As among the Trustees, the Property
Trustee shall have the power, duty and authority to act on behalf of the Trust
with respect to the following matters:

 

(A) the
establishment of the Payment Account;

 

(B) the
receipt of the Debentures;

 

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

 

(D) the
distribution of amounts owed to the Securityholders in respect of the Trust
Securities;

 

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

 

13

 

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

 

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

 

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

 

(I) after an
Event of Default, the taking of any action incidental to the foregoing as the
Property Trustee may from time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and to protect and conserve the
Trust Property for the benefit of the Securityholders (without consideration of
the effect of any such action on any particular Securityholder); and

 

(J) engaging
in such ministerial activities as shall be necessary, appropriate, convenient
or incidental to effect the repayment of the Preferred Securities and the
Common Securities to the extent the Debentures mature or are redeemed.

 

Except as
otherwise provided in this Section 2.7(a)(ii), the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 2.7(a)(i).

 

(b)           So long as this Trust Agreement
remains in effect, the Trust (or the Trustees acting on behalf of the Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, the Trustees shall not
cause the Trust to (i) acquire any investments or engage in any activities
not authorized by this Trust Agreement, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Securityholders, except as
expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a “grantor trust” for United States
Federal income tax purposes, (iv) incur any indebtedness for borrowed
money or issue any other debt or (v) take or consent to any action that
would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.

 

(c)           In connection with the issue and sale
of the Preferred Securities, the Depositor shall have the right and
responsibility to assist the Trust with respect to, or effect on behalf of the
Trust, the following (and any actions taken by the Depositor in furtherance of
the following prior to the date of this Trust Agreement are hereby ratified and
confirmed in all respects):  (i) the
preparation and filing by the Trust with the Commission and the execution on
behalf of the Trust of a registration statement on the appropriate form in
relation to the Preferred Securities, including any amendments thereto; (ii) the
determination of the States in which to take appropriate action to qualify or
register for sale all or part of the Preferred Securities and the

 

14

 

determination of any and all such acts, other
than actions which must be taken by or on behalf of the Trust, and the advice
to the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and filed
by the Trust or on behalf of the Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such States; (iii) the
preparation for filing by the Trust and execution on behalf of the Trust of an
application to the New York Stock Exchange or any other national stock exchange
or the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities; (iv) the preparation for filing by the Trust with
the Commission and the execution on behalf of the Trust of a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto; (v) the negotiation of the terms of, and
the execution and delivery of, the Underwriting Agreement providing for the
sale of the Preferred Securities; and (vi) the taking of any other actions
deemed by the Depositor to be necessary or desirable to carry out any of the
foregoing activities.

 

(d)           Notwithstanding anything herein to
the contrary, the Administrative Trustees are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that the Trust
will not be deemed to be an “investment company” required to be registered
under the Investment Company Act or classified as an association taxable as a
corporation for United States Federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States Federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust or this Trust Agreement, that
each of the Depositor and the Administrative Trustees determines in their
discretion to be necessary or desirable for such purposes, as long as such
action does not adversely affect in any material respect the interests of the
Holders of the Preferred Securities.

 

SECTION 2.8  ASSETS OF TRUST.  The assets of the Trust shall consist of the
Trust Property.

 

SECTION 2.9  TITLE TO TRUST PROPERTY.  Legal title to all Trust Property shall be
vested at all times in the Property Trustee (in its capacity as such) and shall
be held and administered by the Property Trustee for the benefit of the Trust
and the Securityholders in accordance with this Trust Agreement.

 

ARTICLE III.

 

PAYMENT
ACCOUNT

 

SECTION 3.1 
PAYMENT ACCOUNT.

 

(a)           On or prior to the Closing Date, the
Property Trustee shall establish the Payment Account. The Property Trustee and
any agent of the Property Trustee shall have exclusive control and sole right
of withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Trust Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive

 

15

 

benefit of the Securityholders and for distribution as
herein provided, including (and subject to) any priority of payments provided
for herein.

 

(b)           The Property Trustee shall deposit in
the Payment Account, promptly upon receipt, all payments of principal of or
interest on, and any other payments or proceeds with respect to, the
Debentures. Amounts held in the Payment Account shall not be invested by the
Property Trustee pending distribution thereof.

 

ARTICLE IV.

 

CERTAIN
TERMS OF THE TRUST SECURITIES

 

SECTION 4.1 
DISTRIBUTIONS.

 

(a)           Distributions on the Trust Securities
shall be cumulative, and will accumulate whether or not there are funds of the
Trust available for the payment of Distributions. Distributions shall accrue
from                     ,
          , and shall be
payable quarterly in arrears on                 ,
                ,
                 
and                 
of each year, commencing on                    ,
               ,
except as otherwise described below. The Debenture Issuer has the right under
the Indenture, at any time and from time to time, to defer payments of interest
for such period or periods as may be specified with respect to the Debentures
(each, an “Extension Period”), on the terms and conditions specified in the
Indenture. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accumulate at the rate set forth in paragraph (b) of this Section 4.1,
together with additional distributions thereon (to the extent permitted by
applicable law) at the rate at which Additional Interest is then accruing on
the Debentures, compounded quarterly during any such Extension Period. If any
date on which a Distribution is otherwise payable on the Trust Securities is
not a Business Day, then the payment of such Distribution shall be made on the
next succeeding day that is a Business Day (and without any additional
distributions or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, payment of such
Distribution shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such payment was
originally payable (each date on which distributions are payable in accordance
with this Section 4.1(a), a “Distribution Date”).

 

(b)           The Trust Securities represent
undivided beneficial interests in the Trust Property, and, as a practical
matter, the Distributions on the Trust Securities shall be payable at a rate of
   % per annum of the Liquidation Amount of the Trust
Securities. The term “Distributions” as used herein includes such cash
distributions and any accumulated or additional distributions that are payable
hereunder unless otherwise stated. The amount of Distributions payable for any
full or partial period shall be computed on the basis of a 360-day year
of twelve 30-day months. The amount of Distributions payable for any
period shall include Additional Amounts, if any.

 

(c)           Distributions on the Trust Securities
shall be made by the Property Trustee from the Payment Account and shall be
payable on each Distribution Date only to the extent that the Trust has funds
then on hand and available in the Payment Account for the payment of such
Distributions.

 

16

 

(d)           Distributions on the Trust Securities
with respect to a Distribution Date shall be payable to the Holders thereof as
they appear on the Securities Register at the close of business on the relevant
record date, which, as long as the Preferred Securities remain in book-entry
only form, shall be the date one Business Day immediately preceding such
Distribution Date. The relevant record dates for the Common Securities shall be
the same record dates as for the Preferred Securities. If the Preferred
Securities shall not continue to remain in book-entry only form or are not in
book-entry only form at issuance, the relevant record dates for the Preferred
Securities shall be the date 15 days prior to the relevant Distribution Date,
which Distribution Dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Trust Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
(or the Debenture Guarantor on its behalf) having failed to make an interest
payment under the Debentures, will cease to be payable to the Person in whose
name such Trust Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Trust Securities are registered on the special record date or other specified
date for determining Debentureholders entitled to such defaulted interest
established in accordance with the Indenture.

 

(e)           In the event that there is any money
or other property held by or for the Trust that is not accounted for hereunder,
such property shall be distributed pro rata among the Holders of the Trust
Securities. A reference herein to any payment, distribution or treatment as
being “pro rata” shall mean pro rata to each Holder of Trust Securities
according to the aggregate Liquidation Amount of the Trust Securities held by
the relevant Holder in relation to the aggregate Liquidation Amount of all
Trust Securities outstanding unless, in relation to a payment, a Debenture
Event of Default has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate Liquidation Amount of
Preferred Securities held by the relevant Holder relative to the aggregate
Liquidation Amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
Liquidation Amount of Common Securities held by the relevant Holder relative to
the aggregate Liquidation Amount of all Common Securities outstanding.

 

SECTION 4.2 
REDEMPTION.

 

(a)           On each Debenture Redemption Date and
on the stated maturity of the Debentures, the Trust will be required to redeem
a Like Amount of Trust Securities at a price per Trust Security equal to the
Redemption Price.

 

(b)           Notice of redemption shall be given
by the Property Trustee by first-class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the Redemption Date to each Holder of
Trust Securities to be redeemed, at such Holder’s address appearing in the
Security Register. All notices of redemption shall state:

 

(i)            the Redemption Date;

 

(ii)           the Redemption Price;

 

17

 

(iii)          the CUSIP number;

 

(iv)          if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the total Liquidation
Amount of the particular Trust Securities to be redeemed; and

 

(v)           that on the Redemption Date the
Redemption Price will become due and payable upon each such Trust Security to
be redeemed and that distributions thereon will cease to accrue on and after
said date.

 

(c)           The Trust Securities redeemed on each
Redemption Date shall be redeemed at the Redemption Price with the proceeds
from the contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Redemption Price.

 

(d)           If the Property Trustee gives a
notice of redemption (which notice shall be irrevocable) in respect of any
Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, so
long as the Preferred Securities are in book-entry-only form, irrevocably
deposit with the Clearing Agency for the Preferred Securities funds sufficient
to pay the applicable Redemption Price and will give such Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to the
relevant Persons’ accounts at such Clearing Agency on the applicable Redemption
Date. If the Preferred Securities are no longer in book-entry-only form, and in
the case of the Common Securities, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the Holders thereof
upon surrender of their Trust Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then immediately prior to the close of business on the date of such deposit,
all rights of Securityholders holding Trust Securities so called for redemption
will cease, except the right of such Securityholders to receive the Redemption
Price and any Distributions payable on or prior to the Redemption Date, but
without interest, and such Securities will cease to be outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly withheld or refused
and not paid either by the Trust or by the Preferred Securities Guarantor
pursuant to the Guarantee, Distributions on such Trust Securities will continue
to accrue, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption Price
is

 

18

 

actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.

 

(e)           Payment of the Redemption Price on
the Trust Securities shall be made to the recordholders thereof as they appear
on the Securities Register for the Trust Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date;
provided, however, that in the event that the Preferred Securities do not
remain in book-entry-only form, the relevant record date shall be the date
fifteen days prior to the relevant Redemption Date.

 

(f)            Subject to Section 4.3(a), if
less than all the Outstanding Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of Trust Securities to
be redeemed shall be allocated on a pro rata basis (based on Liquidation
Amounts) among the Common Securities and the Preferred Securities. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis (based upon Liquidation Amounts) not more than 60 days prior to the
Redemption Date by the Property Trustee from the Outstanding Preferred
Securities not previously called for redemption, by such method (including,
without limitation, by lot) as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $           or an
integral multiple of $       in excess thereof)
of the Liquidation Amount of Preferred Securities of a denomination larger than
$         . The Property Trustee
shall promptly notify the Security Registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of this Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities
shall relate, in the case of any Preferred Securities redeemed or to be
redeemed only in part, to the portion of the Liquidation Amount of Preferred
Securities that has been or is to be redeemed.

 

SECTION 4.3  SUBORDINATION OF COMMON SECURITIES.

 

(a)           Payment of Distributions (including
Additional Amounts, if applicable) on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made, subject to Section 4.2(f), pro
rata among the Common Securities and the Preferred Securities based on the
Liquidation Amount of the Trust Securities; provided, however, that if on any
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution (including Additional Amounts, if applicable) on, or
Redemption Price of, any Common Security, and no other payment on account of
the redemption, liquidation or other acquisition of Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
(including Additional Amounts, if applicable) on all Outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Preferred Securities, shall have been made or provided
for, and all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of, Preferred
Securities then due and payable.

 

19

 

(b)           In the case of the occurrence of any
Event of Default resulting from any Debenture Event of Default, the Holder of
Common Securities will be deemed to have waived any right to act with respect
to any such Event of Default under this Trust Agreement until the effect of all
such Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until any such Event of Default under
this Trust Agreement with respect to the Preferred Securities has been so
cured, waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.

 

SECTION 4.4 
PAYMENT PROCEDURES.

 

Payments of
Distributions (including Additional Amounts, if applicable) in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or, if
the Preferred Securities are held by a Clearing Agency, such Distributions shall
be made to the Clearing Agency in immediately available funds, which shall
credit the relevant Persons’ accounts at such Clearing Agency on the applicable
distribution dates. Payments in respect of the Common Securities shall be made
in such manner as shall be mutually agreed between the Property Trustee and the
Common Securityholder.

 

SECTION 4.5  TAX RETURNS AND REPORTS.

 

The
Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor’s expense, and file all United States Federal, state and local tax
and information returns and reports required to be filed by or in respect of
the Trust. In this regard, the Administrative Trustees shall (a) prepare
and file (or cause to be prepared and filed) the appropriate Internal Revenue
Service Form required to be filed in respect of the Trust in each taxable
year of the Trust and (b) prepare and furnish (or cause to be prepared and
furnished) to each Securityholder the appropriate Internal Revenue Service form
required to be provided on such form. The Administrative Trustees shall provide
the Depositor and the Property Trustee with a copy of all such returns and
reports promptly after such filing or furnishing. The Trustees shall comply
with United States Federal withholding and backup withholding tax laws and
information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.

 

SECTION 4.6  PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.

 

Upon receipt
under the Debentures of Additional Sums, the Property Trustee shall promptly
pay any taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other
taxing authority.

 

SECTION 4.7  PAYMENTS UNDER INDENTURE.

 

Any amount
payable hereunder to any Holder of Preferred Securities shall be reduced by the
amount of any corresponding payment such Holder (and any Owner with respect
thereto) has directly received pursuant to Section 5.8 of the Indenture.

 

20

 

ARTICLE V.

 

TRUST
SECURITIES CERTIFICATES

 

SECTION 5.1 
INITIAL OWNERSHIP.

 

Upon the
formation of the Trust and the contribution by the Depositor pursuant to Section 2.3
and until the issuance of the Trust Securities, and at any time during which no
Trust Securities are outstanding, the Depositor shall be the sole beneficial
owner of the Trust.

 

SECTION 5.2  THE TRUST SECURITIES CERTIFICATES.

 

The Preferred
Securities Certificates shall be issued in minimum denominations of $         
Liquidation Amount and integral multiples of $      
in excess thereof, and the Common Securities Certificates shall be issued in
denominations of $      Liquidation Amount and
integral multiples of $       in excess thereof.
The Trust Securities Certificates shall be executed on behalf of the Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee’s name pursuant to Sections 5.4, 5.11
and 5.13.

 

SECTION 5.3 
EXECUTION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES.  At each Time of Delivery,
the Administrative Trustees shall cause Trust Securities Certificates, in an
aggregate Liquidation Amount as provided in Sections 2.4 and 2.5, to be
executed on behalf of the Trust and delivered to or upon the written order of
the Depositor, signed by its Chairman of the Board, a Vice Chairman, its
President, a Vice President or its Treasurer and attested by its Secretary or
one of its Assistant Secretaries, without further corporate action by the
Depositor, in authorized denominations.

