Document:

Exhibit
4.1

 

HCSB FINANCIAL
CORPORATION

as Company

 

 

INDENTURE

Dated as of December 21, 2004

 

 

JPMORGAN CHASE BANK, N.A.

As Trustee

 

 

JUNIOR SUBORDINATED DEBT SECURITIES

 

Due March 15,
2035

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.01.

  	
  Definitions

  	
   

  
	
   

  	
   

  
	
  Additional Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Additional Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authenticating Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bankruptcy
  Law

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Board of Directors

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Board
  Resolution

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Business
  Day

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Calculation
  Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Capital Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Capital Securities Guarantee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Capital Treatment Event

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Certificate

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Common
  Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Debt
  Security

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Debt Security Register

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Declaration

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Defaulted Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Deferred Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Event
  of Default

  	
   

  	
   

  
				

 

i

 

	
  Extension
  Period

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Federal
  Reserve

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Indenture

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initial
  Purchaser

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Institutional Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interest Payment Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interest
  Rate

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Investment Company Event

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LIBOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LIBOR Banking Day

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LIBOR Business Day

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LIBOR Determination Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Liquidation Amount

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Maturity
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Notice

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Officers’ Certificate

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Opinion of Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Outstanding

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Paying
  Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Person

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Predecessor Security

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Office of the Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Redemption
  Date

  	
   

  	
   

  

 

ii

 

	
  Redemption
  Price

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Responsible Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Securityholder

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Senior Indebtedness

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Special
  Event

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Special Redemption Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Subsidiary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tax Event

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trust Indenture Act

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trust
  Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  U.S.
  Person

  	
   

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  II

  DEBT SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.01.

  	
  Authentication
  and Dating

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.02.

  	
  Form
  of Trustee’s Certificate of Authentication

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.03.

  	
  Form
  and Denomination of Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.04.

  	
  Execution
  of Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.05.

  	
  Exchange
  and Registration of Transfer of Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.06.

  	
  Mutilated,
  Destroyed, Lost or Stolen Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.07.

  	
  Temporary
  Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.08.

  	
  Payment
  of Interest

  	
   

  
				

 

iii

 

	
  SECTION
  2.09.

  	
  Cancellation
  of Debt Securities Paid, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.10.

  	
  Computation
  of Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.11.

  	
  Extension
  of Interest Payment Period

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.12.

  	
  CUSIP
  Numbers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  PARTICULAR COVENANTS OF THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.01.

  	
  Payment
  of Principal, Premium and Interest; Agreed Treatment of the Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.02.

  	
  Offices
  for Notices and Payments, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.03.

  	
  Appointments
  to Fill Vacancies in Trustee’s Office

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.04.

  	
  Provision
  as to Paying Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.05.

  	
  Certificate
  to Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.06.

  	
  Additional
  Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.07.

  	
  Compliance
  with Consolidation Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.08.

  	
  Limitation
  on Dividends

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.09.

  	
  Covenants
  as to the Trust

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.01.

  	
  Securityholders’
  Lists

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.02.

  	
  Preservation
  and Disclosure of Lists

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.01.

  	
  Events
  of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.02.

  	
  Payment
  of Debt Securities on Default; Suit Therefor

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.03.

  	
  Application
  of Moneys Collected by Trustee

  	
   

  

 

iv

 

	
  SECTION
  5.04.

  	
  Proceedings
  by Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.05.

  	
  Proceedings
  by Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.06.

  	
  Remedies
  Cumulative and Continuing

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.07.

  	
  Direction
  of Proceedings and Waiver of Defaults by Majority of Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.08.

  	
  Notice
  of Defaults

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.09.

  	
  Undertaking
  to Pay Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  CONCERNING THE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.01.

  	
  Duties
  and Responsibilities of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.02.

  	
  Reliance
  on Documents, Opinions, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.03.

  	
  No
  Responsibility for Recitals, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.04.

  	
  Trustee,
  Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
  Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.05.

  	
  Moneys
  to be Held in Trust

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.06.

  	
  Compensation
  and Expenses of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.07.

  	
  Officers’
  Certificate as Evidence

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.08.

  	
  Eligibility
  of Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.09.

  	
  Resignation
  or Removal of Trustee, Calculation Agent, Paying Agent or Debt Security
  Registrar

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.10.

  	
  Acceptance
  by Successor

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.11.

  	
  Succession
  by Merger, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.12.

  	
  Authenticating
  Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  CONCERNING THE SECURITYHOLDERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.01.

  	
  Action
  by Securityholders

  	
   

  

 

v

 

	
  SECTION
  7.02.

  	
  Proof
  of Execution by Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.03.

  	
  Who
  Are Deemed Absolute Owners

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.04.

  	
  Debt
  Securities Owned by Company Deemed Not Outstanding

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.05.

  	
  Revocation
  of Consents; Future Securityholders Bound

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  SECURITYHOLDERS’ MEETINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.01.

  	
  Purposes
  of Meetings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.02.

  	
  Call
  of Meetings by Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.03.

  	
  Call
  of Meetings by Company or Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.04.

  	
  Qualifications
  for Voting

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.05.

  	
  Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.06.

  	
  Voting

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.07.

  	
  Quorum;
  Actions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.08.

  	
  Written
  Consent Without a Meeting

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  SUPPLEMENTAL INDENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.01.

  	
  Supplemental
  Indentures without Consent of Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.02.

  	
  Supplemental
  Indentures with Consent of Securityholders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.03.

  	
  Effect
  of Supplemental Indentures

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.04.

  	
  Notation
  on Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.05.

  	
  Evidence
  of Compliance of Supplemental Indenture to be furnished to Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  REDEMPTION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
  Optional Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.02.

  	
  Special Event Redemption

  	
   

  

 

vi

 

	
  SECTION 10.03.

  	
  Notice of Redemption; Selection of Debt Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.04.

  	
  Payment of Debt Securities Called for Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.01.

  	
  Company May Consolidate, etc., on Certain Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.02.

  	
  Successor Entity to be Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.03.

  	
  Opinion of Counsel to be Given to Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  SATISFACTION AND DISCHARGE OF INDENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.01.

  	
  Discharge of Indenture

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.02.

  	
  Deposited Moneys to be Held in Trust by Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.03.

  	
  Paying Agent to Repay Moneys Held

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.04.

  	
  Return of Unclaimed Moneys

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.01.

  	
  Indenture and Debt Securities Solely Corporate Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.01.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.02.

  	
  Official Acts by Successor Entity

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.03.

  	
  Surrender of Company Powers

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.04.

  	
  Addresses for Notices, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.05.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.06.

  	
  Evidence of Compliance with Conditions Precedent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.07.

  	
  Non-Business Days

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.08.

  	
  Table of Contents, Headings, etc

  	
   

  

 

vii

 

	
  SECTION 14.09.

  	
  Execution in Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.10.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.11.

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.12.

  	
  Acknowledgment of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  SUBORDINATION OF DEBT SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.01.

  	
  Agreement to Subordinate

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.02.

  	
  Default on Senior Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.03.

  	
  Liquidation; Dissolution; Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.04.

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.05.

  	
  Trustee to Effectuate Subordination

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.06.

  	
  Notice by the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.07.

  	
  Rights of the Trustee, Holders of Senior Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.08.

  	
  Subordination May Not Be Impaired

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  FORM OF DEBT
  SECURITY

  	
   

  

 

viii

 

THIS
INDENTURE, dated as of December 21, 2004,
between HCSB Financial Corporation, a
bank holding company incorporated in South
Carolina (hereinafter sometimes called the “Company”), and JPMorgan
Chase Bank, N.A. as trustee (hereinafter sometimes called the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, for
its lawful corporate purposes, the Company has duly authorized the issuance of
its Junior Subordinated Debt Securities due March
15, 2035 (the “Debt Securities”) under this Indenture and to provide,
among other things, for the execution and authentication, delivery and
administration thereof, the Company has duly authorized the execution of this
Indenture.

 

NOW,
THEREFORE, in consideration of the premises, and the purchase of the Debt
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Debt Securities as follows:

 

ARTICLE
I

 

DEFINITIONS

 

SECTION 1.01.  Definitions.

 

The terms
defined in this Section 1.01 (except as herein otherwise expressly provided or
unless the context otherwise requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the respective meanings
specified in this Section 1.01. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles and the term “generally accepted
accounting principles” means such accounting principles as are generally
accepted in the United States at the time of any computation. The words “herein,”
“hereof’ and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.

 

“Additional Interest“ shall have the meaning set
forth in Section 3.06.

 

“Additional Provisions“ shall have the meaning set
forth in Section 15.01.

 

“Authenticating Agent“ means any agent or agents of
the Trustee which at the time shall be appointed and acting pursuant to Section
6.12.

 

“Bankruptcy Law“ means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.

 

“Board of Directors“ means the board of directors or
the executive committee or any other duly authorized designated officers of the
Company.

 

 

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

 

“Business Day“ means any day other than a Saturday, Sunday
or any other day on which banking institutions in Wilmington, Delaware, New
York City or the city of the Principal Office of the Trustee or the Company are
permitted or required by any applicable law or executive order to close.

 

“Calculation Agent“ means the Person identified as “Trustee”
in the first paragraph hereof with respect to the Debt Securities and the
Institutional Trustee with respect to the Trust Securities.

 

“Capital Securities“ means undivided beneficial
interests in the assets of the Trust which are designated as “TP Securities”
and rank pari passu with Common Securities issued by the Trust; provided,
however, that if an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of such Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of such Capital
Securities.

 

“Capital Securities Guarantee“ means the
guarantee agreement that the Company will enter into with JPMorgan Chase Bank,
N.A. or other Persons that operates directly or indirectly for the benefit of
holders of Capital Securities of the Trust.

 

“Capital Treatment Event“ means, if the Company
is organized and existing under the laws of the United States or any state
thereof or the District of Columbia, the receipt by the Company and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of (a) any amendment to, or change in, the laws, rules or regulations of
the United States or any political subdivision thereof or therein, or any
rules, guidelines or policies of any applicable regulatory authority for the
Company or (b) any official or administrative pronouncement or action or
decision interpreting or applying such laws, rules or regulations, which
amendment or change is effective or which pronouncement, action or decision is
announced on or after the date of original issuance of the Debt Securities,
there is more than an insubstantial risk that, within 90 days of the receipt of
such opinion, the aggregate Liquidation Amount of the Capital Securities will
not be eligible to be treated by the Company as “Tier 1 Capital” (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve (or any successor regulatory authority with jurisdiction over
bank or financial holding companies), as then in effect and applicable to the
Company (or if the Company is not a bank holding company, such guidelines
applied to the Company as if the Company were subject to such guidelines);
provided, however, that the inability of the Company to treat all or any
portion of the aggregate Liquidation Amount of the Capital Securities as
Tier 1 Capital shall not constitute the basis for a Capital Treatment
Event, if such inability results from the Company having cumulative preferred
stock, minority interests in consolidated subsidiaries, or any other class of
security or interest which the Federal Reserve or OTS, as applicable, may now
or hereafter accord Tier 1 Capital treatment in excess of the amount which
may now or hereafter qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines; provided further, however, that the
distribution of the Debt Securities in connection with the liquidation of

 

2

 

the Trust by the Company
shall not in and of itself constitute a Capital Treatment Event unless such
liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event.

 

“Certificate“ means a certificate signed by any one
of the principal executive officer, the principal financial officer or the
principal accounting officer of the Company.

 

“Common Securities“ means undivided beneficial
interests in the assets of the Trust which are designated as “Common Securities”
and rank pari passu with Capital Securities issued by the Trust; provided,
however, that if an Event of Default (as defined in the Declaration) has
occurred and is continuing, the rights of holders of such Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of such Capital
Securities.

 

“Company“
means HCSB Financial Corporation, a bank
holding company incorporated in South Carolina,
and, subject to the provisions of Article XI, shall include its successors and
assigns.

 

“Debt Security“ or “Debt Securities” has the meaning
stated in the first recital of this Indenture.

 

“Debt Security Register“ has the meaning specified
in Section 2.05.

 

“Declaration“ means the Amended and Restated Declaration of
Trust of the Trust dated as of December 21, 2004,
as amended or supplemented from time to time.

 

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

 

“Defaulted Interest“ has the meaning set forth in
Section 2.08.

 

“Deferred Interest“ has the meaning set forth in
Section 2.11.

 

“Event of Default“ means any event specified in
Section 5.01, which has continued for the period of time, if any, and after the
giving of the notice, if any, therein designated.

 

“Extension Period“ has the meaning set forth in Section
2.11.

 

“Federal Reserve“ means the Board of Governors of the
Federal Reserve System.

 

“Indenture“ means this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented,
or both.

 

“Initial Purchaser“
means the initial purchaser of the Capital Securities.

 

“Institutional Trustee“ has the meaning set forth
in the Declaration.

 

3

 

“Interest Payment Date“ means March 15, June
15, September 15 and December 15 of each year, commencing on March 15, 2005, during the term of this
Indenture.

 

“Interest
Payment Period” means the period from and including an Interest Payment
Date, or in the case of the first Interest Payment Period, the original date of
issuance of the Debt Securities, to, but excluding, the next succeeding
Interest Payment Date or, in the case of the last Interest Payment Period, the
Redemption Date, Special Redemption Date or Maturity Date, as the case may be.

 

“Interest Rate“ means, with respect to any Interest
Period, a per annum rate of interest, equal to LIBOR, as determined on the
LIBOR Determination Date for such Interest Payment Date, plus 2.35%; provided, however, that the Interest
Rate for any Interest Payment Period may not exceed the highest rate permitted
by New York law, as the same may be modified by United States law of general
application.