 

SECTION 5.4 
REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES CERTIFICATES.  The Depositor
shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.8,
a register or registers for the purpose of registering Trust Securities
Certificates and transfers and exchanges of Preferred Securities Certificates
(the “Securities Register”). The registrar designated by the Depositor (the “Securities
Registrar”), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Preferred Securities Certificates and Common
Securities Certificates (subject to Section 5.10 in the case of the Common
Securities Certificates) and registration of transfers and exchanges of
Preferred Securities Certificates as herein provided. The Bank shall be the
initial Securities Registrar. Upon surrender for registration of transfer of
any Preferred Securities Certificate at the office or agency maintained
pursuant to Section 5.8, the Administrative Trustees or any one of them
shall execute and deliver, in the name of the designated transferee or

 

21

 

transferees, one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee or Trustees. The
Securities Registrar shall not be required to register the transfer of any
Preferred Securities after such Preferred Securities have been called for
redemption. At the option of a Holder, Preferred Securities Certificates may be
exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be exchanged at the
office or agency maintained pursuant to Section 5.8. Every Preferred
Securities Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to an Administrative Trustee and the Securities Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Preferred Securities Certificate surrendered for registration of transfer or
exchange shall be cancelled and subsequently disposed of by an Administrative
Trustee in accordance with customary practice. Registration of transfers or
exchanges of Preferred Securities Certificates shall be effected without
service charge by or on behalf of the Trust, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such transfer or exchange.

 

SECTION 5.5 
MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.  If (a) any mutilated
Trust Securities Certificate shall be surrendered to the Securities Registrar,
or if the Securities Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Trust Securities Certificate and (b) there
shall be delivered to the Securities Registrar and the Administrative Trustees
such security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Trust Securities Certificate
shall have been acquired by a bona fide purchaser, the Administrative Trustees,
or any one of them, on behalf of the Trust shall execute and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Trust Securities Certificate, a new Trust Securities Certificate of like
class, tenor and denomination. In connection with the issuance of any new Trust
Securities Certificate under this Section, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section shall
constitute conclusive evidence of an undivided beneficial interest in the
assets of the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Trust Securities Certificate shall be found at any time.

 

SECTION 5.6  PERSONS DEEMED SECURITYHOLDERS.  Prior to due presentation of a Trust
Securities Certificate for registration of transfer, the Administrative Trustees
or the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
distributions and for all other purposes whatsoever, and neither the Trustees
nor the Securities Registrar shall be bound by any notice to the contrary.

 

SECTION 5.7  ACCESS TO LIST OF SECURITYHOLDERS’ NAMES AND
ADDRESSES.  The Administrative Trustees
shall furnish or cause to be furnished (x) to the Depositor, within 15 days
after receipt by any Administrative Trustee of a request therefor from the
Depositor in writing and (y) to the Property Trustee, promptly after receipt by
any

 

22

 

Administrative Trustee of a request therefor from the
Property Trustee in writing in order to enable the Property Trustee to
discharge its obligations under this Trust Agreement, a list, in such form as
the Depositor or the Property Trustee may reasonably require, of the names and
addresses of the Securityholders as of a recent date. If Holders of Trust
Securities Certificates evidencing ownership at such time and for the previous
six months of not less than 25% of the Outstanding aggregate Liquidation Amount
apply in writing to any Administrative Trustee, and such application states
that the applicants desire to communicate with other Securityholders with
respect to their rights under this Trust Agreement or under the Trust
Securities Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Administrative
Trustees shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Securityholders. Each Holder, by receiving and holding a Trust
Securities Certificate, and each Owner shall be deemed to have agreed not to
hold the Depositor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.

 

SECTION 5.8 
MAINTENANCE OF OFFICE OR AGENCY.  The Administrative Trustees shall maintain in
New York, New York, an office or offices or agency or agencies where Preferred
Securities Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustees in respect of
the Trust Securities and the Trust Agreement may be served. The Administrative
Trustees initially designate The Bank of New York, One Wall Street, New York,
New York  10286; Attention: Corporate
Trust Department, as the principal corporate trust office for such purposes.
The Administrative Trustees shall give prompt written notice to the Depositor
and to the Securityholders of any change in the location of the Securities
Register or any such office or agency.

 

SECTION 5.9  APPOINTMENT OF PAYING AGENT.  The Paying Agent shall make distributions to
Securityholders from the Payment Account and shall report the amounts of such
distributions to the Property Trustee and the Administrative Trustees. Any
Paying Agent shall have the revocable power to withdraw funds from the Payment
Account for the purpose of making the distributions referred to above. The
Administrative Trustees may revoke such power and remove the Paying Agent if
such Trustees determine in their sole discretion that the Paying Agent shall
have failed to perform its obligations under this Trust Agreement in any material
respect. The Paying Agent shall initially be the Bank, and any co-paying agent
chosen by the Bank, and acceptable to the Administrative Trustees and the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days’ written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Bank shall no longer
be the Paying Agent or a successor Paying Agent shall resign or its authority
to act be revoked, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company that is acceptable to the Property Trustee and
the Depositor) to act as Paying Agent. The Administrative Trustees shall cause
such successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Trustees that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the Securityholders
in trust for the benefit of the Securityholders entitled thereto until such
sums shall be paid to such Securityholders.

 

23

 

SECTION 5.10  The Paying Agent shall return all unclaimed
funds to the Property Trustee and upon removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property Trustee.
The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the Paying
Agent appointed hereunder and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.

 

SECTION 5.11 
OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.  At each Time of Delivery, the Depositor shall
acquire and retain beneficial and record ownership of all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Preferred Securities are
issued and sold.

 

The aggregate
Liquidation Amount of the Common Securities at any time shall not be less than
3% of the total capital of the Trust. To the fullest extent permitted by law,
other than a transfer in connection with a consolidation or merger of the
Depositor into another corporation, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, any attempted transfer
of the Common Securities shall be void. The Administrative Trustees shall cause
each Common Securities Certificate issued to the Depositor to contain a legend
stating “THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST
AGREEMENT (AS DEFINED BELOW)”.

 

SECTION 5.12 
BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE.

 

(a)           The Preferred Securities
Certificates, upon original issuance, will be issued in the form of a
typewritten Preferred Securities Certificate or Certificates representing
Book-Entry Preferred Securities Certificates, to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Preferred
Securities Certificate or Certificates shall initially be registered on the
Securities Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no beneficial owner will receive a Definitive
Preferred Securities Certificate representing such beneficial owner’s interest
in such Preferred Securities, except as provided in Section 5.13. Except
for Definitive Preferred Securities Certificates as specified herein, unless
and until Definitive Preferred Securities Certificates have been issued to
beneficial owners pursuant to Section 5.13:

 

(i)            the provisions of this Section 5.11(a) shall
be in full force and effect;

 

(ii)           the Securities Registrar and the
Trustees shall be entitled to deal with the Clearing Agency for all purposes of
this Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of the Liquidation Amount of and
Distributions on the Book-Entry Preferred Securities and the giving of
instructions or directions to Owners of Book-Entry Preferred Securities) as the
sole Holder of Book-Entry Preferred Securities and shall have no obligations to
the Owners thereof;

 

24

 

(iii)          to the extent that the provisions of
this Section 5.11 conflict with any other provisions of this Trust
Agreement, the provisions of this Section 5.11 shall control; and the
rights of the Owners of the Book-Entry Preferred Securities Certificates shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Owners and the Clearing Agency
and/or the Clearing Agency Participants; provided, that solely for the purposes
of determining whether the Holders of the requisite amount of Preferred
Securities have voted on any matter provided for in this Trust Agreement, so
long as Definitive Preferred Security Certificates have not been issued, the
Trustees may conclusively rely on, and shall be protected in relying on, any
written instrument (including a proxy) delivered to the Trustees by the
Clearing Agency setting forth the Owners’ votes or assigning the right to vote
on any matter to any other Persons either in whole or in part. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 5.13, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments on the Preferred Securities to
such Clearing Agency Participants.

 

(b)           A single Common Securities
Certificate representing the Common Securities shall be issued to the Depositor
in the form of a definitive Common Securities Certificate.

 

SECTION 5.13  NOTICES TO CLEARING AGENCY.

 

(a)           To the extent that a notice or other
communication to the Owners is required under this Trust Agreement, unless and
until Definitive Preferred Securities Certificates shall have been issued to
Owners pursuant to Section 5.13, the Trustees shall give all such notices
and communications specified herein to be given to Owners to the Clearing
Agency, and shall have no obligations to the Owners.

 

SECTION 5.14 
DEFINITIVE PREFERRED SECURITIES CERTIFICATES.  If (a) the Depositor advises the
Trustees in writing that the Clearing Agency is no longer willing or able to
act as clearing agency with respect to the Preferred Securities Certificates,
and the Depositor fails to appoint a qualified successor within 90 days, (b) the
Depositor at its option advises the Trustees in writing that it elects to
terminate the book-entry system through the Clearing Agency or (c) after
the occurrence of a Debenture Event of Default, Owners of Preferred Securities
Certificates representing beneficial interests aggregating at least a majority
of the Liquidation Amount of the Outstanding Preferred Securities advise the
Property Trustee in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Owners of
Preferred Securities Certificates, then the Property Trustee shall notify the Clearing
Agency and the Clearing Agency shall notify all Owners of Preferred Securities
Certificates and the other Trustees of the occurrence of any such event and of
the availability of the Definitive Preferred Securities Certificates to Owners
of such class or classes, as applicable, requesting the same. Upon surrender to
the Property Trustee of the typewritten Preferred Securities Certificate or
Certificates representing the Book Entry Preferred Securities Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees, or any one of them, shall execute the Definitive
Preferred Securities Certificates in accordance with the instructions of the
Clearing Agency. Neither the Securities Registrar nor the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and

 

25

 

shall be protected in relying on, such instructions.
Upon the issuance of Definitive Preferred Securities Certificates, the Trustees
shall recognize the Holders of the Definitive Preferred Securities Certificates
as Securityholders. The Definitive Preferred Securities Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by the
execution thereof by the Administrative Trustees or any one of them.

 

SECTION 5.15 
RIGHTS OF SECURITYHOLDERS.  (a) The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as
such) in accordance with Section 2.9, and the Securityholders shall not
have any right or title therein other than the undivided beneficial interest in
the assets of the Trust conferred by their Trust Securities and they shall have
no right to call for any partition or division of property, profits or rights
of the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this
Trust Agreement. The Trust Securities shall have no preemptive or similar
rights and when issued and delivered to Securityholders against payment of the
purchase price therefor will be fully paid and nonassessable by the Trust. The
Holders of the Trust Securities, in their capacities as such, shall be entitled
to the same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware.

 

(b)           For so long as any Preferred
Securities remain Outstanding, if, upon a Debenture Event of Default, the
Debenture Trustee fails or the holders of not less than 25% in principal amount
of the outstanding Debentures fail to declare the principal of all of the
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right by a notice in writing to the Debenture Issuer, the Debenture Guarantor,
the Debenture Trustee and the Property Trustee; and upon any such declaration
such principal amount of and the accrued interest on all of the Debentures
shall become immediately due and payable, provided that the payment of
principal, interest, and any other amounts payable with respect to such Debentures
shall remain subordinated to the extent provided in the Indenture.

 

At any time
after such a declaration of acceleration with respect to the Debentures has
been made and before a judgment or decree for payment of the money due has been
obtained by the Debenture Trustee as in the Indenture provided, the Holders of
a majority in Liquidation Amount of the Preferred Securities then Outstanding,
by written notice to the Debenture Issuer, the Debenture Guarantor, the
Debenture Trustee and the Property Trustee, may rescind and annul such
declaration and its consequences if:  (i) the
Debenture Issuer or the Debenture Guarantor has paid or deposited with the
Debenture Trustee a sum sufficient to pay

 

(A) all
overdue installments of interest (including any Additional Interest) on, and
any other Additional Amounts with respect to, all of the Debentures,

 

(B) the
principal of and premium on any Debentures which have become due otherwise than
by such declaration of acceleration and interest thereon and any Additional
Amounts with respect thereto at the rate or rates borne by or provided for in
the Debentures,

 

26

 

(C) to
the extent the payment of such interest or Additional Amounts is lawful,
interest upon overdue installments of any interest and Additional Amounts at
the rate or rates borne by or provided for in the Debentures, and

 

(D) all
sums paid or advanced by the Debenture Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee, its agents and counsel and all other amounts due the Debenture Trustee
under the Indenture; and (ii) all Events of Default with respect to the
Debentures, other than the non-payment of the principal of, any premium and
interest on, and any Additional Amounts with respect to the Debentures which
have become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture. 
No such rescission shall affect any subsequent default or impair any
right consequent thereon.

 

The Holders of
not less than a majority in Liquidation Amount of the Preferred Securities then
Outstanding may, on behalf of the Holders of all the Preferred Securities,
waive any past default under the Indenture, except a default (i) in the
payment of principal of, any premium or interest (including any Additional
Interest) on, or any other Additional Amounts with respect to, the Debentures
or (ii) in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Debenture.

 

Upon receipt
by the Property Trustee of written notice declaring such an acceleration, or
rescission and annulment thereof, by Holders of the Preferred Securities all or
part of which are represented by Book-Entry Preferred Securities Certificates,
a record date shall be established for determining Holders of Outstanding
Preferred Securities entitled to join in such notice, which record date shall
be at the close of business on the day the Property Trustee receives such
notice. The Holders on such record date, or their duly designated proxies, and
only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day which is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be
canceled and of no further effect. Nothing in this paragraph shall prevent a
Holder, or a proxy of a Holder, from giving, after expiration of such 90-day
period, a new written notice of declaration of acceleration, or rescission and
annulment thereof, as the case may be, that is identical to a written notice
which has been canceled pursuant to the proviso to the preceding sentence, in
which event a new record date shall be established pursuant to the provisions
of this Section 5.14(b).

 

(c)           For so long as any Preferred
Securities remain Outstanding, to the fullest extent permitted by law and
subject to the terms of this Trust Agreement and the Indenture, any Holder of
Preferred Securities shall have the right, upon a Debenture Event of Default
specified in Section 5.1(1) or 5.1(2) of the Indenture, to
institute directly a proceeding against the Debenture Issuer or the Debenture
Guarantor, as the case may be, pursuant to Section 5.8 of the Indenture,
for enforcement of payment to such Holder of the principal of, and any premium
and (subject to the provisions of the Indenture) interest (including any
Additional Interest) on, and any other Additional Amounts with respect to, such
Debentures having a principal amount equal to the Liquidation Amount of the
Preferred Securities of such Holder (a “Direct Action”). In

 

27

 

connection with any such Direct Action, the rights of
the Holders of Common Securities will be subrogated to the rights of any Holder
of Preferred Securities to the extent of any payment made by the Debenture
Issuer or the Debenture Guarantor, as the case may be, to such Holder of
Preferred Securities as a result of such Direct Action. Except as set forth in Section 5.14(b) and
(c), or as otherwise contemplated by the Indenture, the Holders of Preferred
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Debentures.

 

ARTICLE VI.

 

ACTS
OF SECURITYHOLDERS; MEETINGS; VOTING

 

SECTION 6.1  LIMITATIONS ON VOTING RIGHTS.

 

(a)           Except as provided in this Section,
in Sections 5.14, 8.10 and 10.2 and in the Indenture and as otherwise required
by law, no Holder of Preferred Securities shall have any right to vote or in
any manner otherwise control the administration, operation and management of
the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.

 

So long as any
Debentures are held by the Property Trustee, the Trustees shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or power conferred
on the Debenture Trustee with respect to such Debentures, (ii) waive any
past default which is waivable under Section 5.13 of the Indenture, (iii) exercise
any right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a majority in Liquidation Amount of all Outstanding
Preferred Securities; provided, however, that where a consent under the
Indenture would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior written consent of each Holder of Preferred Securities. The Trustees
shall not revoke any action previously authorized or approved by a vote of the
Holders of Preferred Securities, except by a subsequent vote of the Holders of
Preferred Securities. The Property Trustee shall notify all Holders of the
Preferred Securities of any notice of default received from the Debenture
Trustee with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Preferred Securities, prior to taking any of
the foregoing actions, the Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel rendered by counsel experienced in such matters to
the effect that the Trust will not be classified as an association taxable as a
corporation for United States Federal income tax purposes on account of such
action.