 

“Investment Company Event“ means the
receipt by the Company and the Trust of an Opinion of Counsel experienced in
such matters to the effect that, as a result of a change in law or regulation
or written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, there is
more than an insubstantial risk that the Trust is or, within 90 days of the
date of such opinion will be, considered an “investment company” that is
required to be registered under the Investment Company Act of 1940, as amended,
which change or prospective change becomes effective or would become effective,
as the case may be, on or after the date of the original issuance of the Debt
Securities.

 

“LIBOR“
means the London Interbank Offered Rate for U.S. Dollar deposits in Europe as
determined by the Calculation Agent according to Section 2.10(b).

 

“LIBOR Banking Day“ has the meaning
set forth in Section 2.10(b)(1).

 

“LIBOR Business Day“ has the meaning
set forth in Section 2.10(b)(1).

 

“LIBOR Determination Date“ has the
meaning set forth in Section 2.10(b).

 

“Liquidation Amount“ means the
liquidation amount of $1,000 per Trust Security.

 

“Maturity Date“ means March
15, 2035.

 

“Notice“
has the meaning set forth in Section 2.11.

 

“Officers’ Certificate“ means a certificate signed
by the Chairman of the Board, the Vice Chairman, the President or any Vice
President, and by the Chief Financial Officer, the Treasurer, an Assistant
Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 14.06 if and
to the extent required by the provisions of such Section.

 

4

 

“Opinion of Counsel“ means an
opinion in writing signed by legal counsel, who may be an employee of or
counsel to the Company, or may be other counsel reasonably satisfactory to the
Trustee. Each such opinion shall include the statements provided for in Section
14.06 if and to the extent required by the provisions of such Section.

 

“OTS“
means the Office of Thrift Supervision and any successor federal agency that is
primarily responsible for regulating the activities of savings and loan holding
companies.

 

“Outstanding“ means, when used with reference to Debt
Securities, subject to the provisions of Section 7.04, as of any particular
time, all Debt Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except

 

(a)           Debt Securities theretofore canceled
by the Trustee or the Authenticating Agent or delivered to the Trustee for
cancellation;

 

(b)           Debt Securities, or portions thereof,
for the payment or redemption of which moneys in the necessary amount shall
have been deposited in trust with the Trustee or with any Paying Agent (other
than the Company) or shall have been set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent); provided,
that, if such Debt Securities, or portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall have been given as provided
in Articles X and XIV or provision satisfactory to the Trustee shall have been
made for giving such notice; and

 

(c)           Debt Securities paid pursuant to
Section 2.06 or in lieu of or in substitution for which other Debt Securities
shall have been authenticated and delivered pursuant to the terms of Section
2.06 unless proof satisfactory to the Company and the Trustee is presented that
any such Debt Securities are held by bona fide holders in due course.

 

“Paying Agent“ has the meaning set forth in Section
3.04(e).

 

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

 

“Predecessor Security“ of any particular Debt
Security means every previous Debt Security evidencing all or a portion of the
same debt as that evidenced by such particular Debt Security; and, for the
purposes of this definition, any Debt Security authenticated and delivered
under Section 2.06 in lieu of a lost, destroyed or stolen Debt Security shall
be deemed to evidence the same debt as the lost, destroyed or stolen Debt
Security.

 

“Principal Office of the Trustee“ means the
office of the Trustee, at which at any particular time its corporate trust
business shall be principally administered, which at all times shall be located
within the United States and at the time of the execution of this Indenture
shall be 600 Travis Street, 50th Floor, Houston, Texas 77002.

 

“Redemption Date“ has the meaning set forth in Section
10.01.

 

5

 

“Redemption Price“ means 100% of the principal amount
of the Debt Securities being redeemed plus accrued and unpaid interest on such
Debt Securities to the Redemption Date.

 

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

 

“Securityholder,” “holder of Debt Securities“ or
other similar terms, means any Person in whose name at the time a particular
Debt Security is registered on the Debt Security Register.

 

“Senior Indebtedness“ means, with respect to the
Company, (i) the principal, premium, if any, and interest in respect of (A)
indebtedness of the Company for money borrowed and (B) indebtedness evidenced
by securities, debentures, notes, bonds or other similar instruments issued by
the Company; (ii) all capital lease obligations of the Company; (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations
of the Company under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business); (iv) all
obligations of the Company for the reimbursement of any letter of credit, any
banker’s acceptance, any security purchase facility, any repurchase agreement
or similar arrangement, any interest rate swap, any other hedging arrangement,
any obligation under options or any similar credit or other transaction; (v)
all obligations of the type referred to in clauses (i) through (iv) above of
other Persons for the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) above of other Persons secured by any lien on any
property or asset of the Company (whether or not such obligation is assumed by
the Company), whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless, with the prior approval of the Federal Reserve if
not otherwise generally approved, it is provided in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, that such obligations
are not superior or are pari passu in right of payment to the Debt Securities;
provided, however, that Senior Indebtedness shall not include (A) any debt
securities issued to any trust other than the Trust (or a trustee of such
trust) that is a financing vehicle of the Company (a “financing entity”), in
connection with the issuance by such financing entity of equity or other
securities in transactions substantially similar in structure to the
transactions contemplated hereunder and in the Declaration, (B) any guarantees
of the Company in respect of the equity or other securities of any financing
entity referred to in clause (A) above or (C) any other instruments allowed as
subordinated securities for purposes of the Debt Securities by the Federal Reserve
from time to time hereafter.

 

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

 

6

 

“Special Redemption Date“ has the meaning set
forth in Section 10.02.

 

“Special
Redemption Price” means, with respect to the
redemption of any Debt Security following a Special Event, an amount in cash
equal to 103.525% of the principal amount of Debt Securities to be redeemed
prior to March 15, 2006 and thereafter
equal to the percentage of the principal amount of the Debt Securities that is
specified below for the Special Redemption Date plus, in each case, unpaid
interest accrued thereon to the Special Redemption Date:

 

	
  Special
  Redemption During the

  12-Month Period Beginning March 15

  	
   

  	
  Percentage of Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  103.140

  	
  %

  
	
  2007

  	
   

  	
  102.355

  	
  %

  
	
  2008

  	
   

  	
  101.570

  	
  %

  
	
  2009

  	
   

  	
  100.785

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

“Subsidiary“ means, with respect to any Person, (i) any
corporation, at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
the outstanding partnership or similar interests of which shall at the time be
owned by such Person, or by one or more of its Subsidiaries, or by such Person
and one or more of its Subsidiaries, and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner. For the purposes
of this definition, “voting stock” means shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person
having ordinary voting power for the election of a majority of the directors
(or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.

 

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

 

7

 

days of the date of such
opinion, subject to or otherwise required to pay, or required to withhold from
distributions to holders of Trust Securities, more than a de minimis amount of
other taxes (including withholding taxes), duties, assessments or other
governmental charges.

 

“Trust“
means HCSB Financial Trust I, the
Delaware statutory trust, or any other similar trust created for the purpose of
issuing Capital Securities in connection with the issuance of Debt Securities
under this Indenture, of which the Company is the sponsor.

 

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

 

“Trust Securities“ means Common Securities and Capital
Securities of HCSB Financial Trust I.

 

“Trustee“
means the Person identified as “Trustee” in the first paragraph hereof, and,
subject to the provisions of Article VI hereof, shall also include its
successors and assigns as Trustee hereunder.

 

“United States“ means the United States of America and the
District of Columbia.

 

“U.S. Person“ has the meaning given to United States
Person as set forth in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended.

 

ARTICLE
II

 

DEBT SECURITIES

 

SECTION 2.01.  Authentication and Dating.

 

Upon the
execution and delivery of this Indenture, or from time to time thereafter, Debt
Securities in an aggregate principal amount not in excess of $6,186,000 may be executed and delivered by the
Company to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Debt Securities to or upon
the written order of the Company, signed by its Chairman of the Board of
Directors, Vice Chairman, President or Chief Financial Officer or one of its
Vice Presidents, without any further action by the Company hereunder. In
authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
fully protected in relying upon a copy of any Board Resolution or Board
Resolutions relating thereto and, if applicable, an appropriate record of any
action taken pursuant to such resolution, in each case certified by the
Secretary or an Assistant Secretary or other officers with appropriate
delegated authority of the Company as the case may be.

 

The Trustee
shall have the right to decline to authenticate and deliver any Debt Securities
under this Section if the Trustee, being advised by counsel, determines that such
action may not lawfully be taken or if a Responsible Officer of the Trustee in
good faith shall determine that such action would expose the Trustee to
personal liability to existing Securityholders. 
The Trustee shall also be entitled to receive an opinion of counsel to
the effect that (1) all conditions

 

8

 

precedent to the execution, delivery and authentication of the
Securities have been complied with; (2) the Securities are not required to be
registered under the Securities Act; and (3) the Indenture is not required to
be qualified under the Trust Indenture Act.

 

The definitive
Debt Securities shall be typed, printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Debt Securities, as evidenced by their execution of
such Debt Securities.

 

SECTION 2.02.  Form of Trustee’s Certificate of
Authentication.

 

The Trustee’s
certificate of authentication on all Debt Securities shall be in substantially
the following form:

 

This is one of
the Debt Securities referred to in the within-mentioned Indenture.

 

JPMorgan Chase
Bank, N.A., not in its individual capacity but solely as Trustee

 

	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  

 

SECTION 2.03.  Form and Denomination of Debt Securities.

 

The Debt
Securities shall be substantially in the form of Exhibit A hereto. The Debt
Securities shall be in registered, certificated form without coupons and in
minimum denominations of $100,000 and any multiple of $1,000 in excess thereof.
The Debt Securities shall be numbered, lettered, or otherwise distinguished in
such manner or in accordance with such plans as the officers executing the same
may determine with the approval of the Trustee as evidenced by the execution
and authentication thereof.

 

SECTION 2.04.  Execution of Debt Securities.

 

The Debt
Securities shall be signed in the name and on behalf of the Company by the
manual or facsimile signature of any of its Chairman of the Board of Directors,
Vice Chairman, President or Chief Financial Officer or one of its Executive
Vice Presidents, Senior Vice Presidents or Vice Presidents, under its corporate
seal (if legally required), which may be affixed thereto or printed, engraved
or otherwise reproduced thereon, by facsimile or otherwise, and which need not
be attested. Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form herein before recited, executed by the
Trustee or the Authenticating Agent by the manual signature of an authorized
officer, shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee or the
Authenticating Agent upon any Debt Security executed by the Company shall be conclusive
evidence that the Debt Security so authenticated has been duly authenticated
and delivered hereunder and that the holder is entitled to the benefits of this
Indenture.

 

In case any
officer of the Company who shall have signed any of the Debt Securities shall
cease to be such officer before the Debt Securities so signed shall have been
authenticated and delivered by the Trustee or the Authenticating Agent, or
disposed of by the Company, such Debt Securities nevertheless may be
authenticated and delivered or disposed of

 

9

 

as though the Person who signed such Debt Securities had not ceased to
be such officer of the Company; and any Debt Security may be signed on behalf
of the Company by such Persons as, at the actual date of the execution of such
Debt Security, shall be the proper officers of the Company, although at the
date of the execution of this Indenture any such person was not such an
officer.

 

Every Debt
Security shall be dated the date of its authentication.

 

SECTION 2.05.  Exchange and Registration of Transfer of
Debt Securities.

 

The Company
shall cause to be kept, at the office or agency maintained for the purpose of
registration of transfer and for exchange as provided in Section 3.02, a register
(the “Debt Security Register”) for the Debt Securities issued hereunder in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration and transfer of all Debt Securities as
provided in this Article II. Such register shall be in written form or in any
other form capable of being converted into written form within a reasonable
time.

 

Debt
Securities to be exchanged may be surrendered at the Principal Office of the
Trustee or at any office or agency to be maintained by the Company for such
purpose as provided in Section 3.02, and the Company shall execute, the Company
or the Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in exchange therefor the Debt
Security or Debt Securities which the Securityholder making the exchange shall
be entitled to receive. Upon due presentment for registration of transfer of
any Debt Security at the Principal Office of the Trustee or at any office or
agency of the Company maintained for such purpose as provided in Section 3.02,
the Company shall execute, the Company or the Trustee shall register and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in the name of the transferee or transferees a new Debt Security for a
like aggregate principal amount. Registration or registration of transfer of
any Debt Security by the Trustee or by any agent of the Company appointed
pursuant to Section 3.02, and delivery of such Debt Security, shall be deemed
to complete the registration or registration of transfer of such Debt Security.

 

All Debt
Securities presented for registration of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating
Agent) be duly endorsed by, or be accompanied by, a written instrument or
instruments of transfer in form satisfactory to the Company and either the
Trustee or the Authenticating Agent duly executed by, the holder or such holder’s
attorney duly authorized in writing.

 

No service
charge shall be made for any exchange or registration of transfer of Debt
Securities, but the Company or the Trustee may require payment of a sum
sufficient to cover any tax, fee or other governmental charge that may be imposed
in connection therewith.

 

The Company or
the Trustee shall not be required to exchange or register a transfer of any
Debt Security for a period of 15 days immediately preceding the date of
selection of Debt Securities for redemption.

 

Notwithstanding
the foregoing, Debt Securities may not be transferred except in compliance with
the restricted securities legend set forth below, unless otherwise determined
by

 

10

 

the Company in accordance with applicable law, which legend shall be
placed on each Debt Security:

 

THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) TO A “NON U.S. PERSON” IN AN “OFFSHORE TRANSACTION” PURSUANT TO
REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

 

THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS THAT IT
WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS SUCH
TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

 

THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS
THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE “CODE”), (EACH A “PLAN”), OR AN ENTITY

 

11

 

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

 

IN CONNECTION
WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO THE COMPANY AND
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE
INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.

 

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

 

THIS
OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION. THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF DEPOSITORS AND
THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT
SECURED.

 

12

 

SECTION 2.06.  Mutilated, Destroyed, Lost or Stolen Debt
Securities.

 

In case any
Debt Security shall become mutilated or be destroyed, lost or stolen, the
Company shall execute, and upon its written request the Trustee shall
authenticate and deliver, a new Debt Security bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debt Security, or in lieu of and in substitution for the Debt Security so
destroyed, lost or stolen. In every case the applicant for a substituted Debt
Security shall furnish to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction, loss
or theft of such Debt Security and of the ownership thereof.

 

The Trustee
may authenticate any such substituted Debt Security and deliver the same upon
the written request or authorization of any officer of the Company. Upon the
issuance of any substituted Debt Security, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. In case
any Debt Security which has matured or is about to mature or has been called
for redemption in full shall become mutilated or be destroyed, lost or stolen,
the Company may, instead of issuing a substitute Debt Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Debt Security) if the applicant for such payment shall furnish
to the Company and the Trustee such security or indemnity as may be required by
them to save each of them harmless and, in case of destruction, loss or theft,
evidence satisfactory to the Company and to the Trustee of the destruction,
loss or theft of such Security and of the ownership thereof.

 

Every
substituted Debt Security issued pursuant to the provisions of this Section
2.06 by virtue of the fact that any such Debt Security is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debt Security shall be found at
any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Debt Securities duly issued
hereunder. All Debt Securities shall be held and owned upon the express
condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.

 

SECTION 2.07.  Temporary Debt Securities.

 

Pending the
preparation of definitive Debt Securities, the Company may execute and the
Trustee shall authenticate and make available for delivery temporary Debt
Securities that are typed, printed or lithographed. Temporary Debt Securities
shall be issuable in any authorized denomination, and substantially in the form
of the definitive Debt Securities but with such omissions, insertions and
variations as may be appropriate for temporary Debt Securities, all as may be
determined by the Company. Every such temporary Debt Security shall be executed
by the Company and be authenticated by the Trustee upon the same conditions and
in substantially the same manner, and with the same effect, as the definitive
Debt Securities. Without

 

13

 

unreasonable delay, the Company will execute and deliver to the Trustee
or the Authenticating Agent definitive Debt Securities and thereupon any or all
temporary Debt Securities may be surrendered in exchange therefor, at the
Principal Office of the Trustee or at any office or agency maintained by the
Company for such purpose as provided in Section 3.02, and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange for such temporary Debt Securities a like aggregate principal amount
of such definitive Debt Securities. Such exchange shall be made by the Company
at its own expense and without any charge therefor except that in case of any
such exchange involving a registration of transfer the Company may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in relation thereto. Until so exchanged, the temporary Debt
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Debt Securities authenticated and delivered hereunder.

 

SECTION 2.08.  Payment of Interest.

 

Each Debt Security
will bear interest at the then applicable Interest Rate from and including each
Interest Payment Date or, in the case of the first Interest Payment Period, the
original date of issuance of such Debt Security to, but excluding, the next
succeeding Interest Payment Date or, in the case of the last Interest Payment
Period, the Redemption Date, Special Redemption Date or Maturity Date, as
applicable, on the principal thereof, on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
Deferred Interest and on any overdue installment of interest (including
Defaulted Interest), payable (subject to the provisions of Article XII) on each
Interest Payment Date commencing on March 15,
2005. Interest and any Deferred Interest on any Debt Security that is
payable, and is punctually paid or duly provided for by the Company, on any
Interest Payment Date shall be paid to the Person in whose name said Debt
Security (or one or more Predecessor Securities) is registered at the close of
business on the regular record date for such interest installment, except that
interest and any Deferred Interest payable on the Maturity Date shall be paid
to the Person to whom principal is paid. In the event that any Debt Security or
portion thereof is called for redemption and the redemption date is subsequent
to a regular record date with respect to any Interest Payment Date and either
on or prior to such Interest Payment Date, interest on such Debt Security will
be paid upon presentation and surrender of such Debt Security.

 

Any interest
on any Debt Security, other than Deferred Interest, that is payable, but is not
punctually paid or duly provided for by the Company, on any Interest Payment
Date (herein called “Defaulted Interest”) shall forthwith cease to be payable
to the registered holder on the relevant regular record date by virtue of
having been such holder, and such Defaulted Interest shall be paid by the
Company to the Persons in whose names such Debt Securities (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each such Debt Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements reasonably satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date for the

 

14

 

payment of such Defaulted Interest which shall not be more than fifteen
nor less than ten days prior to the date of the proposed payment and not less
than ten days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such special record
date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the special record date
therefor to be mailed, first class postage prepaid, to each Securityholder at
his or her address as it appears in the Debt Security Register, not less than
ten days prior to such special record date. Notice of the proposed payment of
such Defaulted Interest and the special record date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Debt Securities (or their respective Predecessor Securities) are
registered on such special record date and thereafter the Company shall have no
further payment obligation in respect of the Defaulted Interest.

 

Any interest
scheduled to become payable on an Interest Payment Date occurring during an
Extension Period shall not be Defaulted Interest and shall be payable on such
other date as may be specified in the terms of such Debt Securities.

 

The term “regular
record date” as used in this Section shall mean the seventh day prior to the
applicable Interest Payment Date whether or not such date is a Business Day.

 

Subject to the
foregoing provisions of this Section, each Debt Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debt Security shall carry the rights to interest accrued and unpaid, and
to accrue, that were carried by such other Debt Security.

 

SECTION 2.09.  Cancellation of Debt Securities Paid, etc.

 

All Debt
Securities surrendered for the purpose of payment, redemption, exchange or
registration of transfer, shall, if surrendered to the Company or any Paying
Agent, be surrendered to the Trustee and promptly canceled by it, or, if
surrendered to the Trustee, shall be promptly canceled by it, and no Debt Securities
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. The Trustee shall dispose of all canceled Debt
Securities in accordance with its customary practices, unless the Company
otherwise directs the Trustee in writing, in which case the Trustee shall
dispose of such Debt Securities as directed by the Company. If the Company
shall acquire any of the Debt Securities, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debt Securities unless and until the same are surrendered to the Trustee for
cancellation.

 

SECTION 2.10.  Computation of Interest.

 

(a)           The amount of interest payable for
any Interest Payment Period will be computed on the basis of a 360-day year and
the actual number of days elapsed in the relevant interest period; provided,
however, that upon the occurrence of a Special Event Redemption pursuant
to Section 10.02 the amounts payable pursuant to this Indenture shall be
calculated as set forth in the definition of Special Redemption Price.

 

15

 

(b)           LIBOR, for any Interest Payment
Period, shall be determined by the Calculation Agent in accordance with the
following provisions:

 

(1)           On the second LIBOR Business Day
(provided, that on such day commercial banks are open for business (including
dealings in foreign currency deposits) in London (a “LIBOR Banking Day”), and
otherwise the next preceding LIBOR Business Day that is also a LIBOR Banking
Day) prior to March 15, June 15, September
15 and December 15 (or, with
respect to the first Interest Payment Period, on December 17, 2004) (each such day, a “LIBOR Determination Date” for
the following Interest Payment Period), the Calculation Agent shall obtain the
rate for three-month U.S. Dollar deposits in Europe, which appears on Telerate
Page 3750 (as defined in the International Swaps and Derivatives Association,
Inc. 2000 Interest Rate and Currency Exchange Definitions) or such other page as
may replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or
such other service or services as may be nominated by the British Banker’s
Association as the information vendor for the purpose of displaying London
Interbank offered rates for U.S. dollar deposits), as of 11:00 a.m. (London
time) on such LIBOR Determination Date, and the rate so obtained shall be LIBOR
for such Interest Payment Period.  “LIBOR
Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York or Wilmington,
Delaware are authorized or obligated by law or executive order to be closed. If
such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00
noon (London time) on the same LIBOR Determination Date, the corrected rate as
so substituted will be LIBOR for that Interest Payment Period.

 

(2)           If, on any LIBOR Determination Date,
such rate does not appear on Telerate Page 3750 or such other page as may
replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or
such other service or services as may be nominated by the British Banker’s
Association as the information vendor for the purpose of displaying London
Interbank offered rates for U.S. dollar deposits), the Calculation Agent shall
determine the arithmetic mean of the offered quotations of the Reference Banks
(as defined below) to leading banks in the London Interbank market for
three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation
Agent) by reference to requests for quotations as of approximately 11:00 a.m.
(London time) on the LIBOR Determination Date made by the Calculation Agent to
the Reference Banks. If, on any LIBOR Determination Date, at least two of the
Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean
of such quotations. If, on any LIBOR Determination Date, only one or none of
the Reference Banks provide such a quotation, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that at least two leading banks in
the City of New York (as selected by the Calculation Agent) are quoting on the
relevant LIBOR Determination Date for three-month U.S. Dollar deposits in
Europe at approximately 11:00 a.m. (London time) (in an amount determined by
the Calculation Agent). As used herein, “Reference Banks” means four major
banks in the London Interbank market selected by the Calculation Agent.

 

16

 

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

 

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

 

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

 

SECTION 2.11.  Extension of Interest Payment Period.

 

As long as it
is acting in good faith, the Company shall have the right, from time to time
and without causing an Event of Default, to defer payments of interest on the
Debt Securities by extending the interest distribution period on the Debt
Securities at any time and from time to time during the term of the Debt
Securities, for up to twenty consecutive quarterly periods (each such extended
interest distribution period, an “Extension Period”), during which Extension
Period no interest shall be due and payable (except any Additional Interest
that may be due and payable). No Extension Period may end on a date other than
an Interest Payment Date or extend beyond the Maturity Date, any Redemption
Date or any Special Redemption Date, as the case may be. During any Extension
Period, interest will continue to accrue on the Debt Securities, and interest
on such accrued interest (such accrued interest and interest thereon referred
to herein as “Deferred Interest”) will accrue at an annual rate equal to the
Interest Rate applicable during such Extension Period, compounded quarterly
from the date such Deferred Interest would have been payable were it not for
the Extension Period, to the extent permitted by law. No interest or Deferred
Interest shall be due and payable during an Extension Period, except at the end
thereof. At the end of any such Extension Period the Company shall pay all
Deferred Interest then accrued and unpaid on the Debt Securities; provided,
however, that no Extension Period may extend beyond the Maturity Date;
and provided  further, however, that during any such
Extension Period, the Company shall be subject to the restrictions set forth in
Section 3.08 of this Indenture. Prior to the termination of any Extension
Period, the Company may further extend such period, provided, that such
period together with all such previous and further consecutive extensions
thereof shall not exceed twenty consecutive quarterly periods, or extend beyond
the Maturity Date. Upon the termination of any Extension Period and upon the
payment of all Deferred Interest, the Company may commence a new Extension
Period, subject to the

 

17

 

foregoing requirements. The Company must give the Trustee notice of its
election to begin such Extension Period (“Notice”) not later than the related
regular record date.  The Notice shall
describe, in reasonable detail, why the Company has elected to begin an
Extension Period.  The Notice shall
acknowledge and affirm the Company’s understanding that it is prohibited from
issuing dividends and other distributions during the Extension Period.  Upon receipt of the Notice, an Initial
Purchaser shall have the right, at its sole discretion, to disclose the name of
the Company, the fact that the Company has elected to begin an Extension Period
and other information that such Initial Purchaser, at its sole discretion,
deems relevant to the Company’s election to begin an Extension Period.  The Trustee shall give notice of the Company’s
election to begin a new Extension Period to the Securityholders.

 

SECTION 2.12.  CUSIP Numbers.

 

The Company in
issuing the Debt Securities may use a “CUSIP” number (if then generally in
use), and, if so, the Trustee shall use a “CUSIP” number in notices of
redemption as a convenience to Securityholders; provided, that any such
notice may state that no representation is made as to the correctness of such
number either as printed on the Debt Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Debt Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
will promptly notify the Trustee in writing of any change in the CUSIP number.

 

ARTICLE
III

 

PARTICULAR COVENANTS OF THE COMPANY

 

SECTION 3.01.  Payment of Principal, Premium and
Interest; Agreed Treatment of the Debt Securities.

 

(a)           The Company covenants and agrees that
it will duly and punctually pay or cause to be paid all payments due on the
Debt Securities at the place, at the respective times and in the manner
provided in this Indenture and the Debt Securities. At the option of the Company,
each installment of interest on the Debt Securities may be paid (i) by mailing
checks for such interest payable to the order of the holders of Debt Securities
entitled thereto as they appear on the Debt Security Register or (ii) by wire
transfer to any account with a banking institution located in the United States
designated by such holders to the Paying Agent no later than the related record
date. Notwithstanding anything to the contrary contained in this Indenture or
any Debt Security, if the Trust or the Trustee of the Trust is the holder of
any Debt Security, then all payments in respect of such Debt Security shall be
made by the Company in immediately available funds when due.