 

If any
proposed amendment to the Trust Agreement provides for, or the Trustees
otherwise propose to effect, (i) any action that would adversely affect in
any material respect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the terms of this Trust Agreement, then the Holders of Outstanding

 

28

 

Preferred Securities as a class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
majority in Liquidation Amount of the Outstanding Preferred Securities. No
amendment to this Trust Agreement may be made if, as a result of such
amendment, the Trust would be classified as an association taxable as a
corporation for United States federal income tax purposes.

 

SECTION 6.2 
NOTICE OF MEETINGS.

 

Notice of all
meetings of the Preferred Securityholders, stating the time, place and purpose
of the meeting, shall be given by the Property Trustee pursuant to Section 10.8
to each Preferred Securityholder of record, at his registered address, at least
15 days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.

 

SECTION 6.3  MEETINGS OF PREFERRED SECURITYHOLDERS.

 

No annual
meeting of Securityholders is required to be held. The Administrative Trustees,
however, shall call a meeting of Securityholders to vote on any matter upon the
written request of the Preferred Securityholders of record of 25% of the
Preferred Securities (based upon their Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Preferred Securityholders to vote on any matters
as to which Preferred Securityholders are entitled to vote. Preferred
Securityholders of record of 50% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), present in person or by proxy, shall constitute
a quorum at any meeting of Securityholders. If a quorum is present at a
meeting, an affirmative vote by the Preferred Securityholders of record
present, in person or by proxy, holding a majority of the Preferred Securities
(based upon their Liquidation Amount) held by the Preferred Securityholders of
record present, either in person or by proxy, at such meeting shall constitute
the action of the Securityholders, unless this Trust Agreement requires a
greater number of affirmative votes.

 

SECTION 6.4 
VOTING RIGHTS. 
Securityholders shall be entitled to one vote for each $         
of Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.

 

SECTION 6.5 
PROXIES, ETC. 
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees
may direct, for verification prior to the time at which such vote shall be
taken. Pursuant to a resolution of the Property Trustee, proxies may be
solicited in the name of the Property Trustee or one or more officers of the
Property Trustee. Only Securityholders of record shall be entitled to vote.
When Trust Securities are held jointly by several Persons, any one of them may
vote at any meeting in person or by proxy in respect of such Trust Securities,
but if more than one of them shall be present at such meeting in person or by
proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Trust
Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless

 

29

 

challenged at or prior to its exercise, and the burden
of proving invalidity shall rest on the challenger. No proxy shall be valid
more than three years after its date of execution.

 

SECTION 6.6 
SECURITYHOLDER ACTION BY WRITTEN CONSENT.  Any required approval or action which may be
given or taken by Securityholders at a meeting convened for such purpose may be
given or taken without a meeting and without prior notice if Securityholders
holding a majority of all Outstanding Trust Securities (based upon their
Liquidation Amount) entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any express provision of this Trust
Agreement) shall consent to the action in writing.

 

SECTION 6.7 
RECORD DATE FOR VOTING AND OTHER PURPOSES.  For the purposes of determining the
Securityholders who are entitled to notice of and to vote at any meeting or to
act by written consent, or to participate in any distribution on the Trust
Securities in respect of which a record date is not otherwise provided for in
this Trust Agreement, or for the purpose of any other action, the
Administrative Trustees may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Securityholders or the payment of a
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.

 

SECTION 6.8 
ACTS OF SECURITYHOLDERS.  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Trust Agreement to be given, made or taken by Securityholders or Owners may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders or Owners in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to an Administrative Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of the Securityholders or Owners signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 8.1) conclusive in favor of the
Trustees, if made in the manner provided in this Section. The fact and date of
the execution by any Person of any such instrument or writing may be proved by
the affidavit of a witness of such execution or by a certificate of a notary
public or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing acknowledged
to him the execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date of
the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which any Trustee
receiving the same deems sufficient. The ownership of Preferred Securities
shall be proved by the Securities Register. Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the Securityholder of any
Trust Security shall bind every future Securityholder of the same Trust
Security and the Securityholder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustees or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Trust Security. Without limiting the foregoing, a Securityholder entitled
hereunder to take any action hereunder with regard to any particular Trust
Security may do so

 

30

 

with regard to all or any part of the Liquidation
Amount of such Trust Security or by one or more duly appointed agents each of
which may do so pursuant to such appointment with regard to all or any part of
such Liquidation Amount. If any dispute shall arise between the Securityholders
and the Administrative Trustees or among such Securityholders or Trustees with
respect to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by
the Property Trustee shall be conclusive with respect to such matter.

 

SECTION 6.9 
INSPECTION OF RECORDS. 
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably related
to such Securityholder’s interest as a Securityholder.

 

ARTICLE VII.

 

REPRESENTATIONS
AND WARRANTIES

 

SECTION 7.1 
REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE.  The Property
Trustee and the Delaware Trustee, each severally on behalf of and solely as
each such representation or warranty applies to itself, hereby represents and
warrants for the benefit of the Depositor and the Securityholders that:

 

(a)           the Property Trustee is a national
banking association duly organized, validly existing and in good standing under
the laws of the United States, and the Delaware Trustee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware;

 

(b)           each of the Property Trustee and the
Delaware Trustee has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement, and, in the case of the Delaware Trustee,
satisfies for the Trust Section 3807 of the Delaware Business Trust Act;

 

(c)           this Trust Agreement has been duly
authorized, executed and delivered by each of the Property Trustee and the
Delaware Trustee and constitutes the respective valid and legally binding
agreement of each of the Property Trustee and the Delaware Trustee enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles;

 

(d)           the execution, delivery and
performance by each of the Property Trustee and the Delaware Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Property Trustee or the Delaware Trustee, as the case
may be, and does not require any approval of stockholders of the Property
Trustee or the Delaware Trustee, and such execution, delivery and performance
will not (i) violate the Property

 

31

 

Trustee’s or the Delaware Trustee’s Charter or
By-laws, (ii) violate any provision of, or constitute, with or without
notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Property Trustee or the
Delaware Trustee, as the case may be, is a party or by which it is bound, or (iii) violate
any law, governmental rule or regulation of the United States or the State
of Delaware, as the case may be, governing the corporate, banking or trust
powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;

 

(e)           neither the authorization, execution
or delivery by the Property Trustee or the Delaware Trustee, as the case may
be, of this Trust Agreement nor the consummation of any of the transactions by
the Property Trustee or the Delaware Trustee, as the case may be, contemplated
herein or therein requires the consent or approval of, the giving of notice to,
the registration with or the taking of any other action with respect to any
governmental authority or agency under any existing Federal law governing the
corporate, banking or trust powers of the Property Trustee or the Delaware
Trustee, as appropriate in context, under the laws of the United States or the
State of Delaware; and

 

(f)            there are no proceedings pending or,
to the best of each of the Property Trustee’s and the Delaware Trustee’s
knowledge, threatened against or affecting the Property Trustee or the Delaware
Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power
and authority of the Property Trustee or the Delaware Trustee, as the case may
be, to enter into or perform its obligations as one of the Trustees under this
Trust Agreement.

 

SECTION 7.2  REPRESENTATIONS AND WARRANTIES OF
DEPOSITOR.  The Depositor hereby
represents and warrants for the benefit of the Securityholders that:

 

(a)           the Trust Securities Certificates
issued at each Time of Delivery on behalf of the Trust have been duly
authorized and will have been, duly and validly executed, issued and delivered
by the Trustees pursuant to the terms and provisions of, and in accordance with
the requirements of, this Trust Agreement and the Securityholders will be, as
of each such date, entitled to the benefits of this Trust Agreement; and

 

(b)           there are no taxes, fees or other
governmental charges payable by the Trust (or the Trustees on behalf of the
Trust) under the laws of the State of Delaware or any political subdivision
thereof in connection with the execution, delivery and performance by the
Property Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.

 

32

 

ARTICLE VIII.

 

THE
TRUSTEES

 

SECTION 8.1  CERTAIN DUTIES AND RESPONSIBILITIES.

 

(a)           The duties and responsibilities of
the Trustees shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, subject to the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require the Trustees to
expend or risk their own funds or otherwise incur any financial liability in
the performance of any of their duties hereunder, or in the exercise of any of their
rights or powers, if they shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Trust Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustees shall be subject to
the provisions of this Section. To the extent that, at law or in equity, an
Administrative Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to the Securityholders, such Administrative
Trustee shall not be liable to the Trust or to any Securityholder for such
Trustee’s good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Administrative Trustees.

 

(b)           All payments made by the Property
Trustee or a Paying Agent in respect of the Trust Securities shall be made only
from the revenue and proceeds from the Trust Property and only to the extent
that there shall be sufficient revenue or proceeds from the Trust Property to
enable the Property Trustee or a Paying Agent to make payments in accordance
with the terms hereof. Each Securityholder, by its acceptance of a Trust
Security, agrees that it will look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 8.1(b) does not limit the
liability of the Trustees expressly set forth elsewhere in this Trust Agreement
and, in the case of the Property Trustee, in the Trust Indenture Act.

 

(c)           No provision of this Trust Agreement
shall be construed to relieve the Property Trustee from liability for its own
bad faith, negligence or willful misconduct, except that: (i) the Property
Trustee undertakes to perform only those duties specifically set forth in this
Agreement, provided that, it must exercise the same degree of care as a prudent
person would exercise in the conduct of his or her own affairs; (ii) the
Property Trustee shall not be liable for any error of judgment made in good
faith by an authorized officer of the Property Trustee, unless it shall be
proved that the Property Trustee was negligent in ascertaining the pertinent
facts; (iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in Liquidation Amount of
the Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any trust
or power conferred upon the Property Trustee under this Trust Agreement; (iv) the
Property Trustee’s sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Payment Account shall be to
deal with such Property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this Trust
Agreement and the Trust Indenture Act; (v) the Property Trustee shall not
be liable for any interest on any money received by it except as it may
otherwise agree with the Depositor; and money held by the

 

33

 

Property Trustee need not be segregated from other
funds held by it except in relation to the Payment Account maintained by the
Property Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law; and (vi) the Property Trustee shall not be
responsible for monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor shall
the Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Depositor.

 

SECTION 8.2 
CERTAIN NOTICES. 
Within five (5) Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice
of such Event of Default to the Securityholders, the Administrative Trustees
and the Depositor, unless such Event of Default shall have been cured or
waived. Within five Business Days after the receipt of notice of the Debenture
Issuer’s exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Administrative Trustees shall
transmit, in the manner and to the extent provided in Section 10.8, notice
of such exercise to the Securityholders and the Property Trustee, unless such
exercise shall have been revoked.

 

SECTION 8.3 
CERTAIN RIGHTS OF PROPERTY TRUSTEE.  Subject to the provisions of Section 8.1:

 

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

 

(b)           if (i) in performing its duties
under this Trust Agreement the Property Trustee is required to decide between
alternative courses of action or (ii) in construing any of the provisions
of this Trust Agreement the Property Trustee finds the same ambiguous or
inconsistent with any other provisions contained herein or (iii) the
Property Trustee is unsure of the application of any provision of this Trust
Agreement, then, except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this Trust Agreement,
the Property Trustee shall deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of action to be taken and the
Property Trustee shall take such action, or refrain from taking such action, as
the Property Trustee shall be instructed in writing to take, or to refrain from
taking, by the Depositor and the Property Trustee shall be fully protected in
acting in accordance with such instructions; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Trust
Agreement as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no liability
except for its own bad faith, negligence or willful misconduct;

 

(c)           any direction or act of the Depositor
or the Administrative Trustees contemplated by this Trust Agreement shall be
sufficiently evidenced by an Officers’ Certificate;

 

34

 

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

 

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

 

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

 

(g)           the Property Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Trust Agreement at the request or direction of any of the Securityholders
pursuant to this Trust Agreement, unless such Securityholders shall have
offered to the Property Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;

 

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

 

(i)            the Property Trustee may execute any
of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through its agents or attorneys, provided that the Property
Trustee shall be responsible for its own negligence or recklessness with
respect to selection of any agent or attorney appointed by it hereunder;

 

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

 

35

 

(k)           except as otherwise expressly
provided by this Trust Agreement, the Property Trustee shall not be under any
obligation to take any action that is discretionary under the provisions of
this Trust Agreement.

 

No provision
of this Trust Agreement shall be deemed to impose any duty or obligation on the
Property Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it, in any jurisdiction in which it shall
be illegal, or in which the Property Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts,
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Property Trustee shall be construed to be a duty.

 

SECTION 8.4 
NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.  The recitals contained
herein and in the Trust Securities Certificates shall be taken as the
statements of the Depositor, and the Trustees do not assume any responsibility
for their correctness. The Trustees shall not be accountable for the use or
application by the Debenture Issuer of the proceeds of the Debentures.

 

SECTION 8.5 
MAY HOLD SECURITIES.  Any Trustee or any other agent of any Trustee
or the Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, except as otherwise provided in the definition
of “Outstanding” in Article I and subject to Sections 8.8 and 8.13, may
otherwise deal with the Trust with the same rights it would have if it were not
a Trustee or such other agent.

 

SECTION 8.6 
COMPENSATION; INDEMNITY; FEES.

 

The Depositor
agrees:

 

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

 

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

 

(c)           to indemnify each of the Trustees or
any predecessor Trustee for, and to hold the Trustees harmless against, any
loss, damage, claims, liability, penalty or expense incurred without bad faith,
negligence or willful misconduct on its part, arising out of or in connection
with the acceptance or administration of this Trust Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

 

The provisions
of this Section 8.6 shall survive the termination of this Trust Agreement
or the resignation or removal of any Trustee. No Trustee may claim any lien or
charge on any Trust Property as a result of any amount due pursuant to this Section 8.6.

 

36

 

SECTION 8.7 
CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES.

 

(a)           There shall at all times be a
Property Trustee hereunder. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to the
Trust Securities shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

 

(b)           There shall at all times be one or
more Administrative Trustees hereunder. Each Administrative Trustee shall be
either a natural person who is at least 21 years of age or a legal entity that
shall act through one or more persons authorized to bind that entity.

 

(c)           There shall at all times be a
Delaware Trustee. The Delaware Trustee shall either be (i) a natural
person who is at least 21 years of age and a resident of the State of Delaware
or (ii) a legal entity with its principal place of business in the State
of Delaware and that otherwise meets the requirements of applicable Delaware
law that shall act through one or more persons authorized to bind such entity.

 

SECTION 8.8 
CONFLICTING INTERESTS.

 

If the
Property Trustee has or shall acquire a conflicting interest within the meaning
of the Trust Indenture Act, the Property Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Trust Agreement. Subject to
the foregoing, the Depositor and any Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders shall have no rights by virtue of this Trust Agreement in
and to such independent ventures or the income or profits derived therefrom,
and the pursuit of any such venture, even if competitive with the business of
the Trust, shall not be deemed wrongful or improper. Neither the Depositor, nor
any Trustee, shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and the Depositor or any
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Trustee may engage in any financial or other transaction
with the Depositor or any Affiliate of the Depositor, or may act as depository
for, trustee or agent for, or act on any committee or body of holders of,
securities or other obligations of the Depositor or its Affiliates.