 

(b)           The Company will treat the Debt
Securities as indebtedness, and the interest payable in respect of such Debt
Securities as interest, for all U.S. federal income tax purposes. As a
condition to the payment of any principal of or interest on any Debt Security
without the imposition of withholding tax, the Company shall require the
previous delivery of properly completed and signed applicable U.S. federal
income tax certifications (generally, an Internal Revenue Service Form W-9 (or
applicable successor form) in the case of a Person that is

 

18

 

a U.S. Person or an
Internal Revenue Service Form W-8 (or applicable successor form) in the case of
a Person that is not a U.S. Person and any other certification acceptable to it
to enable the Company and the Trustee to determine their respective duties and
liabilities with respect to any taxes or other charges that they may be
required to pay or withhold in respect of such Debt Security or the holder of
such Debt Security under any present or future law or regulation of the United
States or any political subdivision thereof or taxing authority therein or to
comply with any reporting or other requirements under any such law or
regulation.

 

(c)                                  As
of the date of this Indenture, the Company represents that it has no intention
to exercise its right under Section 2.11 to defer payments of interest on the
Debt Securities by commencing an Extension Period.

 

SECTION 3.02.  Offices for Notices and Payments, etc.

 

So long as any
of the Debt Securities remain outstanding, the Company will maintain in New
York, New York an office or agency where the Debt Securities may be presented
for payment, an office or agency where the Debt Securities may be presented for
registration of transfer and for exchange as provided in this Indenture and an
office or agency where notices and demands to or upon the Company in respect of
the Debt Securities or of this Indenture may be served. The Company hereby
appoints the Trustee at ITS Unit Trust Window, 4 New York Plaza, Ground
Floor, New York, New York 10004, attention: ITS (Houston) – HCSB Financial Trust I  as such office or agency.  In case the Company shall fail to maintain
any such office or agency in New York, New York or shall fail to give such
notice of the location or of any change in the location thereof, presentations
and demands may be made and notices may be served at the Principal Office of
the Trustee.

 

In addition to
any such office or agency, the Company may from time to time designate one or
more other offices or agencies where the Debt Securities may be presented for
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain any such office or agency in New York, New York
for the purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.

 

SECTION 3.03.  Appointments to Fill Vacancies in Trustee’s
Office.

 

The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 6.09, a Trustee, so that there shall
at all times be a Trustee hereunder.

 

SECTION 3.04.  Provision as to Paying Agent.

 

(a)                                  If
the Company shall appoint a Paying Agent other than the Trustee, it will cause
such Paying Agent to execute and deliver to the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provision of this
Section 3.04:

 

19

 

(1)                                  that
it will hold all sums held by it as such agent for the payment of all payments
due on the Debt Securities (whether such sums have been paid to it by the
Company or by any other obligor on the Debt Securities) in trust for the
benefit of the holders of the Debt Securities;

 

(2)                                  that
it will give the Trustee prompt written notice of any failure by the Company
(or by any other obligor on the Debt Securities) to make any payment on the
Debt Securities when the same shall be due and payable; and

 

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

 

(b)                                 If
the Company shall act as its own Paying Agent, it will, on or before each due
date of the payments due on the Debt Securities, set aside, segregate and hold
in trust for the benefit of the holders of the Debt Securities a sum sufficient
to pay such payments so becoming due and will notify the Trustee in writing of
any failure to take such action and of any failure by the Company (or by any
other obligor under the Debt Securities) to make any payment on the Debt
Securities when the same shall become due and payable.

 

Whenever the
Company shall have one or more Paying Agents for the Debt Securities, it will,
on or prior to each due date of the payments on the Debt Securities, deposit
with a Paying Agent a sum sufficient to pay all payments so becoming due, such
sum to be held in trust for the benefit of the Persons entitled thereto and
(unless such Paying Agent is the Trustee) the Company shall promptly notify the
Trustee in writing of its action or failure to act.

 

(c)                                  Anything
in this Section 3.04 to the contrary notwithstanding, the Company may, at any
time, for the purpose of obtaining a satisfaction and discharge with respect to
the Debt Securities, or for any other reason, pay, or direct any Paying Agent
to pay to the Trustee all sums held in trust by the Company or any such Paying
Agent, such sums to be held by the Trustee upon the same terms and conditions
herein contained.

 

(d)                                 Anything
in this Section 3.04 to the contrary notwithstanding, the agreement to hold
sums in trust as provided in this Section 3.04 is subject to Sections 12.03 and
12.04.

 

(e)                                  The
Company hereby initially appoints the Trustee to act as Paying Agent (the “Paying
Agent”).

 

SECTION 3.05.  Certificate to Trustee.

 

The Company
will deliver to the Trustee on or before 120 days after the end of each fiscal
year, so long as Debt Securities are outstanding hereunder, a Certificate
stating that in the course of the performance by the signers of their duties as
officers of the Company they would normally have knowledge of any default by
the Company in the performance of any covenants of the Company contained
herein, stating whether or not they have knowledge of any such default and, if
so, specifying each such default of which the signers have knowledge and the
nature thereof.

 

20

 

SECTION 3.06.  Additional Interest.

 

If and for so
long as the Trust is the holder of all Debt Securities and is subject to or
otherwise required to pay, or is required to withhold from distributions to
holders of Trust Securities, any additional taxes (including withholding
taxes), duties, assessments or other governmental charges as a result of a Tax
Event, the Company will pay such additional amounts (the “Additional Interest”)
on the Debt Securities as shall be required so that the net amounts received
and retained by the Trust for distribution to holders of Trust Securities after
paying all taxes (including withholding taxes), duties, assessments or other governmental
charges will be equal to the amounts the Trust would have received and retained
for distribution to holders of Trust Securities after paying all taxes
(including withholding taxes on distributions to holders of Trust Securities),
duties, assessments or other governmental charges if no such additional taxes,
duties, assessments or other governmental charges had been imposed. Whenever in
this Indenture or the Debt Securities there is a reference in any context to
the payment of principal of or premium, if any, or interest on the Debt
Securities, such mention shall be deemed to include mention of payments of the
Additional Interest provided for in this paragraph to the extent that, in such
context, Additional Interest is, was or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Interest (if applicable) in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where
such express mention is not made; provided, however, that,
notwithstanding anything to the contrary contained in this Indenture or any
Debt Security, the deferral of the payment of interest during an Extension
Period pursuant to Section 2.11 shall not defer the payment of any Additional
Interest that may be due and payable.

 

SECTION 3.07.  Compliance with Consolidation Provisions.

 

The Company
will not, while any of the Debt Securities remain outstanding, consolidate
with, or merge into any other Person, or merge into itself, or sell, convey,
transfer or otherwise dispose of all or substantially all of its property or
capital stock to any other Person unless the provisions of Article XI hereof
are complied with.

 

SECTION 3.08.  Limitation on Dividends.

 

If Debt Securities
are initially issued to the Trust or a trustee of such Trust in connection with
the issuance of Trust Securities by the Trust (regardless of whether Debt
Securities continue to be held by such Trust) and (i) there shall have occurred
and be continuing an Event of Default, (ii) the Company shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee or (iii) the Company shall have given notice of its election to defer
payments of interest on the Debt Securities by extending the interest
distribution period as provided herein and such period, or any extension
thereof, shall have commenced and be continuing, then the Company may not (A)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company’s capital
stock or (B) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the
Debt Securities or (C) make any payment under any guarantees of the Company
that rank pari passu in all
respects with or junior in interest to the Capital Securities Guarantee (other
than (a) repurchases, redemptions or other

 

21

 

acquisitions of shares of capital stock of the Company (I) in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, (II) in connection with a dividend reinvestment or
stockholder stock purchase plan or (III) in connection with the issuance of
capital stock of the Company (or securities convertible into or exercisable for
such capital stock), as consideration in an acquisition transaction entered
into prior to the occurrence of (i), (ii) or (iii)
above, (b) as a result of any exchange, reclassification, combination or
conversion of any class or series of the Company’s capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company’s capital stock or of any class or series of the Company’s indebtedness
for any class or series of the Company’s capital stock, (c) the purchase of
fractional interests in shares of the Company’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with
any stockholder’s rights plan, or the issuance of rights, stock or other
property under any stockholder’s rights plan, or the redemption or repurchase
of rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with
or junior to such stock).

 

SECTION 3.09.  Covenants as to the Trust.

 

For so long as
such Trust Securities remain outstanding, the Company shall maintain 100%
ownership of the Common Securities; provided, however, that any
permitted successor of the Company under this Indenture that is a U.S. Person
may succeed to the Company’s ownership of such Common Securities. The Company,
as owner of the Common Securities, shall use commercially reasonable efforts to
cause the Trust (a) to remain a statutory trust, except in connection with a
distribution of Debt Securities to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, (b) to
otherwise continue to be classified as a grantor trust for United States
federal income tax purposes and (c) to cause each holder of Trust Securities to
be treated as owning an undivided beneficial interest in the Debt Securities.

 

ARTICLE
IV

 

LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

 

SECTION 4.01.  Securityholders’ Lists.

 

The Company
covenants and agrees that it will furnish or cause to be furnished to the
Trustee:

 

(a)                                  on
each regular record date for an Interest Payment Date, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Securityholders of the Debt Securities as of such record date; and

 

(b)                                 at
such other times as the Trustee may request in writing, within 30 days after
the receipt by the Company of any such request, a list of similar form and
content as of a

 

22

 

date not more than 15
days prior to the time such list is furnished, except that no such lists need
be furnished under this Section 4.01 so long as the Trustee is in possession
thereof by reason of its acting as Debt Security registrar.

 

SECTION 4.02.  Preservation and Disclosure of Lists.

 

(a)                                  The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Debt Securities (1)
contained in the most recent list furnished to it as provided in Section 4.01
or (2) received by it in the capacity of Debt Securities registrar (if so
acting) hereunder. The Trustee may destroy any list furnished to it as provided
in Section 4.01 upon receipt of a new list so furnished.

 

(b)                                 In
case three or more holders of Debt Securities (hereinafter referred to as “applicants”)
apply in writing to the Trustee and furnish to the Trustee reasonable proof
that each such applicant has owned a Debt Security for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other holders of Debt Securities with
respect to their rights under this Indenture or under such Debt Securities and
is accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall within five Business
Days after the receipt of such application, at the election of the Company,
either:

 

(1)                                  afford
such applicants access to the information preserved at the time by the Trustee
in accordance with the provisions of subsection (a) of this Section 4.02, or

 

(2)                                  inform
such applicants as to the approximate number of holders of Debt Securities
whose names and addresses appear in the information preserved at the time by
the Trustee in accordance with the provisions of subsection (a) of this Section
4.02, and as to the approximate cost of mailing to
such Securityholders the form of proxy or other communication, if any,
specified in such application.

 

If the Company
shall elect not to afford such applicants access to such information, the
Trustee shall, upon the written request of such applicants, mail to each
Securityholder of Debt Securities whose name and address appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02 a copy of the form of proxy or other
communication which is specified in such request with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail to such applicants, and
file with the Securities and Exchange Commission, if permitted or required by
applicable law, together with a copy of the material to be mailed, a written
statement of the Company to the effect that such mailing would be contrary to
the best interests of the holders of all Debt Securities, as the case may be,
or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If said Commission, as permitted or required
by applicable law, after opportunity for a hearing upon the objections
specified in the written statement so filed, shall enter an order refusing to
sustain any of such objections or if, after the entry of an order sustaining
one or more of such objections, said

 

23

 

Commission shall find, after notice and opportunity for hearing, that
all the objections so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.

 

(c)                                  Each
and every holder of Debt Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Paying Agent shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the holders of Debt
Securities in accordance with the provisions of subsection (b) of this Section
4.02, regardless of the source from which such information was derived, and
that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).

 

ARTICLE
V

 

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

 

SECTION 5.01.  Events of Default.

 

The following events
shall be “Events of Default” with respect to Debt Securities:

 

(a)                                  the
Company defaults in the payment of any interest upon any Debt Security when it
becomes due and payable (unless the Company has elected and may defer interest
payments pursuant to Section 2.11), and continuance of such default for a
period of 30 days; for the avoidance of doubt, an extension of any interest
distribution period by the Company in accordance with Section 2.11 of this
Indenture shall not constitute a default under this clause 5.01(a); or

 

(b)                                 the
Company defaults in the payment of all or any part of the principal of (or
premium, if any, on) any Debt Securities as and when the same shall become due
and payable either at maturity, upon redemption, by declaration of acceleration
pursuant to Section 5.01 of this Indenture or otherwise; or

 

(c)                                  the
Company defaults in the payment of any interest upon any Debt Security when it
becomes due and payable following the nonpayment of any such interest for 20 or
more consecutive quarterly periods; or

 

(d)                                 the
Company defaults in the performance of, or breaches, any of its covenants or
agreements in Sections 3.06, 3.07, 3.08 or 3.09 of this Indenture (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of not less than 25% in aggregate principal
amount of the outstanding Debt 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

 

24

 

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

 

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

 

(g)                                 the
Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up
its business or otherwise terminated its existence except in connection with
(1) the distribution of the Debt Securities to holders of the Trust Securities
in liquidation of their interests in the Trust, (2) the redemption of all of
the outstanding Trust Securities or (3) certain mergers, consolidations or
amalgamations, each as permitted by the Declaration.

 

If an Event of
Default specified under clause (c) of this Section 5.01 occurs and is
continuing with respect to the Debt Securities, then, and in each and every
such case, unless the principal of the Debt Securities shall have already
become due and payable, either the Trustee or the holders of not less than 25%
in aggregate principal amount of the Debt Securities then outstanding
hereunder, by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal of the Debt Securities and
any premium and interest accrued, but unpaid, thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable.  If an Event
of Default specified under clause (e) or (f) of this Section 5.01 occurs, then,
in each and every such case, the entire principal amount of the Debt Securities
and any premium and interest accrued, but unpaid, thereon shall ipso facto become immediately due and
payable without further action. 
Notwithstanding anything to the contrary in this Section 5.01, if at any
time during the period in which this Indenture remains in force and effect, the
Company ceases or elects to cease to be subject to the supervision and
regulations of the Federal Reserve, OTS, OCC or similar regulatory authority
overseeing bank, thrift, savings and loan or financial holding companies or
similar institutions requiring specifications for the treatment of capital
similar in nature to the capital adequacy guidelines under the Federal Reserve
rules and regulations, then the first sentence of this paragraph shall be
deemed to include clauses (a), (b) and (d) under this Section 5.01 as an Event
of Default resulting in an acceleration of payment of the Debt Securities to
the same extent as provided herein for clause (c).

 

With respect
to clause (d) of this Section 5.01, the Company agrees that in the event of a
breach by the Company of its covenants or agreements mentioned therein, any
remedy at law or in damages may prove inadequate and therefore the Company
agrees that the Trustee shall be entitled to injunctive relief against the
Company in the event of any breach or threatened

 

25

 

breach by the Company, in addition to any other relief (including
damages) available to the Trustee under this Indenture or under law.

 

The foregoing
provisions, however, are subject to the condition that if, at any time after
the principal of the Debt Securities shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Debt Securities and all payments on the
Debt Securities which shall have become due otherwise than by acceleration
(with interest upon all such payments and Deferred Interest, to the extent
permitted by law) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other amounts due to the Trustee
pursuant to Section 6.06, if any, and (ii) all Events of Default under this
Indenture, other than the non-payment of the payments on Debt Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, and in each and every such case the
holders of a majority in aggregate principal amount of the Debt Securities then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults and rescind and annul such declaration and its consequences, but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon; provided,
however, that if the Debt Securities are held by the Trust or a trustee of the
Trust, such waiver or rescission and annulment shall not be effective until the
holders of a majority in aggregate liquidation amount of the outstanding
Capital Securities of the Trust shall have consented to such waiver or
rescission and annulment.

 

In case the
Trustee shall have proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case the Company, the Trustee
and the holders of the Debt Securities shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the Company, the Trustee and the holders of the Debt Securities shall continue
as though no such proceeding had been taken.

 

SECTION 5.02.  Payment of Debt Securities on Default;
Suit Therefor.

 

The Company
covenants that upon the occurrence of an Event of Default pursuant to clause
5.01(a), 5.01(b) or 5.01(c), and upon demand of the Trustee, the Company will
pay to the Trustee, for the benefit of the holders of the Debt Securities, the
whole amount that then shall have become due and payable on all Debt Securities
including Deferred Interest accrued on the Debt Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any other amounts due to the Trustee under
Section 6.06. In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debt Securities and

 

26

 

collect in the manner provided by law out of the property of the
Company or any other obligor on such Debt Securities wherever situated the
moneys adjudged or decreed to be payable.

 

In case there
shall be pending proceedings for the bankruptcy or for the reorganization of
the Company or any other obligor on the Debt Securities under Bankruptcy Law,
or in case a receiver or trustee shall have been appointed for the property of
the Company or such other obligor, or in the case of any other similar judicial
proceedings relative to the Company or other obligor upon the Debt Securities,
or to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of the Debt Securities shall
then be due and payable as therein expressed or by declaration of acceleration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove
a claim or claims for the whole amount of principal and interest owing and
unpaid in respect of the Debt Securities and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all other amounts due to the Trustee under Section 6.06) and
of the Securityholders allowed in such judicial proceedings relative to the
Company or any other obligor on the Debt Securities, or to the creditors or
property of the Company or such other obligor, unless prohibited by applicable
law and regulations, to vote on behalf of the holders of the Debt Securities in
any election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee under Section 6.06.

 

Nothing herein
contained shall be construed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Debt
Securities or the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.

 

All rights of
action and of asserting claims under this Indenture, or under any of the Debt
Securities, may be enforced by the Trustee without the possession of any of the
Debt Securities, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the holders of the
Debt Securities.

 

In any proceedings
brought by the Trustee (and also any proceedings involving the interpretation
of any provision of this Indenture to which the Trustee shall be a party) the

 

27

 

Trustee shall be held to represent all the holders of the Debt
Securities, and it shall not be necessary to make any holders of the Debt
Securities parties to any such proceedings.

 

SECTION 5.03.  Application of Moneys Collected by Trustee.

 

Any moneys
collected by the Trustee shall be applied in the following order, at the date
or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Debt Securities in respect of which moneys have
been collected, and stamping thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:

 

First: To the payment of costs and expenses
incurred by, and reasonable fees of, the Trustee, its agents, attorneys and
counsel, and of all other amounts due to the Trustee under Section 6.06;

 

Second: To the payment of all Senior
Indebtedness of the Company if and to the extent required by Article XV;

 

Third: To the payment of the amounts then
due and unpaid upon Debt Securities, in respect of which or for the benefit of
which money has been collected, ratably, without preference or priority of any
kind, according to the amounts due on such Debt Securities; and

 

Fourth: The balance, if any, to the
Company.

 

SECTION 5.04.  Proceedings by Securityholders.

 

No holder of
any Debt Security shall have any right to institute any suit, action or
proceeding for any remedy hereunder, unless such holder previously shall have
given to the Trustee written notice of an Event of Default with respect to the
Debt Securities and unless the holders of not less than 25% in aggregate principal
amount of the Debt Securities then outstanding shall have given the Trustee a
written request to institute such action, suit or proceeding and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred thereby, and the Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action, suit or proceeding; provided,
that no holder of Debt Securities shall have any right to prejudice the rights
of any other holder of Debt Securities, obtain priority or preference over any
other such holder or enforce any right under this Indenture except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Debt Securities.

 

Notwithstanding
any other provisions in this Indenture, however, the right of any holder of any
Debt Security to receive payment of the principal of, premium, if any, and
interest on such Debt Security when due, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

 

28

 

SECTION 5.05.  Proceedings by Trustee.

 

In case of an
Event of Default hereunder the Trustee may in its discretion proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any of such rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.

 

SECTION 5.06.  Remedies Cumulative and Continuing.

 

Except as
otherwise provided in Section 2.06, all powers and remedies given by this
Article V to the Trustee or to the Securityholders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any other powers
and remedies available to the Trustee or the holders of the Debt Securities, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture or otherwise
established with respect to the Debt Securities, and no delay or omission of
the Trustee or of any holder of any of the Debt Securities to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.04, every power and remedy given by this Article V or
by law to the Trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.

 

SECTION 5.07.  Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.

 

The holders of
a majority in aggregate principal amount of the Debt Securities affected
(voting as one class) at the time outstanding and, if the Debt Securities are
held by the Trust or a trustee of the Trust, the holders of a majority in
aggregate liquidation amount of the outstanding Capital Securities of the Trust
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to such Debt Securities; provided,
however, that if the Debt Securities are held by the Trust or a trustee
of the Trust, such time, method and place or such exercise, as the case may be,
may not be so directed until the holders of a majority in aggregate liquidation
amount of the outstanding Capital Securities of the Trust shall have directed
such time, method and place or such exercise, as the case may be; provided,
further, that (subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such direction or if the
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if a Responsible Officer of the Trustee
shall determine that the action or proceedings so directed would involve the
Trustee in personal liability. Prior to any declaration of acceleration, or
ipso facto acceleration, of the maturity of the Debt Securities, the holders of
a majority in aggregate principal amount of the Debt Securities at the time
outstanding may on behalf of the holders of all of the Debt Securities waive
(or modify any previously granted

 

29

 

waiver of) any past default or Event of Default and its consequences,
except a default (a) in the payment of principal of, premium, if any, or
interest on any of the Debt Securities, (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of
the holder of each Debt Security affected, or (c) in respect of the covenants
contained in Section 3.09; provided, however, that if the Debt
Securities are held by the Trust or a trustee of the Trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in Liquidation Amount of the Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver; provided, further,
that if the consent of the holder of each outstanding Debt Security is
required, such waiver or modification to such waiver shall not be effective
until each holder of the outstanding Capital Securities of the Trust shall have
consented to such waiver or modification to such waiver. Upon any such waiver
or modification to such waiver, the Default or Event of Default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the holders of the Debt Securities shall be restored to their
former positions and rights hereunder, respectively; but no such waiver or
modification to such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. Whenever any Default
or Event of Default hereunder shall have been waived as permitted by this
Section 5.07, said Default or Event of Default shall for all purposes of the
Debt Securities and this Indenture be deemed to have been cured and to be not
continuing.

 

SECTION 5.08.  Notice of Defaults.

 

The Trustee
shall, within 90 days after a Responsible Officer of the Trustee shall have
actual knowledge or received written notice of the occurrence of a Default with
respect to the Debt Securities, mail to all Securityholders, as the names and
addresses of such holders appear upon the Debt Security Register, notice of all
Defaults with respect to the Debt Securities known to the Trustee, unless such
defaults shall have been cured before the giving of such notice (the term “defaults”
for the purpose of this Section 5.08 being hereby defined to be the events
specified in subsections (a), (b), (c), (d), (e) and (f) of Section 5.01, not
including periods of grace, if any, provided for therein); provided,
that, except in the case of default in the payment of the principal of,
premium, if any, or interest on any of the Debt Securities, the Trustee shall
be protected in withholding such notice if and so long as a Responsible Officer
of the Trustee in good faith determines that the withholding of such notice is
in the interests of the Securityholders.

 

SECTION 5.09.  Undertaking to Pay Costs.

 

All parties to
this Indenture agree, and each holder of any Debt Security by such holder’s
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding in the aggregate more than 10% in principal amount of
the Debt

 

30

 

Securities (or, if such Debt Securities are held by the Trust or a
trustee of the Trust, more than 10% in liquidation amount of the outstanding
Capital Securities), to any suit instituted by any Securityholder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Debt Security against the Company on or after the same shall have become
due and payable, or to any suit instituted in accordance with Section 14.12.

 

ARTICLE
VI

 

CONCERNING THE TRUSTEE

 

SECTION 6.01.  Duties and Responsibilities of Trustee.

 

With respect
to the holders of Debt Securities issued hereunder, the Trustee, prior to the
occurrence of an Event of Default with respect to the Debt Securities and after
the curing or waiving of all Events of Default which may have occurred, with
respect to the Debt Securities, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default with respect to the Debt Securities has occurred (which has not been
cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

 

No provision
of this Indenture shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:

 

(a)                                  prior
to the occurrence of an Event of Default with respect to the Debt Securities
and after the curing or waiving of all Events of Default which may have
occurred

 

(1)                                  the
duties and obligations of the Trustee with respect to the Debt Securities shall
be determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations with respect to the Debt Securities as are specifically set forth
in this Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and

 

(2)                                  in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform on
their face to the requirements of this Indenture;

 

(b)                                 the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;

 

31

 

(c)                                  the
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
Securityholders pursuant to Section 5.07, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture;

 

(d)                                 the
Trustee shall not be charged with knowledge of any Default or Event of Default
with respect to the Debt Securities unless either (1) a Responsible Officer
shall have actual knowledge of such Default or Event of Default or (2) written
notice of such Default or Event of Default shall have been given to the Trustee
by the Company or any other obligor on the Debt Securities or by any holder of
the Debt Securities, except with respect to an Event of Default pursuant to
Sections 5.01(a), 5.01(b) or 5.01(c) hereof (other than an Event of Default
resulting from the default in the payment of Additional Interest or premium, if
any, if the Trustee does not have actual knowledge or written notice that such
payment is due and payable), of which the Trustee shall be deemed to have
knowledge; and

 

(e)                                  in
the absence of bad faith on the part of the Trustee, the Trustee may seek and
rely on reasonable instructions from the Company.

 

None of the
provisions contained in this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers.

 

SECTION 6.02.  Reliance on Documents, Opinions, etc.

 

Except as
otherwise provided in Section 6.01:

 

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

 

(b)                                 any
request, direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by an Officers’ Certificate (unless other evidence in
respect thereof be herein specifically prescribed); and any Board Resolution
may be evidenced to the Trustee by a copy thereof certified by the Secretary or
an Assistant Secretary of the Company;

 

(c)                                  the
Trustee may consult with counsel of its selection and any advice or Opinion of
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
accordance with such advice or Opinion of Counsel;

 

(d)                                 the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of the
Securityholders, pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby;

 

32

 

(e)                                  the
Trustee shall not be liable for any action taken or omitted by it in good faith
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the occurrence of
an Event of Default with respect to the Debt Securities (that has not been
cured or waived) to exercise with respect to the Debt Securities such of the
rights and powers vested in it by this Indenture, and to use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person’s own affairs;

 

(f)                                    the
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, coupon or other
paper or document, unless requested in writing to do so by the holders of not
less than a majority in aggregate principal amount of the outstanding Debt
Securities affected thereby; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a condition to so
proceeding; and

 

(g)                                 the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents (including any Authenticating
Agent) or attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney appointed by
it with due care.

 

SECTION 6.03.  No Responsibility for Recitals, etc.

 

The recitals
contained herein and in the Debt Securities (except in the certificate of
authentication of the Trustee or the Authenticating Agent) shall be taken as
the statements of the Company and the Trustee and the Authenticating Agent
assume no responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Debt Securities. The Trustee and the Authenticating
Agent shall not be accountable for the use or application by the Company of any
Debt Securities or the proceeds of any Debt Securities authenticated and
delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.