 

SECTION 8.9 
CO-TRUSTEES AND SEPARATE TRUSTEE.

 

Unless an
Event of Default shall have occurred and be continuing, at any time or times,
for the purpose of meeting the legal requirements of the Trust Indenture Act or
of any

 

37

 

jurisdiction in which any part of the Trust
Property may at the time be located, the Depositor and the Administrative
Trustees, by agreed action of the majority of such Trustees, shall have power
to appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery, and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Depositor does not join in such appointment within 15 days after the receipt by
it of a request so to do, or in case a Debenture Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this Section shall
either be (i) a natural person who is at least 21 years of age and a
resident of the United States or (ii) a legal entity with its principal
place of business in the United States that shall act through one or more
persons authorized to bind such entity. Should any written instrument from the
Depositor be required by any co-trustee or separate trustee so appointed for
more fully confirming to such co- trustee or separate trustee such property,
title, right, or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by the Depositor. Every co-trustee or
separate trustee shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following terms, namely:

 

(a)           The Trust Securities shall be
executed and delivered and all rights, powers, duties, and obligations
hereunder in respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with, the Trustees
specified hereunder, shall be exercised, solely by such Trustees and not by
such co-trustee or separate trustee.

 

(b)           The rights, powers, duties, and
obligations hereby conferred or imposed upon the Property Trustee in respect of
any property covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Property Trustee or by the Property Trustee and
such co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the extent
that under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations shall be
exercised and performed by such co-trustee or separate trustee.

 

(c)           The Property Trustee at any time, by
an instrument in writing executed by it, with the written concurrence of the
Depositor, may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate trustee without
the concurrence of the Depositor. Upon the written request of the Property
Trustee, the Depositor shall join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section.

 

38

 

(d)           No co-trustee or separate trustee
hereunder shall be personally liable by reason of any act or omission of the
Property Trustee or any other trustee hereunder.

 

(e)           The Property Trustee shall not be
liable by reason of any act of a co-trustee or separate trustee.

 

(f)            Any Act of Holders delivered to the
Property Trustee shall be deemed to have been delivered to each such co-trustee
and separate trustee.

 

RESIGNATION
AND REMOVAL; APPOINTMENT OF SUCCESSOR. 
No resignation or removal of any Trustee (the “Relevant Trustee”) and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11. Subject to
the immediately preceding sentence, the Relevant Trustee may resign at any time
with respect to the Trust Securities by giving written notice thereof to the
Depositor. If the instrument of acceptance by the successor Trustee required by
Section 8.11 shall not have been delivered to the Relevant Trustee within
30 days after the giving of such notice of resignation, the Relevant Trustee
may petition, at the expense of the Depositor, any court of competent
jurisdiction for the appointment of a successor Relevant Trustee with respect
to the Trust Securities. Unless a Debenture Event of Default shall have occurred
and be continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). In no event will the Holders
of Preferred Securities have the right to vote to appoint, remove or replace
the Administrative Trustees. An Administrative Trustee may be removed by Act of
the Common Securityholder at any time. If any Trustee shall resign, be removed
or become incapable of acting as Trustee, or if a vacancy shall occur in the
office of any Trustee for any cause, at a time when no Debenture Event of
Default shall have occurred and be continuing, the Common Securityholder, by
Act of the Common Securityholder delivered to the retiring Trustee, shall
promptly appoint a successor Trustee or Trustees with respect to the Trust
Securities and the Trust, and the retiring Trustee shall comply with the
applicable requirements of Section 8.11. If the Property Trustee or the
Delaware Trustee shall resign, be removed or become incapable of continuing to
act as the Property Trustee or the Delaware Trustee, as the case may be, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Preferred Securityholders, by Act of the Securityholders of a majority in
Liquidation Amount of the Preferred Securities then Outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Relevant
Trustee or Trustees with respect to the Trust Securities and the Trust, and
such successor Trustee shall comply with the applicable requirements of Section 8.11.
If an Administrative Trustee shall resign, be removed or become incapable of
acting as Administrative Trustee, at a time when a Debenture Event of Default
shall have occurred and be continuing, the Common Securityholder by Act of the
Common Securityholder delivered to the Administrative Trustee shall promptly
appoint a successor Administrative Trustee or Administrative Trustees with
respect to the Trust Securities and the Trust, and such successor Administrative
Trustee or Trustees shall comply with the applicable requirements of Section 8.11.
If no successor Relevant Trustee with respect to the Trust Securities shall
have been so appointed by the Common Securityholder or the

 

39

 

Preferred Securityholders and accepted
appointment in the manner required by Section 8.11, any Securityholder who
has been a Securityholder of Trust Securities 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 Relevant Trustee with
respect to the Trust Securities. The Depositor shall give notice of each
resignation and each removal of the Property Trustee or the Delaware Trustee
and each appointment of a successor Property Trustee or Delaware Trustee to all
Securityholders in the manner provided in Section 10.8. Each notice shall
include the name of the successor Relevant Trustee and the address of its
Corporate Trust Office if it is the Property Trustee. Notwithstanding the
foregoing or any other provision of this Trust Agreement, in the event any
Administrative Trustee or a Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Depositor, incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by (a) the
unanimous act of remaining Administrative Trustees if there are at least two of
them or (b) otherwise by the Depositor (with the successor in each case
being a Person who satisfies the eligibility requirement for Administrative
Trustees set forth in Section 8.7).

 

SECTION 8.10 
ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.  In case of the appointment hereunder of a
successor Trustee such successor Trustee so appointed shall execute,
acknowledge and deliver to the Trust and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Depositor or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
if the Property Trustee is the resigning Trustee shall duly assign, transfer
and deliver to the successor Trustee all property and money held by such
retiring Property Trustee hereunder. In case of the appointment hereunder of a
successor Relevant Trustee with respect to the Trust Securities and the Trust,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which

 

(a)           shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in,
each successor Relevant Trustee all the rights, powers, trusts and duties of
the retiring Relevant Trustee with respect to the Trust Securities and the
Trust and

 

(b)           shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees of the same trust and that each
such Relevant Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any other such
Relevant Trustee and upon the execution and delivery of such amendment the resignation
or removal of the retiring Relevant Trustee shall become effective to the
extent provided therein and each such successor Relevant Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust; but, on request of the Trust or any successor
Relevant Trustee such retiring Relevant Trustee shall duly assign,

 

40

 

transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Trust Securities and
the Trust. Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be. No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.

 

SECTION 8.11 
MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.

 

Any
corporation into which the Property Trustee or the Delaware Trustee (or any
Administrative Trustee that is not a natural person) 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 Relevant Trustee shall be a
party, shall be the successor of such Relevant Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.

 

SECTION 8.12 
PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR,
DEBENTURE ISSUER OR TRUST.

 

If and when
the Property Trustee or the Delaware Trustee shall be or become a creditor of
the Depositor, the Debenture Issuer or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor, Debenture Issuer or
Trust (or any such other obligor).

 

SECTION 8.13 
REPORTS BY PROPERTY TRUSTEE.

 

(a)           Within 60 days after September 15
of each year commencing with the first September 15 following the first
issuance of Preferred Securities pursuant to this Trust Agreement, the Property
Trustee shall transmit to all Securityholders in accordance with Section 10.8,
and to the Depositor, a brief report dated as of such September 15 with
respect to: (i) its eligibility under Section 8.7 or, in lieu
thereof, if to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect; (ii) a statement that
the Property Trustee has complied with all of its obligations under this Trust
Agreement during the twelve-month period (or, in the case of the initial
report, the period since the Closing Time) ending with such September 15
or, if the Property Trustee has not complied in any material respect with such
obligations, a description of such noncompliance; and (iii) any change in
the property and funds in its possession as Property Trustee since the date of
its last report and any action taken by the Property Trustee in the performance
of its duties hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.

 

41

 

(b)           In addition the Property Trustee
shall transmit to Securityholders such reports concerning the Property Trustee
and its actions under this Trust Agreement as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.

 

(c)           A copy of each such report shall, at
the time of such transmission to Holders, be filed by the Property Trustee with
each stock exchange, interdealer quotation system or other self-regulatory
organization upon which the Trust Securities are listed or traded, with the
Commission and with the Depositor.

 

SECTION 8.14 
REPORTS TO THE PROPERTY TRUSTEE.

 

The Depositor
and the Administrative Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by Section 314
of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

 

SECTION 8.15 
EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.  Each of the Depositor and the Administrative
Trustees on behalf of the Trust shall provide to the Property Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Trust Agreement that relate to any of the matters set forth in Section 314
(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers’ Certificate.

 

SECTION 8.16 
NUMBER OF TRUSTEES.

 

(a)           The number of Trustees shall be four,
provided that the Holder of all of the Common Securities by written instrument
may increase or decrease the number of Administrative Trustees.  The Property Trustee and the Delaware Trustee
may be the same person if the Property Trustee meets the applicable
requirements.

 

(b)           If a Trustee ceases to hold office
for any reason and the number of Administrative Trustees is not reduced
pursuant to Section 8.17(a), or if the number of Trustees is increased
pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be
filled with a Trustee appointed in accordance with Section 8.10.

 

(c)           The death, resignation, retirement,
removal, bankruptcy, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul, dissolve or terminate the Trust. Whenever a
vacancy in the number of Administrative Trustees shall occur, until such
vacancy is filled by the appointment of an Administrative Trustee in accordance
with Section 8.10, the Administrative Trustees in office, regardless of
their number (and notwithstanding any other provision of this Agreement), shall
have all the powers granted to the Administrative Trustees and shall discharge
all the duties imposed upon the Administrative Trustees by this Trust
Agreement.

 

42

 

SECTION 8.17 
DELEGATION OF POWER.

 

(a)           Any Administrative Trustee may, by
power of attorney consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 2.7(a), including any registration
statement or amendment thereto filed with the Commission, or making any other
governmental filing; and

 

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

 

ARTICLE IX.

 

DISSOLUTION,
LIQUIDATION, TERMINATION AND MERGER

 

SECTION 9.1 
DISSOLUTION UPON EXPIRATION DATE.  Unless earlier dissolved, the Trust shall
automatically dissolve on December 31, 2054 (the “Expiration Date”).

 

SECTION 9.2 
EARLY DISSOLUTION. 
The first to occur of any of the following events is an “Early
Termination Event”, upon the occurrence of which the Trust shall be dissolved:

 

(a)           the occurrence of a Bankruptcy Event
in respect of, or the dissolution or liquidation of, the Debenture Issuer or
the Debenture Guarantor;

 

(b)           (b) the written direction to the
Property Trustee from the Depositor at any time (which direction is optional
and wholly within the discretion of the Depositor) to dissolve the Trust and
distribute a Like Amount of Debentures to Securityholders in exchange for the
Trust Securities;

 

(c)           the redemption of all of the Trust
Securities in connection with the redemption of all the Debentures; and

 

(d)           the entry of an order for dissolution
of the Trust by a court of competent jurisdiction.

 

SECTION 9.3 
TERMINATION.

 

The respective
obligations and responsibilities of the Trustees and the Trust shall terminate
upon the latest to occur of the following:

 

(a)           the distribution by the Property
Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.4,
or upon the redemption of all of the Trust Securities pursuant to Section 4.2,
of all amounts required to be distributed hereunder upon the final payment of
the Trust Securities;

 

43

 

(b)           the payment of any expenses owed by
the Trust; and

 

(c)           the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Trust or the Securityholders.

 

SECTION 9.4 
LIQUIDATION.

 

(a)           If an Early Termination Event
specified in clause (a), (b), or (d) of Section 9.2 occurs or upon
the Expiration Date, the Trust shall be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to each Securityholder a Like Amount of Debentures, subject to Section 9.4(e).

 

(b)           Notice of liquidation shall be given
by the Property Trustee by first-class mail, postage prepaid mailed not later
than 30 nor more than 60 days prior to the Liquidation Date to each Holder of
Trust Securities at such Holder’s address appearing in the Securities Register.
All notices of liquidation shall: (i) state the Liquidation Date; (ii) state
that from and after the Liquidation Date, the Trust Securities will no longer
be deemed to be Outstanding and any Trust Securities Certificates not
surrendered for exchange will be deemed to represent a Like Amount of
Debentures; and (iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(e) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property Trustee shall deem
appropriate.

 

(c)           Except where Section 9.2(c) or
9.4(e) applies, in order to effect the liquidation of the Trust and
distribution of the Debentures to Securityholders, the Property Trustee shall
establish a record date for such distribution (which shall be not more than 45
days prior to the Liquidation Date) and, either itself acting as exchange agent
or through the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.

 

(d)           Except where Section 9.2(c) or
9.4(e) applies, on and after the Liquidation Date, (i) the Trust
Securities will no longer be deemed to be Outstanding, (ii) certificates
representing a Like Amount of Debentures will be issued to the Holders of Trust
Securities Certificates, upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor
shall cause the Debenture Issuer to use its reasonable efforts to have the
Debentures listed or traded on the such stock exchange, interdealer quotation
system and/or other self-regulatory organization as the Preferred Securities
are then listed or traded, (iv) any Trust Securities Certificates not so
surrendered for exchange will be deemed to represent a Like Amount of
Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures) and (v) all rights of Securityholders holding Trust Securities
will cease, except

 

44

 

the right of such Securityholders to receive
Debentures upon surrender of Trust Securities Certificates.

 

(e)           In the event that, notwithstanding
the other provisions of this Section 9.4, whether because of an order for
dissolution entered by a court of competent jurisdiction or otherwise,
distribution of the Debentures in the manner provided herein is determined by
the Property Trustee not to be practical, the Trust Property shall be
liquidated, and the Trust shall be wound-up and terminated by the Property
Trustee in such manner as the Property Trustee determines. In such event,
Securityholders will be entitled to receive out of the assets of the Trust
available for distribution to Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the Liquidation Amount per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the “Liquidation
Distribution”). If, upon any such winding up, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder
of the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution pro rata (determined as aforesaid) with Holders of Preferred
Securities, except that, if a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities.

 

SECTION 9.5 
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST.  The Trust may not merge
with or into, convert into, consolidate, amalgamate, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other entity, except pursuant to this Section 9.5
or Section 9.4. The Trust may, at the request of the Depositor, with the
consent of only the Administrative Trustees and without the consent of the
Holders of the Preferred Securities, merge with or into, convert into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the
Preferred Securities (the “Successor Securities”) so long as the Successor
Securities rank the same as the Preferred Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Depositor expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee as
the holder of the Debentures, (iii) the Successor Securities are listed or
traded, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the Preferred Securities are then listed or traded, if any, (iv) such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized statistical
rating organization, (v) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose substantially identical to that of the Trust, (vii) prior
to such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of Counsel
rendered by independent

 

45

 

counsel experienced in such matters to the effect that
(a) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be required
to register as an investment company under the Investment Company Act and (viii) the
Depositor (or any permitted successor or assignee) owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Preferred
Securities, consolidate, amalgamate, merge with or into, convert into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, convert into, or replace it if
such consolidation, amalgamation, merger, conversion, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity to be classified
as other than a grantor trust for United States Federal income tax purposes.

 

ARTICLE X.

 

MISCELLANEOUS
PROVISIONS

 

SECTION 10.1 
LIMITATION OF RIGHTS OF SECURITYHOLDERS.  The death or incapacity of any person having
an interest, beneficial or otherwise, in Trust Securities shall not operate to
terminate this Trust Agreement, nor entitle the legal representatives or heirs
of such person or any Securityholder for such person, to claim an accounting,
take any action or bring any proceeding in any court for a partition or winding
up of the arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

 

SECTION 10.2 
AMENDMENT.

 

(a)           This Trust Agreement may be amended
from time to time by the Trustees and the Depositor, without the consent of any
Securityholders, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any
provisions of this Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States Federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
investment company under the Investment Company; provided, however, that in the
case of clause (i), such action shall not adversely affect in any material
respect the interests of any Securityholder. Any such amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders.

 

(b)           Except as provided in Section 10.2(c) hereof,
any provision of this Trust Agreement may be amended by the Trustees and the
Depositor with (i) the consent of Trust Securityholders representing not
less than a majority (based upon Liquidation Amounts) of the

 

46

 

Trust Securities then Outstanding and (ii) receipt
by the Trustees of an Opinion of Counsel to the effect that such amendment or
the exercise of any power granted to the Trustees in accordance with such
amendment will not affect the Trust’s status as a grantor trust for United
States Federal income tax purposes or the Trust’s exemption from status of an
investment company under the Investment Company Act.

 

(c)           In addition to and notwithstanding
any other provision in this Trust Agreement, without the consent of each
affected Securityholder, this Trust Agreement may not be amended to (i) change
the amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right
of a Securityholder to institute suit for the enforcement of any such payment
on or after such date. Notwithstanding any other provision herein, without the
unanimous consent of the Securityholders, this paragraph (c) of this Section 10.2
may not be amended.

 

(d)           Notwithstanding any other provisions
of this Trust Agreement, no Trustee shall enter into or consent to any
amendment to this Trust Agreement which would cause the Trust to fail or cease
to qualify for the exemption from status of an investment company under the
Investment Company Act or fail or cease to be classified as a grantor trust for
United States Federal income tax purposes.

 

(e)           Notwithstanding anything in this
Trust Agreement to the contrary, this Trust Agreement may not be amended in a
manner which imposes any additional obligation on the Depositor, the Property
Trustee or the Delaware Trustee without the consent of the Depositor, the
Property Trustee or the Delaware Trustee, as the case may be.

 

(f)            In the event that any amendment to
this Trust Agreement is made, the Administrative Trustees shall promptly
provide to the Depositor a copy of such amendment.

 

(g)           Neither the Property Trustee nor the
Delaware Trustee shall be required to enter into any amendment to this Trust
Agreement which affects its own rights, duties or immunities under this Trust
Agreement. The Property Trustee shall be entitled to receive an Opinion of
Counsel and an Officers’ Certificate stating that any amendment to this Trust
Agreement is in compliance with this Trust Agreement.

 

SECTION 10.3 
SEPARABILITY. 
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

SECTION 10.4  GOVERNING LAW.  This Trust Agreement and the rights and
obligations of each of the Securityholders, the Trust and the Trustees with
respect to this Trust Agreement and the Trust Securities shall be construed in
accordance with and governed by the laws of the State of Delaware.

 

SECTION 10.5  PAYMENTS DUE ON NON-BUSINESS DAY.  If the date fixed for any payment on any
Trust Security shall be a day that is not a Business Day, then such payment
need not be made on such date but may be made on the next succeeding day that
is a Business

 

47

 

Day (except as otherwise provided in Sections 4.1(a) and
4.2(d)), with the same force and effect as though made on the date fixed for
such payment, and no interest shall accrue thereon for the period after such
date.

 

SECTION 10.6  SUCCESSORS. 
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under Article Eight
of the Indenture and pursuant to which the assignee agrees in writing to
perform the Depositor’s obligations hereunder, the Depositor shall not assign
its obligations hereunder.

 

SECTION 10.7  HEADINGS. 
The Article and Section headings are for convenience only and
shall not affect the construction of this Trust Agreement.

 

SECTION 10.8  REPORTS, NOTICES AND DEMANDS.  Any report, notice, demand or other
communication which by any provision of this Trust Agreement is required or
permitted to be given or served to or upon any Securityholder or the Depositor
may be given or served in writing by deposit thereof, first-class postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (a) in the case of a Preferred Securityholder, to
such Preferred Securityholder as such Securityholder’s name and address may
appear on the Securities Register; and (b) in the case of the Common
Securityholder or the Depositor, to Assured Guaranty US Holdings Inc., 1325
Avenue of the Americas, New York, New York 
10019, Attention:                      ,
facsimile no.:                .
Any notice to Preferred Securityholders shall also be given to such owners as
have, within two years preceding the giving of such notice, filed their names
and addresses with the Property Trustee for that purpose. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission. Any notice, demand or other communication which by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon the Trust, the Property Trustee or the Administrative Trustees shall be
given in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee, to The Bank of New
York, One Wall Street, New York, New York 
10286, Attention:                ;
(b) with respect to the Delaware Trustee, to The Bank of New York
(Delaware), White Clay Center, Route 273, Newark , Delaware 19711, Attention:                       ;
and (c) with respect to the Administrative Trustees, to them at c/o
Assured Guaranty Corp., 1325 Avenue of the Americas, New York, New York, marked
“Attention Administrative Trustees of Assured Guaranty Capital Trust [I][II].”
Such notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Trust or the Property Trustee.

 

SECTION 10.9  AGREEMENT NOT TO PETITION.  Each of the Trustees and the Depositor agree
for the benefit of the Securityholders that, until at least one year and one
day after the Trust has been dissolved in accordance with Article IX, they
shall not file, or join in the filing of, a petition against the Trust under
any bankruptcy, insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively, “Bankruptcy Laws”)
or otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Depositor takes action in violation of
this Section 10.9,

 

48

 

the Property Trustee agrees, for the benefit of
Securityholders, that at the expense of the Depositor, it shall file an answer
with the bankruptcy court or otherwise properly contest the filing of such
petition by the Depositor against the Trust or the commencement of such action
and raise the defense that the Depositor has agreed in writing not to take such
action and should be stopped and precluded therefrom and such other defenses,
if any, as counsel for the Trustee or the Trust may assert. The provisions of
this Section 10.9 shall survive the termination of this Trust Agreement.

 

SECTION 10.10  TRUST INDENTURE ACT; CONFLICT WITH TRUST
INDENTURE ACT.

 

(a)           This Trust Agreement is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Trust Agreement and shall, to the extent applicable, be governed by such
provisions.

 

(b)           The Property Trustee shall be the
only Trustee which is a trustee for the purposes of the Trust Indenture Act.

 

(c)           If any provision hereof limits,
qualifies or conflicts with another provision hereof which is required to be
included in this Trust Agreement by any of the provisions of the Trust
Indenture Act, such required provision shall control. If any provision of this
Trust Agreement modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Trust Agreement as so modified or excluded, as the case may be.

 

(d)           The application of the Trust
Indenture Act to this Trust Agreement shall not affect the nature of the Trust
Securities as equity securities representing undivided beneficial interests in
the assets of the Trust.

 

SECTION 10.11 
ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.  THE RECEIPT AND ACCEPTANCE OF
A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR
ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT,
SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL
OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE
AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.

 

49

 

	
   

  	
  ASSURED GUARANTY US HOLDINGS INC., as

  Depositor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Property

  
	
   

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK (DELAWARE), as

  Delaware Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  •,

  
	
   

  	
  as Administrative Trustee.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  •,

  
	
   

  	
  as Administrative Trustee

  

 

50

 

EXHIBIT A

 

[Attach a copy of the Original Trust Agreement]

 

51

 

EXHIBIT B

 

THIS CERTIFICATE IS NOT TRANSFERABLE

 

EXCEPT AS PROVIDED IN THE

 

TRUST AGREEMENT (AS DEFINED BELOW)

 

Certificate Number  of Common Securities

 

C-                         

 

Certificate
Evidencing Common Securities

of

ASSURED
GUARANTY CAPITAL TRUST [I][II]

 

      %
Common Securities

 

(liquidation
amount $       per Common Security)

 

Assured
Guaranty Capital Trust [I][II], a statutory business trust formed under the
laws of the State of Delaware (the “Trust”), hereby certifies that Assured
Guaranty US Holdings Inc. (the “Holder”) is the registered owner of                                
(             )
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust and designated the        %
Common Securities (liquidation amount $         
per Common Security) (the “Common Securities”). In accordance with Section 5.10
of the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
and any attempted transfer hereof shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust, dated as of               
, 2005, as the same may be amended from time to time (the “Trust Agreement”),
including the designation of the terms of the Common Securities as set forth
therein. The Trust will furnish a copy of the Trust Agreement to the Holder
without charge upon written request to the Trust at its principal place of
business or registered office.

 

Upon receipt
of this certificate, the Holder is bound by the Trust Agreement and is entitled
to the benefits thereunder.

 

IN WITNESS
WHEREOF, one of the Administrative Trustees of the Trust has executed this
certificate this          day of                   ,
2005.

 

	
   

  	
  ASSURED GUARANTY CAPITAL TRUST [I][II]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Administrative Trustee

  

 

52

 

EXHIBIT C

 

AGREEMENT AS TO EXPENSES AND LIABILITIES

 

AGREEMENT dated as of                      ,
2005, between Assured Guaranty Ltd., a Bermuda company (“Assured Guaranty”),
and Assured Guaranty Capital Trust [I][II], a Delaware business trust (the “Trust”).

 

WHEREAS, the
Trust intends to issue its Common Securities (the “Common Securities”) to and
receive Debentures from Assured Guaranty US Holdings Inc., a Delaware
corporation and a wholly-owned subsidiary of Assured Guaranty (“Holdings”), and
to issue and sell          % Trust
Preferred Securities (the “Preferred Securities”) with such powers, preferences
and special rights and restrictions as are set forth in the Amended and
Restated Trust Agreement of the Trust dated as of                  ,
2005, as the same may be amended from time to time (the “Trust Agreement’);

 

WHEREAS,
Holdings will directly or indirectly own all of the Common Securities of the
Trust and will issue the Debentures;

 

WHEREAS,
Assured Guaranty will guarantee the obligations of Holdings under the
Debentures and has agreed to guarantee certain expenses and liabilities of the
Trust as provided herein;

 

NOW,
THEREFORE, in consideration of the purchase by each holder of the Preferred
Securities, which purchase Assured Guaranty hereby agrees shall benefit Assured
Guaranty and which purchase Assured Guaranty acknowledges will be made in
reliance upon the execution and delivery of this Agreement, Assured Guaranty
and Trust hereby agree as follows:

 

ARTICLE I

GUARANTEE BY ASSURED GUARANTY

 

Subject to the
terms and conditions hereof, Assured Guaranty hereby irrevocably and unconditionally
guarantees to each person or entity to whom the Trust is now or hereafter
becomes indebted or liable (the “Beneficiaries”) the full payment, when and as
due, of any and all Obligations (as hereinafter defined) to such Beneficiaries.
As used herein, “Obligations” means any costs, expenses or liabilities of the
Trust, other than obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be. This Agreement is intended to be for the benefit
of, and to be enforceable by, all such Beneficiaries, whether or not such
Beneficiaries have received notice hereof.

 

ARTICLE II

TERM OF AGREEMENT.

 

This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise) and (b) the date one which
there are no Beneficiaries remaining ; provided, however, that this Agreement
shall continue to be effective or shall be reinstated, as the case may be, if
at any time any holder of Preferred Securities or any Beneficiary must restore
payment of any sums paid under the Preferred Securities, under any Obligation,
under the Guarantee Agreement dated the date hereof between Assured Guaranty in
its capacity as guarantor with respect to the Preferred Securities, and The
Bank of New York, as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.

 

53

 

ARTICLE III

WAIVER OF NOTICE.

 

Assured Guaranty hereby waives notice of acceptance of this Agreement
and of any Obligation to which it applies or may apply, and Assured Guaranty
hereby waives presentment, demand for payment, protest, notices of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

 

ARTICLE IV

NO IMPAIRMENT

 

The obligations, covenants, agreements and duties of Assured Guaranty
under this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

 

(a)           the extension of
time for the payment by the Trust of all or any portion of the Obligations or
for the performance of any other obligation under, arising out of, or in
connection with, the Obligations;

 

(b)           any failure,
omission, delay or lack of diligence on the part of the Beneficiaries to
enforce, assert or exercise any right, privilege, power or remedy conferred on
the Beneficiaries with respect to the Obligations or any action on the part of
the Trust granting indulgence or extension of any kind; or

 

(c)           the voluntary or
involuntary liquidation, dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement composition or readjustment of debt of, or other
similar proceedings affecting, the Trust or any of the assets of the Trust.

 

There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, Assured Guaranty with respect to the happening of any of
the foregoing.

 

ARTICLE V

ENFORCEMENT.

 

A Beneficiary may enforce this Agreement directly against Assured
Guaranty, and Assured Guaranty waives any right or remedy to require that any
action be brought against the Trust or any other person or entity before
proceeding against Assured Guaranty.

 

ARTICLE VI

SUBROGATION.

 

Assured Guaranty shall be subrogated to all (if any) rights of the
Trust in respect of any amounts paid to the Beneficiaries by Assured Guaranty
under this Agreement; provided, however, that Assured Guaranty shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement , in all cases as a result of
payment under this Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Agreement.

 

ARTICLE VII

BINDING EFFECT

 

All guarantees and agreements contained in this Agreement shall bind
the successors, assigns, receivers, trustees and representatives of Assured
Guaranty and shall inure to the benefit of the Beneficiaries.

 

54

 

ARTICLE VIII

AMENDMENT

 

So long as there remains any Beneficiary or any Preferred Securities
are outstanding, this Agreement shall not be modified or amended in any manner
adverse to such Beneficiary or to the holders of the Preferred Securities.

 

ARTICLE IX

NOTICES

 

Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex):

 

Assured
Guaranty Capital Trust [I][II]

c/o Assured
guaranty Corp.

1325 Avenue of
the Americas

New York, New
York  10019

Facsimile:

Attention:

 

Assured
Guaranty Ltd.

30 Woodbourne
Avenue

Hamilton 08
Bermuda

Facsimile:

Attention:

 

ARTICLE X

GOVERNING LAW

 

This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.

 

THIS AGREEMENT
is executed as of the day and year first above written.

 

	
   

  	
  ASSURED GUARANTY LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSURED GUARANTY CAPITAL TRUST [I][II]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

55

 

EXHIBIT D

 

This Preferred
Security is a Global Certificate within the meaning of the Trust Agreement
hereinafter referred to and is registered in the name of The Depository Trust
Company (the “Depository”) or a nominee of the Depository. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depository or its nominee only in the limited
circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.

 

Unless this
Preferred Security is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to Assured Guaranty
Capital Trust [I][II] or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.