 

SECTION 6.04.  Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May Own Debt Securities.

 

The Trustee or
any Authenticating Agent or any Paying Agent or any transfer agent or any Debt
Security registrar, in its individual or any other capacity, may become the owner
or pledgee of Debt Securities with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, transfer agent or Debt Security
registrar.

 

SECTION 6.05.  Moneys to be Held in Trust.

 

Subject to the
provisions of Section 12.04, all moneys received by the Trustee or any Paying
Agent shall, until used or applied as herein provided, be held in trust for the
purpose

 

33

 

for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee and any Paying Agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company. So long as no Event of
Default shall have occurred and be continuing, all interest allowed on any such
moneys, if any, shall be paid from time to time to the Company upon the written
order of the Company, signed by the Chairman of the Board of Directors, the
President, the Chief Operating Officer, a Vice President, the Treasurer or an
Assistant Treasurer of the Company.

 

SECTION 6.06.  Compensation and Expenses of Trustee.

 

Other than as
provided in the Fee Agreement of even date herewith between Cohen Bros. &
Company, the Trustee, the Company and Delaware Trustee (as defined in the
Declaration), the Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Company will pay or reimburse the Trustee upon its
written request for all documented reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance that
arises from its negligence, willful misconduct or bad faith. The Company also
covenants to indemnify each of the Trustee (including in its individual
capacity) and any predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Trustee), except to the extent such loss, damage, claim,
liability or expense results from the negligence, willful misconduct or bad
faith of such indemnitee, arising out of or in connection with the acceptance
or administration of this Trust, including the costs and expenses of defending
itself against any claim or liability in the premises. The obligations of the
Company under this Section 6.06 to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for documented expenses, disbursements and
advances shall constitute additional indebtedness hereunder. Such additional
indebtedness shall be secured by (and the Company hereby grants and pledges to
the Trustee) a lien prior to that of the Debt Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
the benefit of the holders of particular Debt Securities.

 

Without
prejudice to any other rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an
Event of Default specified in subsections (e), (f) or (g) of Section 5.01, the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.

 

The provisions
of this Section shall survive the resignation or removal of the Trustee and the
defeasance or other termination of this Indenture.

 

Notwithstanding
anything in this Indenture or any Debt Security to the contrary, the Trustee
shall have no obligation whatsoever to advance funds to pay any principal of or

 

34

 

interest on or other amounts with respect to the Debt Securities or
otherwise advance funds to or on behalf of the Company.

 

SECTION 6.07.  Officers’ Certificate as Evidence.

 

Except as
otherwise provided in Sections 6.01 and 6.02, whenever in the administration of
the provisions of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or omitting
any action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence, willful
misconduct or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers’ Certificate delivered to
the Trustee, and such certificate, in the absence of negligence, willful
misconduct or bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.

 

SECTION 6.08.  Eligibility of Trustee.

 

The Trustee
hereunder shall at all times be a U.S. Person that is a banking corporation or
national association organized and doing business under the laws of the United
States of America or any state thereof or of the District of Columbia and
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least fifty million U.S. dollars ($50,000,000)
and subject to supervision or examination by federal, state, or District of
Columbia authority. If such corporation or national association publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 6.08 the combined capital and surplus of such corporation or
national association shall be deemed to be its combined capital and surplus as
set forth in its most recent records of condition so published.

 

The Company
may not, nor may any Person directly or indirectly controlling, controlled by,
or under common control with the Company, serve as Trustee, notwithstanding
that such corporation or national association shall be otherwise eligible and
qualified under this Article.

 

In case at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 6.08, the Trustee shall resign immediately in the manner and
with the effect specified in Section 6.09.

 

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

 

SECTION 6.09.  Resignation or Removal of Trustee,
Calculation Agent, Paying Agent or Debt Security Registrar.

 

(a)                                  The
Trustee, or any trustee or trustees hereafter appointed, the Calculation Agent,
the Paying Agent and any Debt Security Registrar may at any time resign by
giving written notice of such resignation to the Company and by mailing notice
thereof, at the Company’s expense, to the holders of the Debt Securities at
their addresses as they shall appear

 

35

 

on the Debt Security
Register. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor or successors by written instrument, in duplicate, executed
by order of its Board of Directors, one copy of which instrument shall be
delivered to the resigning party and one copy to the successor. If no successor
shall have been so appointed and have accepted appointment within 30 days after
the mailing of such notice of resignation to the affected Securityholders, the
resigning party may petition any court of competent jurisdiction for the
appointment of a successor, or any Securityholder who has been a bona fide
holder of a Debt Security or Debt Securities for at least six months may,
subject to the provisions of Section 5.09, on behalf of himself or herself and
all others similarly situated, petition any such court for the appointment of a
successor. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor.

 

(b)                                 In
case at any time any of the following shall occur:

 

(1)                                  the
Trustee shall fail to comply with the provisions of the last paragraph of
Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Debt Security or Debt
Securities for at least six months,

 

(2)                                  the
Trustee shall cease to be eligible in accordance with the provisions of Section
6.08 and shall fail to resign after written request therefor by the Company or
by any such Securityholder, or

 

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

 

then, in any
such case, the Company may remove the Trustee and appoint a successor Trustee
by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee, or, subject to the provisions of
Section 5.09, if no successor Trustee shall have been so appointed and have
accepted appointment within 30 days of the occurrence of any of (1), (2) or (3)
above, any Securityholder who has been a bona fide holder of a Debt Security or
Debt Securities for at least six months may, on behalf of himself or herself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor Trustee.

 

(c)                                  Upon
prior written notice to the Company and the Trustee, the holders of a majority
in aggregate principal amount of the Debt Securities at the time outstanding
may at any time remove the Trustee and nominate a successor Trustee, which
shall be deemed appointed as successor Trustee unless within ten Business Days
after such nomination the Company objects thereto, in which case or in the case
of a failure by such holders to nominate a successor Trustee, the Trustee so
removed or any Securityholder, upon the terms and conditions and otherwise as
in subsection (a) of this Section 6.09 provided, may petition any court of
competent jurisdiction for an appointment of a successor.

 

36

 

(d)                                 Any
resignation or removal of the Trustee, the Calculation Agent, the Paying Agent
and any Debt Security Registrar and appointment of a successor pursuant to any
of the provisions of this Section 6.09 shall become effective upon acceptance
of appointment by the successor as provided in Section 6.10.

 

SECTION 6.10.  Acceptance by Successor.

 

Any successor
Trustee, Calculation Agent, Paying Agent or Debt Security Registrar appointed
as provided in Section 6.09 shall execute, acknowledge and deliver to the
Company and to its predecessor an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the retiring party shall
become effective and such successor, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations with respect to the Debt Securities of its predecessor hereunder,
with like effect as if originally named herein; but, nevertheless, on the
written request of the Company or of the successor, the party ceasing to act
shall, upon payment of the amounts then due it pursuant to the provisions of
Section 6.06, execute and deliver an instrument transferring to such successor
all the rights and powers of the party so ceasing to act and shall duly assign,
transfer and deliver to such successor all property and money held by such
retiring party hereunder. Upon reasonable request of any such successor, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor all such rights and
powers. Any party ceasing to act shall, nevertheless, retain a lien upon all
property or funds held or collected to secure any amounts then due it pursuant
to the provisions of Section 6.06.

 

If a successor
Trustee is appointed, the Company, the retiring Trustee and the successor
Trustee shall execute and deliver an indenture supplemental hereto which shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Debt Securities as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the Trust hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee.

 

No successor
Trustee shall accept appointment as provided in this Section 6.10 unless at the
time of such acceptance such successor Trustee shall be eligible and qualified
under the provisions of Section 6.08.

 

In no event
shall a retiring Trustee, Calculation Agent, Paying Agent or Debt Security
Registrar be liable for the acts or omissions of any successor hereunder.

 

Upon
acceptance of appointment by a successor Trustee, Calculation Agent, Paying
Agent or Debt Security Registrar as provided in this Section 6.10, the Company
shall mail notice of the succession to the holders of Debt Securities at their
addresses as they shall appear on the Debt Security Register. If the Company
fails to mail such notice within ten

 

37

 

Business Days after the acceptance of appointment by the successor, the
successor shall cause such notice to be mailed at the expense of the Company.

 

SECTION 6.11.  Succession by Merger, etc.

 

Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto; provided,
that such Person shall be otherwise eligible and qualified under this Article.

 

In case at the
time such successor to the Trustee shall succeed to the trusts created by this
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor Trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such
Debt Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have
the full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or authenticate Debt Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.

 

SECTION 6.12.  Authenticating Agents.

 

There may be
one or more Authenticating Agents appointed by the Trustee upon the request of
the Company with power to act on its behalf and subject to its direction in the
authentication and delivery of Debt Securities issued upon exchange or
registration of transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate and
deliver Debt Securities; provided, that the Trustee shall have no liability to
the Company for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Debt Securities. Any such Authenticating
Agent shall at all times be a Person organized and doing business under the
laws of the United States or of any state or territory thereof or of the
District of Columbia authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of at least $50,000,000 and being subject
to supervision or examination by federal, state, territorial or District of
Columbia authority. If such Person publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.12 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 an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect herein specified
in this Section.

 

Any Person
into which any Authenticating Agent may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any Person
succeeding to all

 

38

 

or substantially all of the corporate trust
business of any Authenticating Agent, shall be the successor of such
Authenticating Agent hereunder, if such successor Person is otherwise eligible
under this Section 6.12 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.

 

Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent with respect to the Debt
Securities by giving written notice of termination to such Authenticating Agent
and to the Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.12, the Trustee may, and upon the request of
the Company shall, promptly appoint a successor Authenticating Agent eligible
under this Section 6.12, shall give written notice of such appointment to
the Company and shall mail notice of such appointment to all holders of Debt
Securities as the names and addresses of such holders appear on the Debt
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities with respect to the Debt Securities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent
herein.

 

Other than as provided in the Fee Agreement of even date herewith
between Cohen Bros. & Company, the Company, the Trustee and Delaware
Trustee (as defined in the Declaration), the Company agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its
services. Any Authenticating Agent shall have no responsibility or liability
for any action taken by it as such in accordance with the directions of the
Trustee and shall receive such reasonable indemnity as it may require against
the costs, expenses and liabilities incurred in furtherance of its duties under
this Section 6.12.

 

ARTICLE VII

 

CONCERNING THE SECURITYHOLDERS

 

SECTION 7.01.  Action by Securityholders.

 

Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Debt Securities or
aggregate Liquidation Amount of the Capital Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by such Securityholders or holders of Capital
Securities, as the case may be, in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Debt Securities voting in
favor thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article VIII or of such holders of
Capital Securities duly called and held in accordance with the provisions of
the Declaration, or (c) by a combination of such instrument or instruments and
any such record of such a meeting of such Securityholders or holders of Capital
Securities, as the case may be, or (d) by any other method the Trustee deems
satisfactory.

 

39

 

If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, the Company may, at its option, as evidenced by an
Officers’ Certificate, fix in advance a record date for such Debt Securities
for the determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other action or revocation of the same may be given before
or after the record date, but only the Securityholders of record at the close
of business on the record date shall be deemed to be Securityholders for the
purposes of determining whether Securityholders of the requisite proportion of
outstanding Debt Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, and for that purpose the outstanding Debt
Securities shall be computed as of the record date; provided, however,
that no such authorization, agreement or consent by such Securityholders on the
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.

 

SECTION 7.02.  Proof of Execution by Securityholders.

 

Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or such Securityholder’s agent
or proxy shall be sufficient if made in accordance with such reasonable rules
and regulations as may be prescribed by the Trustee or in such manner as shall
be satisfactory to the Trustee. The ownership of Debt Securities shall be proved
by the Debt Security Register or by a certificate of the Debt Security
Registrar. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.

 

The record of any Securityholders’ meeting shall be proved in the
manner provided in Section 8.06.

 

SECTION 7.03.  Who Are Deemed Absolute Owners.

 

Prior to due presentment for registration of transfer of any Debt
Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent,
any transfer agent and any Debt Security registrar may deem the Person in whose
name such Debt Security shall be registered upon the Debt Security Register to
be, and may treat such Person as, the absolute owner of such Debt Security
(whether or not such Debt Security shall be overdue) for the purpose of
receiving payment of or on account of the principal of, premium, if any, and
interest on such Debt Security and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being or upon such holder’s order shall be valid, and, to the extent of the sum
or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Debt Security.

 

40

 

SECTION 7.04.  Debt Securities Owned by Company Deemed
Not Outstanding.

 

In determining whether the holders of the requisite aggregate principal
amount of Debt Securities have concurred in any direction, consent or waiver
under this Indenture, Debt Securities which are owned by the Company or any
other obligor on the Debt Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company (other than the Trust) or any other obligor on the Debt Securities
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination; provided, that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver, only Debt Securities which a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section 7.04 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee’s right to vote such Debt Securities
and that the pledgee is not the Company or any such other obligor or Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.

 

SECTION 7.05.  Revocation of Consents; Future
Securityholders Bound.

 

At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.01, of the taking of any action by the holders of
the percentage in aggregate principal amount of the Debt Securities specified
in this Indenture in connection with such action, any holder (in cases where no
record date has been set pursuant to Section 7.01) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to Section 7.01)
of a Debt Security (or any Debt Security issued in whole or in part in exchange
or substitution therefor) the serial number of which is shown by the evidence
to be included in the Debt Securities the holders of which have consented to
such action may, by filing written notice with the Trustee at the Principal
Office of the Trustee and upon proof of holding as provided in Section 7.02,
revoke such action so far as concerns such Debt Security (or so far as concerns
the principal amount represented by any exchanged or substituted Debt
Security). Except as aforesaid any such action taken by the holder of any Debt
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debt Security, and of any Debt Security issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or any Debt Security issued in exchange or substitution therefor.

 

ARTICLE VIII

 

SECURITYHOLDERS’ MEETINGS

 

SECTION 8.01.  Purposes of Meetings.

 

A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the
following purposes:

 

41

 

(a)                                  to
give any notice to the Company or to the Trustee, or to give any directions to
the Trustee, or to consent to the waiving of any default hereunder and its
consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article V;

 

(b)                                 to
remove the Trustee and nominate a successor trustee pursuant to the provisions
of Article VI;

 

(c)                                  to
consent to the execution of an indenture or indentures supplemental hereto
pursuant to the provisions of Section 9.02; or

 

(d)                                 to
take any other action authorized to be taken by or on behalf of the holders of
any specified aggregate principal amount of such Debt Securities under any
other provision of this Indenture or under applicable law.

 

SECTION 8.02.  Call of Meetings by Trustee.

 

The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 8.01, to be held at such time and at such
place in The City of New York, the Borough of Manhattan, or Houston, Texas, as
the Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of Debt
Securities affected at their addresses as they shall appear on the Debt
Securities Register. Such notice shall be mailed not less than 20 nor more than
180 days prior to the date fixed for the meeting.

 

SECTION 8.03.  Call of Meetings by Company or
Securityholders.

 

In case at any time the Company pursuant to a Board Resolution, or the
holders of at least 10% in aggregate principal amount of the Debt Securities,
as the case may be, then outstanding, shall have requested the Trustee to call
a meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 20 days after receipt of such
request, then the Company or such Securityholders may determine the time and
the place in for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section 8.02.

 

SECTION 8.04.  Qualifications for Voting.

 

To be entitled to vote at any meeting of Securityholders a Person shall
be (a) a holder of one or more Debt Securities with respect to which the meeting
is being held or (b) a Person appointed by an instrument in writing as proxy by
a holder of one or more such Debt Securities. The only Persons who shall be
entitled to be present or to speak at any meeting of Securityholders shall be
the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.

 

42

 

SECTION 8.05.  Regulations.

 

Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Debt Securities and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.

 

The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case
the Company or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote at the
meeting.

 

Subject to the provisions of Section 7.04, at any meeting each
holder of Debt Securities with respect to which such meeting is being held or
proxy therefor shall be entitled to one vote for each $1,000 principal amount
of Debt Securities held or represented by such holder; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Debt
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Debt Securities held by such chairman or instruments in
writing as aforesaid duly designating such chairman as the Person to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from
time to time by a majority of those present, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.

 

SECTION 8.06.  Voting.

 

The vote upon any resolution submitted to any meeting of holders of
Debt Securities with respect to which such meeting is being held shall be by
written ballots on which shall be subscribed the signatures of such holders or
of their representatives by proxy and the serial number or numbers of the Debt
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in Section 8.02.
The record shall show the serial numbers of the Debt Securities voting in favor
of or against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.  Any record so
signed and verified shall be conclusive evidence of the matters therein stated.

 

43

 

SECTION 8.07.  Quorum; Actions.

 

The Persons entitled to vote a majority in outstanding principal amount
of the Debt Securities shall constitute a quorum for a meeting of
Securityholders; provided, however, that if any action is to be
taken at such meeting with respect to a consent, waiver, request, demand,
notice, authorization, direction or other action which may be given by the
holders of not less than a specified percentage in outstanding principal amount
of the Debt Securities, the Persons holding or representing such specified
percentage in outstanding principal amount of the Debt Securities will
constitute a quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request
of Securityholders, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the permanent
chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may
be further adjourned for a period of not less than 10 days as determined by the
permanent chairman of the meeting prior to the adjournment of such adjourned
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 8.02, except that such notice need be given only once
not less than five days prior to the date on which the meeting is scheduled to
be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the outstanding principal
amount of the Debt Securities which shall constitute a quorum.

 

Except as limited by the proviso in the first paragraph of Section 9.02,
any resolution presented to a meeting or adjourned meeting duly reconvened at
which a quorum is present as aforesaid may be adopted by the affirmative vote
of the holders of not less than a majority in outstanding principal amount of
the Debt Securities; provided, however, that, except as limited
by the proviso in the first paragraph of Section 9.02, any resolution with
respect to any consent, waiver, request, demand, notice, authorization,
direction or other action that this Indenture expressly provides may be given
by the holders of not less than a specified percentage in outstanding principal
amount of the Debt Securities may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid only by
the affirmative vote of the holders of not less than such specified percentage
in outstanding principal amount of the Debt Securities.

 

Any resolution passed or decision taken at any meeting of holders of
Debt Securities duly held in accordance with this Section shall be binding
on all the Securityholders, whether or not present or represented at the
meeting.

 

SECTION 8.08.  Written Consent Without a Meeting.

 

Whenever under this Indenture, Securityholders are required or
permitted to take any action by vote, such action may be taken without a
meeting on written consent, setting forth the action so taken, signed by the
Securityholders of all outstanding Debt Securities entitled to vote
thereon.  No consent shall be effective
to take the action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this paragraph to
the Trustee, written consents signed by a sufficient number of Securityholders
to take action are delivered to the Trustee at its Principal Office.  Delivery made to the Trustee at its Principal
Office, shall be by hand or by certificated or registered mail, return receipt
requested.  Written

 

44

 

consent thus given by the Securityholders of
such number of Debt Securities as is required hereunder, shall have the same
effect as a valid vote of Securityholders of such number of Debt Securities.

 

ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

SECTION 9.01.  Supplemental Indentures without Consent of
Securityholders.

 

The Company, when authorized by a Board Resolution, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto, without the consent of the Securityholders, for one or
more of the following purposes:

 

(a)                                  to
evidence the succession of another Person to the Company, or successive
successions, and the assumption by the successor Person of the covenants,
agreements and obligations of the Company, pursuant to Article XI hereof;

 

(b)                                 to
add to the covenants of the Company such further covenants, restrictions or
conditions for the protection of the holders of Debt Securities as the Board of
Directors shall consider to be for the protection of the holders of such Debt
Securities, and to make the occurrence, or the occurrence and continuance, of a
Default in any of such additional covenants, restrictions or conditions a
Default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;

 

(c)                                  to
cure any ambiguity or to correct or supplement any provision contained herein
or in any supplemental indenture which may be defective or inconsistent with
any other provision contained herein or in any supplemental indenture, or to
make or amend such other provisions in regard to matters or questions arising
under this Indenture; provided, that any such action shall not adversely
affect the interests of the holders of the Debt Securities;

 

(d)                                 to
add to, delete from, or revise the terms of Debt Securities, including, without
limitation, any terms relating to the issuance, exchange, registration or
transfer of Debt Securities, including to provide for transfer procedures and
restrictions substantially similar to those applicable to the Capital
Securities, as required by Section 2.05 (for purposes of assuring that no
registration of Debt Securities is required under the Securities Act of 1933,
as amended); provided, that any such action shall not adversely affect the
interests of the holders of the Debt Securities then outstanding (it being
understood, for purposes of this proviso, that transfer restrictions on Debt
Securities substantially similar to those applicable to Capital Securities
shall not be deemed to adversely affect the holders of the Debt Securities);

 

(e)                                  to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Debt Securities and to add to or change any of the

 

45

 

provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 6.10;

 

(f)                                    to
make any change (other than as elsewhere provided in this paragraph) that does
not adversely affect the rights of any Securityholder in any material respect;
or

 

(g)                                 to
provide for the issuance of and establish the form and terms and conditions of
the Debt Securities, to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or the Debt Securities, or to
add to the rights of the holders of Debt Securities.

 

The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section 9.01
may be executed by the Company and the Trustee without the consent of the
holders of any of the Debt Securities at the time outstanding, notwithstanding
any of the provisions of Section 9.02.

 

SECTION 9.02.  Supplemental Indentures with Consent of
Securityholders.

 

With the consent (evidenced as provided in Section 7.01) of the
holders of not less than a majority in aggregate principal amount of the Debt
Securities at the time outstanding affected by such supplemental indenture, the
Company, when authorized by a Board Resolution, and the Trustee may from time
to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act, then
in effect, applicable to indentures qualified thereunder) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the holders of the Debt Securities; provided,
however, that no such supplemental indenture shall without such consent
of the holders of each Debt Security then outstanding and affected thereby (i)
change the Maturity Date of any Debt Security, or reduce the principal amount
thereof or any premium thereon, or reduce the rate (or manner of calculation of
the rate) or extend the time of payment of interest thereon, or reduce (other
than as a result of the maturity or earlier redemption of any such Debt
Security in accordance with the terms of this Indenture and such Debt Security)
or increase the aggregate principal amount of Debt Securities then outstanding,
or change any of the redemption provisions, or make the principal thereof or
any interest or premium thereon payable in any coin or currency other than
United States Dollars, or impair or affect the right of any Securityholder to
institute suit for payment thereof or impair the right of repayment, if any, at
the option of the holder, or (ii) reduce the aforesaid percentage of Debt
Securities the holders of which are required to consent to any such
supplemental indenture; and provided, further, that if the Debt
Securities are held by the Trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in Liquidation
Amount of the outstanding Capital Securities shall have consented to such
supplemental indenture; provided, further, that if the

 

46

 

consent of the Securityholder of each
outstanding Debt Security is required, such supplemental indenture shall not be
effective until each holder of the outstanding Capital Securities shall have
consented to such supplemental indenture.

 

Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders (and
holders of Capital Securities, if required) as aforesaid, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.

 

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
Debt Security Register. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.

 

It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

 

SECTION 9.03.  Effect of Supplemental Indentures.

 

Upon the execution of any supplemental indenture pursuant to the
provisions of this Article IX, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debt Securities shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

 

SECTION 9.04.  Notation on Debt Securities.

 

Debt Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article IX may
bear a notation as to any matter provided for in such supplemental indenture.
If the Company or the Trustee shall so determine, new Debt Securities so
modified as to conform, in the opinion of the Board of Directors of the
Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debt Securities then outstanding.

 

47

 

SECTION 9.05.  Evidence of Compliance of Supplemental
Indenture to be furnished to Trustee.

 

The Trustee, subject to the provisions of Sections 6.01 and 6.02,
shall, in addition to the documents required by Section 14.06, receive an
Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee shall receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this Article IX
is authorized or permitted by, and conforms to, the terms of this Article IX
and that it is proper for the Trustee under the provisions of this Article IX
to join in the execution thereof.

 

ARTICLE X

 

REDEMPTION OF SECURITIES

 

SECTION 10.01.  Optional Redemption.

 

At any time the Company shall have the right, subject to the receipt by
the Company of prior approval from any regulatory authority with jurisdiction
over the Company if such approval is then required under applicable capital
guidelines or policies of such regulatory authority, to redeem the Debt
Securities, in whole or (provided that all accrued and unpaid interest has been
paid on all Debt Securities for all Interest Periods terminating on or prior to
such date) from time to time in part, on any March 15,
June 15, September 15 or December 15
on or after March 15, 2010 (the “Redemption
Date”), at the Redemption Price.

 

SECTION 10.02.  Special Event Redemption.

 

If a Special Event shall occur and be continuing, the Company shall
have the right, subject to the receipt by the Company of prior approval from
any regulatory authority with jurisdiction over the Company if such approval is
then required under applicable capital guidelines or policies of such
regulatory authority, to redeem the Debt Securities, in whole or in part, at
any time within 90 days following the occurrence of such Special Event (the “Special
Redemption Date”), at the Special Redemption Price.

 

SECTION 10.03.  Notice of Redemption; Selection of Debt Securities.

 

In case the Company shall desire to exercise the right to redeem all,
or, as the case may be, any part of the Debt Securities, it shall fix a date
for redemption and shall mail, or cause the Trustee to mail (at the expense of
the Company) a notice of such redemption at least 30 and not more than 60 days
prior to the date fixed for redemption to the holders of Debt Securities so to
be redeemed as a whole or in part at their last addresses as the same appear on
the Debt Security Register. Such mailing shall be by first class mail. The
notice if mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Debt Security designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any
other Debt Security.

 

48

 

Each such notice of redemption shall specify the CUSIP number, if any,
of the Debt Securities to be redeemed, the date fixed for redemption, the
redemption price (or manner of calculation of the price) at which Debt
Securities are to be redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Debt Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Debt
Securities are to be redeemed the notice of redemption shall specify the
numbers of the Debt Securities to be redeemed. In case the Debt Securities are
to be redeemed in part only, the notice of redemption shall state the portion
of the principal amount thereof to be redeemed and shall state that on and
after the date fixed for redemption, upon surrender of such Debt Security, a
new Debt Security or Debt Securities in principal amount equal to the
unredeemed portion thereof will be issued.

 

Prior to 10:00 a.m. New York City time on the Redemption Date or the
Special Redemption Date specified in the notice of redemption given as provided
in this Section, the Company will deposit with the Trustee or with one or more
Paying Agents an amount of money sufficient to redeem on the redemption date
all the Debt Securities so called for redemption at the appropriate redemption
price, together with unpaid interest accrued to such date.

 

The Company will give the Trustee notice not less than 45 nor more than
60 days prior to the Redemption Date as to the Redemption Price at which the
Debt Securities are to be redeemed and the aggregate principal amount of Debt
Securities to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debt Securities or
portions thereof (in integral multiples of $1,000) to be redeemed.