 

Certificate
Number  Number of Preferred Securities

 

P-                               

 

Certificate Evidencing Preferred Securities

Of

 

ASSURED GUARANTY CAPITAL TRUST [I][II]

 

       % Trust Originated Preferred
Securities

 

(liquidation amount $          
per Preferred Security)

 

Assured Guaranty
Capital Trust [I][II], a statutory business trust formed under the laws of the
State of Delaware (the “Trust”), hereby certifies that Cede & Co. (the
“Holder”) is the registered owner of                   
(                   )
preferred securities of the Trust representing an undivided beneficial interest
in the assets of the Trust and designated the Assured Guaranty Capital Trust
[I][II]             %
Trust Originated Preferred Securities (Liquidation Amount $     
per Preferred Security) (the “Preferred Securities”). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.4 of the Trust Agreement
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of
the Amended and Restated Trust Agreement of the Trust, dated as of                  ,
1999, as the same may be amended from time to time (the “Trust Agreement”),
including the designation of the terms of Preferred Securities as set forth
therein. The Holder is entitled to the benefits of the Guarantee Agreement
entered into by Assured Guaranty Ltd., a Bermuda company, and The Bank of New
York, as guarantee trustee, dated as of                     ,
2005 (the “Guarantee”), to the extent provided therein. The Trust will furnish
a copy of the Trust Agreement and the Guarantee to the Holder without charge
upon written recruits to the Trust at its principal place of business or
registered office.

 

Upon receipt
of this certificate, the Holder is bound by the Trust Agreement and is entitled
to the benefits thereunder.

 

IN WITNESS
WHEREOF, one of the Administrative Trustees of the Trust has executed this
certificate this      th day of           ,
2005.

 

56

 

	
   

  	
  ASSURED GUARANTY CAPITAL TRUST [I][II]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Administrative Trustee

  

 

ASSIGNMENT

 

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

 

(Insert assignee’s social security or tax
identification number) (Insert address and zip code of assignee) and
irrevocably appoints agent to transfer this Preferred Security Certificate on
the books of the Trust. The agent may substitute another to act for him or her.

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
				

 

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

 

57Exhibit 4.1

    
       

    

    
      

    

    Exhibit
      4.1

     

    APPLIED
      DIGITAL SOLUTIONS, INC.

     

    

     

    2003
      FLEXIBLE STOCK PLAN

     

    (as
      Amended and Restated Effective January 1, 2005)

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    APPLIED
      DIGITAL SOLUTIONS, INC.

     

    2003
      FLEXIBLE STOCK PLAN

     

    (as
      Amended and Restated Effective January 1, 2005) 

     

    TABLE
      OF
      CONTENTS

     

    
      	 	 	 	
              Page

            
	 	 	 	 
	
              1.
                NAME AND PURPOSE

            	 
	 	 
	 	
              1.1.
                Name.

            	
              1

            
	 	
              1.2.
                Purpose.

            	
              1

            
	 	 	 
	 	 	 	 
	
              2.
                DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION

            	 
	 	 
	 	
              2.1.
                General Definitions.

            	 
	 	 	
              2.1.1.
                Affiliate.

            	
              1

            
	 	 	
              2.1.2.
                Agreement.

            	
              1

            
	 	 	
              2.1.3.
                Benefit.

            	
              1

            
	 	 	
              2.1.4.
                Board.

            	
              1

            
	 	 	
              2.1.5.
                Cash Award.

            	
              1

            
	 	 	
              2.1.6.
                Change of Control.

            	
              1

            
	 	 	
              2.1.7.
                Code.

            	
              2

            
	 	 	
              2.1.8.
                Company.

            	
              2

            
	 	 	
              2.1.9.
                Committee.

            	
              2

            
	 	 	
              2.1.10.
                Common Stock.

            	
              3

            
	 	 	
              2.1.11.
                Effective Date.

            	
              3

            
	 	 	
              2.1.12.
                Employee.

            	
              3

            
	 	 	
              2.1.13.
                Employer.

            	
              3

            
	 	 	
              2.1.14.
                Exchange Act.

            	
              3

            
	 	 	
              2.1.15.
                Fair Market Value.

            	
              3

            
	 	 	
              2.1.16.
                Fiscal Year.

            	
              3

            
	 	 	
              2.1.17.
                ISO.

            	
              3

            
	 	 	
              2.1.18.
                NQSO.

            	
              3

            
	 	 	
              2.1.19.
                Option.

            	
              3

            
	 	 	
              2.1.20.
                Other Stock Based Award.

            	
              3

            
	 	 	
              2.1.21.
                Parent.

            	
              4

            
	 	 	
              2.1.22.
                Participant.

            	
              4

            
	 	 	
              2.1.23.
                Performance Based Compensation.

            	
              4

            
	 	 	
              2.1.24.
                Performance Share.

            	
              4

            
	 	 	
              2.1.25.
                Plan.

            	
              4

            
	 	 	
              2.1.26.
                Reload Option.

            	
              4

            
	 	 	
              2.1.27.
                Restricted Stock.

            	
              4

            
	 	 	
              2.1.28.
                Rule 16b-3.

            	
              4

            
	 	 	
              2.1.29.
                SEC.

            	
              4

            
	 	 	
              2.1.30.
                Share.

            	
              4

            
	 	 	
              2.1.31.
                SAR.

            	
              4

            
	 	 	
              2.1.32.
                Subsidiary.

            	
              4

            
	 	 	 	 
	 	
              2.2.
                Other Definitions.

            	
              5

            
	 	
              2.3.
                Conflicts.

            	
              5

            
	 	 	 	 
	 	 	 	 
	
              3.
                COMMON STOCK

            	 
	 	 
	 	
              3.1.
                Number of Shares.

            	
              5

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              3.2.
                Reusage.

            	
              5

            
	 	
              3.3.
                Adjustments.

            	
              5

            
	 	 	 
	 	 	 
	
              4.
                ELIGIBILITY

            	 
	 	 
	 	
              4.1.
                Determined By Committee.

            	
              5

            
	 	 	 
	 	 	 
	
              5.
                ADMINISTRATION

            	 
	 	 
	 	
              5.1.
                Committee.

            	
              5

            
	 	
              5.2.
                Authority.

            	
              6

            
	 	
              5.3.
                Delegation.

            	
              6

            
	 	
              5.4.
                Determination.

            	
              6

            
	 	 	 
	 	 	 
	
              6.
                AMENDMENT

            	 
	 	 
	 	
              6.1.
                Power of Board.

            	
              6

            
	 	
              6.2.
                Limitation.

            	
              6

            
	 	 	 
	 	 	 
	
              7.
                TERM AND TERMINATION

            	 
	 	 
	 	
              7.1.
                Term.

            	
              7

            
	 	
              7.2.
                Termination.

            	
              7

            
	 	 	 
	 	 	 
	
              8.
                MODIFICATION OR TERMINATION OF BENEFITS

            	 
	 	 
	 	
              8.1.
                General.

            	
              7

            
	 	
              8.2.
                Committee’s Right.

            	
              7

            
	 	
              8.3.
                Compliance with Applicable Laws.

            	
              7

            
	 	 	 
	 	 	 
	
              9.
                CHANGE OF CONTROL

            	 
	 	 
	 	
              9.1.
                Vesting and Payment.

            	
              7

            
	 	
              9.2.
                Other Action.

            	
              7

            
	 	 	 
	 	 	 
	
              10.
                AGREEMENTS AND CERTAIN BENEFITS

            	 
	 	 
	 	
              10.1.
                Grant Evidenced by Agreement.

            	
              8

            
	 	
              10.2.
                Provisions of Agreement.

            	
              8

            
	 	
              10.3.
                Transferability.

            	
              8

            
	 	 	 
	 	 	 
	
              11.
                REPLACEMENT AND TANDEM AWARDS

            	 
	 	 
	 	
              11.1.
                Replacement.

            	
              8

            
	 	
              11.2.
                Tandem Awards.

            	
              8

            
	 	 	 
	 	 	 
	
              12.
                PAYMENT, DIVIDENDS AND WITHHOLDING

            	 
	 	 
	 	
              12.1.
                Payment.

            	
              8

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              12.2.
                Dividend Equivalents.

            	
              8

            
	 	
              12.3.
                Withholding.

            	
              9

            
	 	 	 
	 	 	 
	
              13.
                OPTIONS

            	 
	 	 
	 	
              13.1.
                Types of Options.

            	
              9

            
	 	
              13.2.
                Grant of ISOs and Option Price.

            	
              9

            
	 	
              13.3.
                Other Requirements for ISOs.

            	
              9

            
	 	
              13.4.
                NQSOs.

            	
              9

            
	 	
              13.5.
                Determination by Committee.

            	
              9

            
	 	 	 
	 	 	 
	
              14.
                SARS

            	 
	 	 
	 	
              14.1.
                Grant and Payment.

            	
              9

            
	 	
              14.2.
                Grant of Tandem Award.

            	
              9

            
	 	
              14.3.
                ISO Tandem Award.

            	
              9

            
	 	
              14.4.
                Payment of Award.

            	
              9

            
	 	 	 
	 	 	 
	
              15.
                ANNUAL LIMITATIONS

            	 
	 	 
	 	
              15.1.
                Limitation on Options and SARs.

            	
              9

            
	 	
              15.2.
                Limitation on Performance Shares.

            	
              10

            
	 	
              15.3.
                Computations.

            	
              10

            
	 	 	 
	 	 	 
	
              16.
                RESTRICTED STOCK AND PERFORMANCE SHARES

            	 
	 	 
	 	
              16.1.
                Restricted Stock.

            	
              10

            
	 	
              16.2.
                Cost of Restricted Stock.

            	
              10

            
	 	
              16.3.
                Non-Transferability.

            	
              10

            
	 	
              16.4.
                Performance Shares.

            	
              10

            
	 	
              16.5.
                Grant.

            	
              10

            
	 	 	 
	 	 	 
	
              17.
                CASH AWARDS

            	 
	 	 
	 	
              17.1.
                Grant.

            	
              10

            
	 	
              17.2.
                Annual Limits.

            	
              11

            
	 	
              17.3.
                Restrictions.

            	
              11

            
	 	 	 
	 	 	 
	
              18.
                OTHER STOCK BASED AWARDS AND OTHER BENEFITS

            	 
	 	 
	 	
              18.1.
                Other Stock Based Awards.

            	
              11

            
	 	
              18.2.
                Other Benefits.

            	
              11

            
	 	 	 
	 	 	 
	
              19.
                MISCELLANEOUS PROVISIONS

            	 
	 	 
	 	
              19.1.
                Underscored References.

            	
              11

            
	 	
              19.2.
                Number and Gender.

            	
              11

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              19.3.
                Unfunded Status of Plan.

            	
              11

            
	 	
              19.4.
                Termination of Employment.

            	
              11

            
	 	
              19.5.
                Designation of Beneficiary.

            	
              12

            
	 	
              19.6.
                Governing Law.

            	
              12

            
	 	
              19.7.
                Purchase for Investment.

            	
              12

            
	 	
              19.8.
                No Employment Contract.

            	
              12

            
	 	
              19.9.
                No Effect on Other Benefits.

            	
              12

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    APPLIED
      DIGITAL SOLUTIONS, INC.

     

    2003
      FLEXIBLE STOCK PLAN

     

    (as
      Amended and Restated Effective January 1, 2005)

     

     

     

    1.NAME
      AND PURPOSE

     

    1.1
      Name.

     

    The
      name
      of this Plan is the “Applied Digital Solutions, Inc. 2003 Flexible Stock
      Plan.”

     

    1.2
      Purpose.

     

    The
      Company has established this Plan to attract, retain, motivate and reward
      Employees and other individuals, to encourage ownership of the Company’s common
      stock by Employees and other individuals, and to promote and further the best
      interests of the Company by granting cash and other awards. The Company also
      intends in appropriate circumstances to grant awards of its common stock in
      lieu
      of cash compensation pursuant to the mutual agreement of the Participant and
      the
      Company. 

     

    2.
      DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION

     

    2.1
      General Definitions.

     

    The
      following words and phrases, when used in the Plan, unless otherwise
      specifically defined or unless the context clearly otherwise requires, shall
      have the following respective meanings:

     

    2.1.1
      Affiliate.

     

    A
      Parent
      or Subsidiary of the Company.

     

    2.1.2
      Agreement.

     

    The
      document which evidences the grant of any Benefit under the Plan and which
      sets
      forth the Benefit and the terms, conditions and provisions of, and restrictions
      relating to, such Benefit.

     

    2.1.3
      Benefit.

     

    Any
      benefit granted to a Participant under the Plan.

     

    2.1.4
      Board.

     

    The
      Board
      of Directors of the Company.

     

    2.1.5
      Cash Award.

     

    A
      Benefit
      payable in the form of cash.

     

    2.1.6
      Change of Control.

     

    The
      occurrence of any of the following:

     

    An
      acquisition of any common stock or other voting securities of the Company
      entitled to vote generally for the election of directors (the “Voting
      Securities”) by any “Person” or “Group” (as each such term is used for purposes
      of Section 13(d) or 14(d) of the Exchange Act), immediately after which such
      Person or Group, as the case may be, has “Beneficial Ownership” (within the
      meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 20%
      of
      the then outstanding shares of common stock or the combined voting power of
      the
      Company’s then outstanding Voting Securities; provided,
      however,
      that in
      determining whether a Change of Control has occurred, shares of common stock
      or
      Voting Securities that are acquired in a Non-Control Acquisition (as defined
      below) shall not constitute an acquisition which would cause a Change of
      Control. A “Non-Control Acquisition” shall mean an acquisition by (i) the
      Company,

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (ii)
      any
      Subsidiary or (ii) any employee benefit plan maintained by the Company or any
      Subsidiary, including a trust forming part of any such plan (an “Employee
      Benefit Plan”);

     

    When,
      during any 2-year period, individuals who, at the beginning of the 2-year
      period, constitute the Board (the “Incumbent Board”), cease for any reason to
      constitute at least 50% of the members of the Board; provided,
      however,
      that (i)
      if the election or nomination for election by the Company’s shareholders of any
      new director was approved by a vote of at least two-thirds of the Incumbent
      Board, such new director shall, for purposes hereof, be deemed to be a member
      of
      the Incumbent Board; and (ii) no individual shall be deemed to be a member
      of
      the Incumbent Board if such individual initially assumed office as a result
      of
      either an actual or threatened “Election Contest” (as described in Rule 14a-11
      promulgated under the Exchange Act) or other actual or threatened solicitation
      of proxies or consents by or on behalf of a Person or Group other than the
      Board
      (a “Proxy Contest”) including by reason of any agreement intended to avoid or
      settle any Election Contest or Proxy Contest;

     

    The
      consummation of:

     

    a
      merger,
      consolidation or reorganization involving the Company or any Subsidiary, unless
      the merger, consolidation or reorganization is a Non-Control Transaction. A
      “Non-Control Transaction” shall mean a merger, consolidation or reorganization
      of the Company or any Subsidiary where:

     

    the
      shareholders of the Company immediately prior to the merger, consolidation
      or
      reorganization own, directly or indirectly, immediately following such merger,
      consolidation or reorganization, at least 50% of the combined voting power
      of
      the outstanding voting securities of the corporation resulting from such merger,
      consolidation or reorganization (the “Surviving Corporation”) in substantially
      the same proportion as their ownership of the common stock or Voting Securities,
      as the case may be, immediately prior to the merger, consolidation or
      reorganization, 

     

    the
      individuals who were members of the Incumbent Board immediately prior to the
      execution of the agreement providing for the merger, consolidation or
      reorganization constitute at least two-thirds of the members of the board of
      directors of the Surviving Corporation, or a corporation beneficially owning,
      directly or indirectly, a majority of the voting securities of the Surviving
      Corporation, and

     

    no
      Person
      or Group, other than (1) the Company, (2) any Subsidiary, (3) any Employee
      Benefit Plan or (4) any other Person or Group who, immediately prior to the
      merger, consolidation or reorganization, had Beneficial Ownership of not less
      than 20% of the then outstanding Voting Securities or common stock, has
      Beneficial Ownership of 20% or more of the combined voting power of the
      Surviving Corporation’s then outstanding voting securities or common
      stock;

     

    A
      complete liquidation or dissolution of the Company; or 

     

    The
      sale
      or other disposition of all or substantially all of the assets of the Company
      to
      any Person (other than a transfer to a Subsidiary).

     

    Notwithstanding
      the foregoing, a Change of Control shall not be deemed to have occurred solely
      because any Person or Group (the “Subject Person”) acquired Beneficial Ownership
      of more than the permitted amount of the then outstanding Voting Securities
      or
      common stock of the Company as a result of an acquisition of Voting Securities
      or common stock by the Company which, by reducing the number of shares of Voting
      Securities or common stock then outstanding, increases the proportional number
      of shares beneficially owned by the Subject Person; provided,
      however, that
      if a
      Change of Control would have occurred (but for the operation of this sentence)
      as a result of the acquisition of Voting Securities or common stock by the
      Company, and after such acquisition by the Company, the Subject Person becomes
      the beneficial owner of any additional shares of Voting Securities or common
      stock, which increases the percentage of the then outstanding shares of Voting
      Securities or common stock beneficially owned by the Subject Person, then a
      Change of Control shall be deemed to have occurred.

     

    2.1.7
      Code.

     

    The
      Internal Revenue Code of 1986, as amended. Any reference to the Code includes
      the regulations promulgated pursuant to the Code.

     

    2.1.8
      Company.

     

    Applied
      Digital Solutions, Inc.

     

    2.1.9
      Committee.

     

    The
      Committee described in Section 5.1.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    2.1.10
      Common Stock.

     

    The
      Company’s common stock, which presently has a par value of $.01 per
      Share.

     

    2.1.11
      Effective Date.

     

    The
      date
      that the amended and restated Plan is approved by the shareholders of the
      Company which must occur within one year before or after approval by the Board.
      Any grants of Benefits prior to the approval by the shareholders of the Company
      shall be void if such approval is not obtained.

     

    2.1.12
      Employee.

     

    Any
      person employed by the Employer.

     

    2.1.13
      Employer.

     

    The
      Company and all Affiliates.

     

    2.1.14
      Exchange Act.

     

    The
      Securities Exchange Act of 1934, as amended.

     

    2.1.15
      Fair Market Value.

     

    The
      closing price of Shares on the Nasdaq National Market on a given date, or,
      in
      the absence of sales on a given date, the closing price on the Nasdaq National
      Market on the last day on which a sale occurred prior to such date.

     

    2.1.16
      Fiscal Year.

     

    The
      taxable year of the Company which is the calendar year.

     

    2.1.17
      ISO.

     

    An
      Incentive Stock Option as defined in Section 422 of the Code.

     

    2.1.18
      NQSO.

     

    A
      non-qualified stock Option, which is an Option that does not qualify as an
      ISO.

     

    2.1.19
      Option.

     

    An
      option
      to purchase Shares granted under the Plan.

     

    2.1.20
      Other Stock Based Award.

     

    An
      award
      under Section 3.1 that is valued in whole or in part by reference to, or
      otherwise based on, common stock.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    2.1.21
      Parent.

     

    Any
      corporation (other than the Company or a Subsidiary) in an unbroken chain of
      corporations ending with the Company, if, at the time of the grant of an Option
      or other Benefit, each of the corporations (other than the Company) owns stock
      possessing 50% or more of the total combined voting power of all classes of
      stock in one of the other corporations in such chain.

     

    2.1.22
      Participant.

     

    An
      individual who is granted a Benefit under the Plan. Benefits may be granted
      only
      to Employees, members of the Board, (including former Employees and former
      members of the Board if in connection with their separation from the Company),
      employees and owners of entities which are not Affiliates but which have a
      direct or indirect ownership interest in an Employer or in which an Employer
      has
      a direct or indirect ownership interest, individuals who, and employees and
      owners of entities which, are customers and suppliers of an Employer,
      individuals who, and employees and owners of entities which, render services
      to
      an Employer, and individuals who, and employees and owners of entities, which
      have ownership or business affiliations with any individual or entity previously
      described.

     

    2.1.23
      Performance Based Compensation.

     

    Compensation
      which meets the requirements of Section 162(m)(4)(C) of the
      Code.

     

    2.1.24
      Performance Share.

     

    A
      Share
      awarded to a Participant under Section 16.4 of the Plan.

     

    2.1.25
      Plan.

     

    The
      Applied Digital Solutions, Inc. 2003 Flexible Stock Plan and all amendments
      and
      supplements to it.

     

    2.1.26
      Reload Option.

     

    An
      Option
      to purchase the number of Shares used by a Participant to exercise an Option
      and
      to satisfy any withholding requirement incident to the exercise of such
      Option.

     

    2.1.27
      Restricted Stock.

     

    Shares
      issued under Section 16.1 of the Plan.

     

    2.1.28
      Rule 16b-3.

     

    Rule
      16b-3 promulgated by the SEC, as amended, or any successor rule in effect from
      time to time.

     

    2.1.29
      SEC.

     

    The
      Securities and Exchange Commission.

     

    2.1.30
      Share.

     

    A
      share
      of common stock.

     

    2.1.31
      SAR.

     

    A
      stock
      appreciation right, which is the right to receive an amount equal to the
      appreciation, if any, in the Fair Market Value of a Share from the date of
      the
      grant of the right to the date of its payment.

     

    2.1.32
      Subsidiary.

     

    Any
      corporation, other than the Company, in an unbroken chain of corporations
      beginning with the Company if, at the time of grant of an Option or other
      Benefit, each of the corporations, other than the last corporation in the
      unbroken chain, owns stock possessing 50% or more of the total combined voting
      power of all classes of stock in one of the other corporations in such
      chain.

     

    
      
        
        

      

      
        4

        
          

        

      

       

    

     

    2.2
      Other Definitions.

     

    In
      addition to the above definitions, certain words and phrases used in the Plan
      and any Agreement may be defined in other portions of the Plan or in such
      Agreement.

     

    2.3
      Conflicts.

     

    In
      the
      case of any conflict in the terms of the Plan relating to a Benefit, the
      provisions in the section of the Plan which specifically grants such Benefit
      shall control those in a different section. In the case of any conflict between
      the terms of the Plan relating to a Benefit and the terms of an Agreement
      relating to a Benefit, the terms of the
      Plan
      shall control.

     

    3.
      COMMON STOCK

     

    3.1
      Number of Shares.

     

    The
      number of Shares which may be issued or sold or for which Options, SARs or
      Performance Shares may be granted under the Plan shall be 5,200,000 Shares.
      Such
      Shares may be authorized but unissued Shares, Shares held in the treasury,
      or
      both. The full number of Shares available may be used for any type of Option
      or
      other Benefit; provided, however, that the number of Shares that may be issued
      under ISOs shall not exceed 1,300,000.

     

    3.2
      Reusage.

     

    If
      an
      Option or SAR expires or is terminated, surrendered, or canceled without having
      been fully exercised, if Restricted Shares or Performance Shares are forfeited,
      or if any other grant results in any Shares not being issued, the Shares covered
      by such Option or SAR, grant of Restricted Shares, Performance Shares or other
      grant, as the case may be, shall again be available for use under the Plan.
      Any
      Shares which are used as full or partial payment to the Company upon exercise
      of
      an Option or for any other Benefit that requires a payment to the Company shall
      be available for purposes of the Plan.

     

    3.3
      Adjustments.

     

    If
      there
      is any change in the common stock of the Company by reason of any stock
      dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation,
      reorganization, combination or exchange of shares, or otherwise, the number
      of
      SARs and number and class of shares available for Options and grants of
      Restricted Stock, Performance Shares and Other Stock Based Awards and the number
      of Shares subject to outstanding Options, SARs, grants of Restricted Stock
      which
      are not vested, grants of Performance Shares which are not vested, and Other
      Stock Based Awards, and the price thereof, as applicable, may be appropriately
      adjusted by the Committee.

     

    4.
      ELIGIBILITY

     

    4.1
      Determined By Committee.

     

    The
      Participants and the Benefits they receive under the Plan shall be determined
      solely by the Committee. In making its determinations, the Committee shall
      consider past, present and expected future contributions of Participants and
      potential Participants to the Employer, including, without limitation, the
      performance of, or the refraining from the performance of, services. Unless
      specifically provided otherwise herein, all determinations of the Committee
      in
      connection with the Plan or an Agreement shall be made in its sole
      discretion.

     

    5.
      ADMINISTRATION

     

    5.1
      Committee.

     

    The
      Plan
      shall be administered by the Committee. The Committee shall consist of the
      “outside directors” of the Board, unless the Board appoints a Committee of two
      or more but less than all of the Board all of whom are "outside directors"
      as
      defined in Section 162(m) of the Code. The
      Committee shall use its best efforts to grant Options, SARs, Restricted Stock,
      Performance Shares, Cash Awards and Other Stock Based Awards under this Plan
      to
      an Employee which will qualify as “performance-based compensation” for purposes
      of Section 162(m) of the Code, except where the Committee deems that the
      Company’s interests when viewed broadly will be better served by a grant which
      is free of the conditions required to so qualify any such grant for purposes
      of
      Section 162(m) of the Code.

     

    If
      the
      Committee does not include the entire outside directors of the Board, it shall
      serve at the pleasure of the outside directors of the Board, which may from
      time
      to time appoint members in substitution for members previously appointed and
      fill vacancies, however caused, in the Committee. The Committee may select
      one
      of its members as its 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Chairman
      and shall hold its meetings at such times and places as it may determine. A
      majority of its members shall constitute a quorum. All determinations of the
      Committee made at a meeting at which a quorum is present shall be made by a
      majority of its members present at the meeting. Any decision or determination
      reduced to writing and signed by a majority of the members shall be fully as
      effective as if it had been made by a majority vote at a meeting duly called
      and
      held.

     

    5.2
      Authority.

     

    Subject
      to the terms of the Plan, the Committee shall have discretionary authority
      to:

     

    determine
      the individuals to whom Benefits are granted, the type and amounts of Benefits
      to be granted and the date of issuance and duration of all such
      grants;

     

    determine
      the terms, conditions and provisions of, and restrictions relating to, each
      Benefit granted;

     

    interpret
      and construe the Plan and all Agreements;

     

    prescribe,
      amend and rescind rules and regulations relating to the Plan;

     

    determine
      the content and form of all Agreements;

     

    determine
      all questions relating to Benefits under the Plan;

     

    maintain
      accounts, records and ledgers relating to Benefits;

     

    maintain
      records concerning its decisions and proceedings;

     

    employ
      agents, attorneys, accountants or other persons for such purposes as the
      Committee considers necessary or desirable;

     

    take,
      at
      any time, any action described in Section 9.1 or permitted by Section 9.2(a),
      irrespective of whether any Change of Control has occurred or is
      imminent;

     

    determine,
      except to the extent otherwise provided in the Plan, whether and the extent
      to
      which Benefits under the Plan will be structured to conform to the requirements
      applicable to Performance-Based Compensation, and to take such action, establish
      such procedures, and impose such restrictions at the time such Benefits are
      granted as the Committee determines to be necessary or appropriate to conform
      to
      such requirements; and 

     

    do
      and
      perform all acts which it may deem necessary or appropriate for the
      administration of the Plan and carry out the purposes of the Plan.

     

    5.3
      Delegation.

     

    Except
      as
      required by Rule 16b-3 with respect to grants of Options, Stock Appreciation
      Awards, Performance Shares, Other Stock Based Awards, or other Benefits to
      individuals who are subject to Section 16b-3 of the Exchange Act or as otherwise
      required for compliance with Rule 16b-3 or other applicable law, the Committee
      may delegate all or any part of its authority under the Plan to any Employee,
      Employees or committee.

     

    5.4
      Determination.

     

    All
      determinations of the Committee shall be final and binding on all
      persons.

     

    6.
      AMENDMENT

     

    6.1
      Power of Board.

     

    Except
      as
      hereinafter provided, the Board shall have the sole right and power to amend
      the
      Plan at any time and from time to time.

     

    6.2
      Limitation.

     

    The
      Board
      may not amend the Plan, without approval of the shareholders of the
      Company:

     

    in
      a
      manner which would cause Options which are intended to qualify as ISOs to fail
      to qualify;

     

    in
      a
      manner which would cause the Plan to fail to meet the requirements of Rule
      16b-3; or

     

    in
      a
      manner which would violate applicable law.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    7.
      TERM AND TERMINATION

     

    7.1
      Term.

     

    The
      Plan
      shall commence as of the Effective Date and, subject to the terms of the Plan,
      including those requiring approval by the shareholders of the Company and those
      limiting the period over which ISOs or any other Benefits may be granted, shall
      continue in full force and effect until terminated.

     

    7.2
      Termination.

     

    The
      Plan
      may be terminated at any time by the Board.

     

    8.
      MODIFICATION OR TERMINATION OF BENEFITS

     

    8.1
      General.

     

    Subject
      to the provisions of Section 8.2, the amendment or termination of the
      Plan
      shall not adversely affect a Participant’s right to any Benefit granted prior to
      such amendment or termination.

     

    8.2
      Committee’s Right.

     

    Any
      Benefit granted may be converted, modified, forfeited or canceled, in whole
      or
      in part, by the Committee if and to the extent permitted in the Plan or
      applicable Agreement or with the consent of the Participant to whom such Benefit
      was granted. Except as may be provided in an Agreement, the Committee may,
      in
      its sole discretion, in whole or in part, waive any restrictions or conditions
      applicable to, or accelerate the vesting of, any Benefit.

     

    8.3
      Compliance with Applicable Laws.

     

    The
      Plan
      shall be administered and interpreted in accordance with applicable federal
      tax
      laws, including Section 409A of the Code, and the regulations promulgated
      thereunder. 

     

    9.
      CHANGE OF CONTROL

     

    9.1
      Vesting and Payment.

     

    In
      the
      event of a Change of Control:

     

    all
      outstanding Options shall become fully exercisable, except to the extent that
      the right to exercise the Option is subject to restrictions established in
      connection with an SAR that is issued in tandem with the Option;

     

    all
      outstanding SARs shall become immediately payable, except to the extent that
      the
      right to exercise the SAR is subject to restrictions established in connection
      with an Option that is issued in tandem with the SAR;

     

    all
      Shares of Restricted Stock shall become fully vested;

     

    all
      Performance Shares shall be deemed to be fully earned and shall be paid out
      in
      such manner as determined by the Committee; and

     

    all
      Cash
      Awards, Other Stock Based Awards and other Benefits shall become fully vested
      and/or earned and paid out in such manner as determined by the
      Committee.

     

    9.2
      Other Action.

     

    In
      the
      event of a Change of Control, the Committee, in its sole discretion, may, in
      addition to the provisions of Section 9.1 above and to the extent not
      inconsistent therewith:

     

    provide
      for the purchase of any Benefit for an amount of cash equal to the amount which
      could have been attained upon the exercise or realization of such
      Benefit;

     

    make
      such
      adjustment to the Benefits then outstanding as the Committee deems appropriate
      to reflect such transaction or change; and/or

     

    cause
      the
      Benefits then outstanding to be assumed, or new Benefits substituted therefor,
      by the surviving corporation in such change.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    10.
      AGREEMENTS AND CERTAIN BENEFITS

     

    10.1
      Grant Evidenced by Agreement.

     

    The
      grant
      of any Benefit under the Plan may be evidenced by an Agreement which shall
      describe the specific Benefit granted and the terms and conditions of the
      Benefit. The granting of any Benefit shall be subject to, and conditioned upon,
      the recipient’s execution of any Agreement required by the Committee. Except as
      otherwise provided in an Agreement, all capitalized terms used in the Agreement
      shall have the same meaning as in the Plan, and the Agreement shall be subject
      to all of the terms of the Plan.

     

    10.2
      Provisions of Agreement.

     

    Each
      Agreement shall contain such provisions that the Committee shall determine
      to be
      necessary, desirable and appropriate for the Benefit granted which may include,
      but not necessarily be limited to, the following with respect to any Benefit:
      description of the type of Benefit; the Benefit’s duration; its transferability;
      if an Option, the exercise price, the exercise period and the person or persons
      who may exercise the Option; the effect upon such Benefit of the Participant’s
      death, disability, changes of duties or termination of employment; the Benefit’s
      conditions; when, if, and how any Benefit may be forfeited, converted into
      another Benefit, modified, exchanged for another Benefit, or replaced; and
      the
      restrictions on any Shares purchased or granted under the Plan.

     

    10.3
      Transferability.

     

    Unless
      otherwise specified in an Agreement or permitted by the Committee, each Benefit
      granted shall be not transferable other than by will or the laws of descent
      and
      distribution and shall be exercisable during a Participant’s lifetime only by
      him.

     

    11.
      REPLACEMENT AND TANDEM AWARDS

     

    11.1
      Replacement.

     

    The
      Committee may permit a Participant to elect to surrender a Benefit in exchange
      for a new Benefit.

     

    11.2
      Tandem Awards.

     

    Awards
      may be granted by the Committee in tandem. However, no Benefit may be granted
      in
      tandem with an ISO except SARs.

     

    12.
      PAYMENT, DIVIDENDS AND WITHHOLDING

     

    12.1
      Payment.

     

    Upon
      the
      exercise of an Option or in the case of any other Benefit that requires a
      payment by a Participant to the Company, the amount due the Company is to be
      paid:

     

    in
      cash;

     

    by
      the
      surrender of all or part of a Benefit (including the Benefit being exercised)
      including by means of a so-called “cashless exercise” of an option;

     

    by
      the
      tender to the Company of Shares owned by the optionee and registered in his
      name
      having a Fair Market Value equal to the amount due to the Company;

     

    in
      other
      property, rights and credits deemed acceptable by the Committee, including
      the
      Participant’s promissory note;

     

    by
      any
      combination of the payment methods specified in (a), (b), (c) and (d)
      above.

     

    Notwithstanding,
      the foregoing, any method of payment other than (a) may be used only with the
      consent of the Committee or if and to the extent so provided in an Agreement.
      The proceeds of the sale of Shares purchased pursuant to an Option and any
      payment to the Company for other Benefits shall be added to the general funds
      of
      the Company or to the Shares held in treasury, as the case may be, and used
      for
      the corporate purposes of the Company as the Board shall determine.

     

    12.2
      Dividend Equivalents.

     

    Grants
      of
      Benefits in Shares or Share equivalents may include dividend equivalent payments
      or dividend credit rights.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    12.3
      Withholding.

     

    The
      Company may, at the time any distribution is made under the Plan, whether in
      cash or in Shares, or at the time any Option is exercised, withhold from such
      distribution or Shares issuable upon the exercise of an Option, any amount
      necessary to satisfy federal, state and local income and/or other tax
      withholding requirements with respect to such distribution or exercise of such
      Options. The Committee or the Company may require a participant to tender to
      the
      Company cash and/or Shares in the amount necessary to comply with any such
      withholding requirements.

     

    13.
      OPTIONS

     

    13.1
      Types of Options.

     

    It
      is
      intended that both ISOs and NQSOs, which may be Reload Options, may be granted
      by the Committee under the Plan.

     

    13.2
      Grant of ISOs and Option Price.

     

    Each
      ISO
      must be granted to an Employee and granted within ten years from the earlier
      of
      the date of adoption by the Board or the Effective Date. The purchase price
      for
      Shares under any ISO shall be no less than the Fair Market Value of the Shares
      at the time the Option is granted.

     

    13.3
      Other Requirements for ISOs.

     

    The
      terms
      of each Option which is intended to qualify as an ISO shall meet all
      requirements of Section 422 of the Code.

     

    13.4
      NQSOs.

     

    The
      terms
      of each NQSO shall provide that such Option will not be treated as an ISO.
      The
      purchase price for Shares under any NQSO shall be no less than 100% of the
      Fair
      Market Value of the Shares at the time the Option is granted.

     

    13.5
      Determination by Committee.

     

    Except
      as
      otherwise provided in Section 13.1 through Section 13.4, the terms of all
      Options shall be determined by the Committee.

     

    14.
      SARS

     

    14.1
      Grant and Payment.

     

    The
      Committee may grant SARs. Upon electing to receive payment of a SAR, a
      Participant shall receive payment in Shares.

     

    14.2
      Grant of Tandem Award.

     

    The
      Committee may grant SARs in tandem with an Option, in which case: the exercise
      of the Option shall cause a correlative reduction in SARs standing to a
      Participant’s credit which were granted in tandem with the Option; and the
      payment of SARs shall cause a correlative reduction of the Shares under such
      Option.

     

    14.3
      ISO Tandem Award.

     

    When
      SARs
      are granted in tandem with an ISO, the SARs shall have such terms and conditions
      as shall be required for the ISO to qualify as an ISO.

     

    14.4
      Payment of Award.

     

    SARs
      shall be paid by the Company to a Participant, to the extent payment is elected
      by the Participant (and is otherwise due and payable), as soon as practicable
      after the date on which such election is made.

     

    15.
      ANNUAL LIMITATIONS

     

    15.1
      Limitation on Options and SARs.

     

    The
      number of (a) Shares covered by Options where the purchase price is
      no less
      than the Fair Market Value of the Shares on the date of grant plus (b) SARs
      which may be granted to any Participant in any Fiscal Year shall not exceed
      1,000,000.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    15.2
      Limitation on Performance Shares

     

    The
      number of Shares covered by Performance Shares in any Fiscal Year shall not
      exceed 500,000.

     

    15.3
      Computations.

     

    For
      purposes of Section 15.1: Shares covered by an Option that is canceled
      shall count against the maximum, and, if the exercise price under an Option
      is
      reduced, the transaction shall be treated as a cancellation of the Option and
      a
      grant of a new Option; and SARs covered by a grant of SARs that is canceled
      shall count against the maximum, and, if the Fair Market Value of a Share on
      which the appreciation under a grant of SARs will be calculated is reduced,
      the
      transaction will be treated as a cancellation of the SARs and the grant of
      a new
      grant of SARs.

     

    16.
      RESTRICTED STOCK AND PERFORMANCE SHARES

     

    16.1
      Restricted Stock.

     

    The
      Committee may grant Benefits in Shares available under Section 3.1 of
      the
      Plan as Restricted Stock. Shares of Restricted Stock shall be issued and
      delivered at the time of the grant or as otherwise determined by the Committee,
      but shall be subject to forfeiture until provided otherwise in the applicable
      Agreement or the Plan. Each certificate representing Shares of Restricted Stock
      shall bear a legend referring to the Plan and the risk of forfeiture of the
      Shares and stating that such Shares are nontransferable until all restrictions
      have been satisfied and the legend has been removed. At the discretion of the
      Committee, the grantee may or may not be entitled to full voting and dividend
      rights with respect to all shares of Restricted Stock from the date of
      grant.

     

    16.2
      Cost of Restricted Stock.

     

    Unless
      otherwise determined by the Committee, grants of Shares of Restricted Stock
      shall be made at a per Share cost to the Participant equal to par
      value.

     

    16.3
      Non-Transferability.

     

    Shares
      of
      Restricted Stock shall not be transferable until after the removal of the legend
      with respect to such Shares.

     

    16.4
      Performance Shares.

     

    Performance
      Shares are the right of an individual to whom a grant of such Shares is made
      to
      receive Shares or cash equal to the Fair Market Value of such Shares at a future
      date in accordance with the terms and conditions of such grant. The terms and
      conditions shall be determined by the Committee, in its sole discretion, but
      generally are expected to be based substantially upon the attainment of targeted
      profit and/or performance objectives. The Committee shall determine the
      performance targets which will be applied with respect to each grant of
      Performance Shares at the time of grant, but in no event later than 90 days
      after the beginning of the period of service to which the performance targets
      relate. The performance criteria applicable to Performance Shares will be one
      or
      more of the following: (1) stock price; (2) average annual growth in earnings
      per share; (3) increase in shareholder value; (4) earnings per share; (5) net
      income; (6) return on assets; (7) return on shareholders’ equity; (8) increase
      in cash flow; (9) operating profit or operating margins; (10) revenue growth
      of
      the Company; and (11) operating expenses. Each performance target applicable
      to
      a Performance Share award and the deadline for satisfying each such target
      shall
      be stated in the Agreement between the Company and the Employee. The Committee
      must certify in writing that each such target has been satisfied before the
      Performance Shares award becomes effective. 

     

    16.5
      Grant.

     

    The
      Committee may grant an award of Performance Shares. The number of Performance
      Shares and the terms and conditions of the grant shall be set forth in the
      applicable Agreement.

     

    17.
      CASH AWARDS

     

    17.1
      Grant.

     

    The
      Committee may grant Cash Awards at such times and (subject to Section 17.2)
      in such amounts as it deems appropriate.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    17.2
      Annual Limits.

     

    The
      amount of any Cash Award in any Fiscal Year to any Participant shall not exceed
      the greater of $100,000 or 100% of his cash compensation (excluding any Cash
      Award under this Section 17.2) for such Fiscal Year.

     

    17.3
      Restrictions.

     

    Cash
      Awards may be subject or not subject to conditions (such as an investment
      requirement), restricted or nonrestricted, vested or subject to forfeiture
      and
      may be payable currently or in the future or both. The Committee may make grants
      of Cash Awards that are intended to be Performance Based Compensation and grants
      of Cash Awards that are not intended to be Performance Based Compensation.
      

     

    The
      Committee shall determine the performance targets which will be applied with
      respect to each grant of Cash Awards that are intended to be Performance Based
      Compensation at the time of grant, but in no event later than 90 days after
      the
      beginning of the period of service to which the performance targets relate.
      The
      performance criteria applicable to Performance Based Compensation awards will
      be
      one or more of the following: (1) stock price; (2) average annual growth in
      earnings per share; (3) increase in shareholder value; (4) earnings per share;
      (5) net income; (6) return on assets; (7) return on shareholders’ equity; (8)
      increase in cash flow; (9) operating profit or operating margins; (10) revenue
      growth of the Company; and (11) operating expenses. Each performance target
      applicable to a Cash Award intended to be Performance Based Compensation and
      the
      deadline for satisfying each such target shall be stated in the Agreement
      between the Company and the Employee. The Committee must certify in writing
      that
      each such target has been satisfied before the Performance Based Compensation
      award is paid. 

     

    18.
      OTHER STOCK BASED AWARDS AND OTHER BENEFITS

     

    18.1
      Other Stock Based Awards.

     

    The
      Committee shall have the right to grant Other Stock Based Awards which may
      include, without limitation, the grant of Shares based on certain conditions,
      the payment of cash based on the performance of the common stock, the grant
      of
      securities convertible into Shares, and the grant of Shares in lieu of the
      payment of cash compensation pursuant to the mutual agreement of the Participant
      and the Company.

     

    18.2
      Other Benefits.

     

    The
      Committee shall have the right to provide types of Benefits under the Plan
      in
      addition to those specifically listed, if the Committee believes that such
      Benefits would further the purposes for which the Plan was
      established.

     

    19.
      MISCELLANEOUS PROVISIONS

     

    19.1
      Underscored References.

     

    The
      underscored references contained in the Plan are included only for convenience,
      and they shall not be construed as a part of the Plan or in any respect
      affecting or modifying its provisions.

     

    19.2
      Number and Gender.

     

    The
      masculine and neuter, wherever used in the Plan, shall refer to either the
      masculine, neuter or feminine; and, unless the context otherwise requires,
      the
      singular shall include the plural and the plural the singular.

     

    19.3
      Unfunded Status of Plan.

     

    The
      Plan
      is intended to constitute an “unfunded” plan for incentive and deferred
      compensation. With respect to any payments or deliveries of Shares not yet
      made
      to a Participant by the Company, nothing contained herein shall give any rights
      that are greater than those of a general creditor of the Company. The Committee
      may authorize the creation of trusts or other arrangements to meet the
      obligations created under the Plan to deliver Shares or payments hereunder
      consistent with the foregoing.

     

    19.4
      Termination of Employment.

     

    If
      the
      employment of a Participant by the Company terminates for any reason, except
      as
      otherwise provided in an Agreement, all unexercised, deferred, and unpaid
      Benefits may be exercisable or paid only in accordance with rules established
      by
      the Committee. These rules may provide, as the Committee may deem appropriate,
      for the expiration, forfeiture, continuation, or acceleration of the vesting
      of
      all or part of the Benefits.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    19.5
      Designation of Beneficiary.

     

    A
      Participant may file with the Committee a written designation of a beneficiary
      or beneficiaries (subject to such limitations as to the classes and number
      of
      beneficiaries and contingent beneficiaries as the Committee may from time to
      time prescribe) to exercise, in the event of the death of the Participant,
      an
      Option, or to receive, in such event, any Benefits. The Committee reserves
      the
      right to review and approve beneficiary designations. A Participant may from
      time to time revoke or change any such designation of beneficiary and any
      designation of beneficiary under the Plan shall be controlling over any other
      disposition, testamentary or otherwise; provided, however, that if the Committee
      shall be in doubt as to the right of any such beneficiary to exercise any Option
      or to receive any Benefit, the Committee may determine to recognize only an
      exercise by the legal representative of the recipient, in which case the
      Company, the Committee and the members thereof shall not be under any further
      liability to anyone.

     

    19.6
      Governing Law.

     

    This
      Plan
      shall be construed and administered in accordance with the laws of the State
      of
      Missouri.

     

    19.7
      Purchase for Investment.

     

    The
      Committee may require each person purchasing Shares pursuant to an Option or
      other award under the Plan to represent to and agree with the Company in writing
      that such person is acquiring the Shares for investment and without a view
      to
      distribution or resale. The certificates for such Shares may include any legend
      which the Committee deems appropriate to reflect any restrictions on transfer.
      All certificates for Shares delivered under the Plan shall be subject to such
      stock-transfer orders and other restrictions as the Committee may deem advisable
      under all applicable laws, rules and regulations, and the Committee may cause
      a
      legend or legends to be put on any such certificates to make appropriate
      references to such restrictions.

     

    19.8
      No Employment Contract.

     

    Neither
      the adoption of the Plan nor any Benefit granted hereunder shall confer upon
      any
      Employee any right to continued employment nor shall the Plan or any Benefit
      interfere in any way with the right of the Employer to terminate the employment
      of any of its Employees at any time.

     

    19.9
      No Effect on Other Benefits.

     

    The
      receipt of Benefits under the Plan shall have no effect on any benefits to
      which
      a Participant may be entitled from the Employer, under another plan or
      otherwise, or preclude a Participant from receiving any such
      benefits.

     

     

     

     

     

     

     

     

     

    12

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