 

SECTION 10.04.  Payment of Debt Securities Called for
Redemption.

 

If notice of redemption has been given as provided in Section 10.03,
the Debt Securities or portions of Debt Securities with respect to which such
notice has been given shall become due and payable on the Redemption Date or
the Special Redemption Date (as the case may be) and at the place or places
stated in such notice at the applicable redemption price, together with
interest accrued to the date fixed for redemption, and on and after said
Redemption Date or the Special Redemption Date (unless the Company shall
default in the payment of such Debt Securities at the redemption price,
together with unpaid interest accrued thereon to said date) interest on the
Debt Securities or portions of Debt Securities so called for redemption shall
cease to accrue. On presentation and surrender of such Debt Securities at a
place of payment specified in said notice, such Debt Securities or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with unpaid interest accrued thereon to
the Redemption Date or the Special Redemption Date (as the case may be).

 

Upon presentation of any Debt Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Debt
Security or Debt Securities of authorized denominations in principal amount
equal to the unredeemed portion of the Debt Security so presented.

 

49

 

ARTICLE XI

 

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

SECTION 11.01.  Company May Consolidate, etc., on Certain
Terms.

 

Nothing contained in this Indenture or in the Debt Securities shall
prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company) or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or other disposition of all or substantially all of the property or
capital stock of the Company or its successor or successors to any other
corporation (whether or not affiliated with the Company, or its successor or
successors) authorized to acquire and operate the same; provided, however,
that the Company hereby covenants and agrees that, (i) upon any such
consolidation, merger (where the Company is not the surviving corporation),
sale, conveyance, transfer or other disposition, the successor entity shall be
a corporation organized and existing under the laws of the United States or any
state thereof or the District of Columbia (unless such corporation has (1)
agreed to make all payments due in respect of the Debt Securities or, if
outstanding, the Capital Securities and Capital Securities Guarantee without
withholding or deduction for, or on account of, any taxes, duties, assessments
or other governmental charges under the laws or regulations of the jurisdiction
of organization or residence (for tax purposes) of such corporation or any
political subdivision or taxing authority thereof or therein unless required by
applicable law, in which case such corporation shall have agreed to pay such
additional amounts as shall be required so that the net amounts received and
retained by the holders of such Debt Securities or Capital Securities, as the
case may be, after payment of all taxes (including withholding taxes), duties,
assessments or other governmental charges, will be equal to the amounts that
such holders would have received and retained had no such taxes (including
withholding taxes), duties, assessments or other governmental charges been
imposed, (2) irrevocably and unconditionally consented and submitted to the
jurisdiction of any United States federal court or New York state court, in
each case located in The City of New York, Borough of Manhattan, in respect of
any action, suit or proceeding against it arising out of or in connection with
this Indenture, the Debt Securities, the Capital Securities Guarantee or the
Declaration and irrevocably and unconditionally waived, to the fullest extent
permitted by law, any objection to the laying of venue in any such court or
that any such action, suit or proceeding has been brought in an inconvenient
forum and (3) irrevocably appointed an agent in The City of New York for
service of process in any action, suit or proceeding referred to in clause (2)
above) and such corporation expressly assumes all of the obligations of the
Company under the Debt Securities, this Indenture, the Capital Securities
Guarantee and the Declaration and (ii) after giving effect to any such
consolidation, merger, sale, conveyance, transfer or other disposition, no
Default or Event of Default shall have occurred and be continuing.

 

SECTION 11.02.  Successor Entity to be Substituted.

 

In case of any such consolidation, merger, sale, conveyance, transfer
or other disposition contemplated in Section 11.01 and upon the assumption
by the successor entity, by supplemental indenture, executed and delivered to
the Trustee and reasonably satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any,

 

50

 

and interest on all of the Debt Securities
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor entity shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the Company, and thereupon the
predecessor entity shall be relieved of any further liability or obligation
hereunder or upon the Debt Securities. Such successor entity thereupon may
cause to be signed, and may issue either in its own name or in the name of the
Company, any or all of the Debt Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor entity instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent shall
authenticate and deliver any Debt Securities which previously shall have been
signed and delivered by the officers of the Company, to the Trustee or the
Authenticating Agent for authentication, and any Debt Securities which such
successor entity thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Debt Securities
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debt Securities theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Debt Securities had been
issued at the date of the execution hereof.

 

SECTION 11.03.  Opinion of Counsel to be Given to Trustee.

 

The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall
receive, in addition to the Opinion of Counsel required by Section 9.05,
an Opinion of Counsel as conclusive evidence that any consolidation, merger,
sale, conveyance, transfer or other disposition, and any assumption, permitted
or required by the terms of this Article XI complies with the provisions
of this Article XI.

 

ARTICLE XII

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

SECTION 12.01.  Discharge of Indenture.

 

When (a) the Company shall deliver to the Trustee for cancellation all
Debt Securities theretofore authenticated (other than any Debt Securities which
shall have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.06) and not theretofore canceled, or (b) all
the Debt Securities not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds,
which shall be immediately due and payable, sufficient to pay at maturity or
upon redemption all of the Debt Securities (other than any Debt Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.06) not theretofore canceled or
delivered to the Trustee for cancellation, including principal and premium, if
any, and interest due or to become due to such date of maturity or redemption
date, as the case may be, but excluding, however, the amount of any moneys for
the payment of principal of, and premium, if any, or interest on the Debt

 

51

 

Securities (1) theretofore repaid to the
Company in accordance with the provisions of Section 12.04, or (2) paid to
any state or to the District of Columbia pursuant to its unclaimed property or
similar laws, and if in the case of either clause (a) or clause (b) the Company
shall also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect except for the
provisions of Sections 2.05, 2.06, 3.01, 3.02, 3.04, 6.06, 6.09 and 12.04
hereof, which shall survive until such Debt Securities shall mature or are
redeemed, as the case may be, and are paid in full. Thereafter, Sections 6.06,
6.09 and 12.04 shall survive, and the Trustee, on demand of the Company
accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with, and at the cost and
expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture, the Company, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Debt Securities.

 

SECTION 12.02.  Deposited Moneys to be Held in Trust by
Trustee.

 

Subject to the provisions of Section 12.04, all moneys deposited
with the Trustee pursuant to Section 12.01 shall be held in trust and
applied by it to the payment, either directly or through any Paying Agent
(including the Company if acting as its own Paying Agent), to the holders of
the particular Debt Securities for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, and premium, if any, and interest.

 

SECTION 12.03.  Paying Agent to Repay Moneys Held.

 

Upon the satisfaction and discharge of this Indenture, all moneys then
held by any Paying Agent of the Debt Securities (other than the Trustee) shall,
upon demand of the Company, be repaid to the Company or paid to the Trustee,
and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.

 

SECTION 12.04.  Return of Unclaimed Moneys.

 

Any moneys deposited with or paid to the Trustee or any Paying Agent
for payment of the principal of, and premium, if any, or interest on Debt
Securities and not applied but remaining unclaimed by the holders of Debt
Securities for two years after the date upon which the principal of, and
premium, if any, or interest on such Debt Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by the Trustee or
such Paying Agent on written demand; and the holder of any of the Debt
Securities shall thereafter look only to the Company for any payment which such
holder may be entitled to collect and all liability of the Trustee or such
Paying Agent with respect to such moneys shall thereupon cease.

 

52

 

ARTICLE XIII

 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

 

SECTION 13.01.  Indenture and Debt Securities Solely
Corporate Obligations.

 

No recourse for the payment of the principal of or premium, if any, or
interest on any Debt Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture, or
in any such Debt Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder, officer,
director, employee or agent, as such, past, present or future, of the Company
or of any predecessor or successor corporation of the Company, either directly
or through the Company or any successor corporation of the Company, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of the
Debt Securities.

 

ARTICLE XIV

 

MISCELLANEOUS
PROVISIONS

 

SECTION 14.01.  Successors.

 

All the covenants, stipulations, promises and agreements of the Company
contained in this Indenture shall bind its successors and assigns whether so
expressed or not.

 

SECTION 14.02.  Official Acts by Successor Entity.

 

Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee, officer or other authorized Person of any entity that
shall at the time be the lawful successor of the Company.

 

SECTION 14.03.  Surrender of Company Powers.

 

The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company and as to any permitted
successor.

 

SECTION 14.04.  Addresses for Notices, etc.

 

Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the
Securityholders on the Company may be given or served in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied (which
telecopy shall be followed by notice delivered or mailed by first class mail)
or mailed by first class mail to the Company at:

 

53

 

HCSB Financial
Corporation

5201 Broad
Street

Loris, South
Carolina 29569

Attention:  James R.
Clarkson

 

Any notice, direction, request or demand by any Securityholder or the
Company to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or made in writing at the office of
JPMorgan Chase Bank, N.A. at:

 

600 Travis Street, 50th
Floor

Houston, Texas 77002

Attn: Institutional Trust Services – HCSB
Financial Trust I

 

SECTION 14.05.  Governing Law.

 

This Indenture and the Debt Securities shall each be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of laws principles of said State other than Section 5-1401 of
the New York General Obligations Law.

 

SECTION 14.06.  Evidence of Compliance with Conditions
Precedent.

 

Upon any application or demand by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers’ Certificate stating that in the opinion of
the signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with (except that no such Opinion of Counsel is
required to be furnished to the Trustee in connection with the authentication
and issuance of Debt Securities issued on the date of this Indenture).

 

Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (except certificates delivered pursuant
to Section 3.05) shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition and the definitions
relating thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (c) a statement that, in the opinion of
such person, he or she has made such examination or investigation as is
necessary to enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and (d) a statement as
to whether or not, in the opinion of such person, such condition or covenant
has been complied with.

 

SECTION 14.07.  Non-Business Days.

 

Notwithstanding anything to the contrary contained herein, if any
Interest Payment Date, other than on the Maturity Date, any Redemption Date or
the Special Redemption Date, falls on a day that is not a Business Day, then
any interest payable will be paid on, and such Interest Payment Date will be
moved to, the next succeeding Business Day, and additional interest will accrue
for each day that such payment is delayed as a result thereof.  If the Maturity

 

54

 

Date, any Redemption Date or the Special
Redemption Date falls on a day that is not a Business Day, then the principal,
premium, if any, and/or interest payable on such date will be paid on the next
succeeding Business Day, and no additional interest will accrue in respect of
such payment made on such next succeeding Business Day.

 

SECTION 14.08.  Table of Contents, Headings, etc.

 

The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.

 

SECTION 14.09.  Execution in Counterparts.

 

This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.

 

SECTION 14.10.  Severability.

 

In case any one or more of the provisions contained in this Indenture
or in the Debt Securities shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Debt Securities, but this Indenture and such Debt Securities shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.

 

SECTION 14.11.  Assignment.

 

Subject to Article XI, the Company will have the right at all
times to assign any of its rights or obligations under this Indenture and the
Debt Securities to a direct or indirect wholly owned Subsidiary of the Company;
provided, however, that, in the event of any such assignment, the
Company will remain liable for all such obligations. Subject to the foregoing,
this Indenture is binding upon and inures to the benefit of the parties hereto
and their respective successors and assigns. This Indenture may not otherwise
be assigned by the parties thereto.

 

SECTION 14.12.  Acknowledgment of Rights.

 

The Company acknowledges that, with respect to any Debt Securities held
by the Trust or the Institutional Trustee of the Trust, if the Institutional
Trustee of the Trust fails to enforce its rights under this Indenture as the
holder of Debt Securities held as the assets of the Trust after the holders of
a majority in Liquidation Amount of the Capital Securities of the Trust have so
directed in writing such Institutional Trustee, a holder of record of such
Capital Securities may to the fullest extent permitted by law institute legal
proceedings directly against the Company to enforce such Institutional Trustee’s
rights under this Indenture without first instituting any legal proceedings
against such Institutional Trustee or any other Person. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest (or premium, if
any) or principal on the Debt Securities on the date such interest (or premium,
if any) or principal is

 

55

 

otherwise due and payable (or in the case of
redemption, on the redemption date), the Company acknowledges that a holder of
record of Capital Securities of the Trust may directly institute a proceeding
against the Company for enforcement of payment to such holder directly of the
principal of (or premium, if any) or interest on the Debt Securities having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder on or after the respective due date specified
in the Debt Securities.

 

ARTICLE XV

 

SUBORDINATION
OF DEBT SECURITIES

 

SECTION 15.01.  Agreement to Subordinate.

 

The Company covenants and agrees, and each holder of Debt Securities
issued hereunder and under any supplemental indenture (the “Additional
Provisions”) by such Securityholder’s acceptance thereof likewise covenants and
agrees, that all Debt Securities shall be issued subject to the provisions of
this Article XV; and each holder of a Debt Security, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees to be bound by
such provisions.

 

The payment by the Company of the payments due on all Debt Securities
issued hereunder and under any Additional Provisions shall, to the extent and
in the manner hereinafter set forth, be subordinated and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
whether outstanding at the date of this Indenture or thereafter incurred.

 

No provision of this Article XV shall prevent the occurrence of
any Default or Event of Default hereunder.

 

SECTION 15.02.  Default on Senior Indebtedness.

 

In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company following any applicable grace period, or in
the event that the maturity of any Senior Indebtedness of the Company has been
accelerated because of a default, and such acceleration has not been rescinded
or canceled and such Senior Indebtedness has not been paid in full, then, in
either case, no payment shall be made by the Company with respect to the
payments due on the Debt Securities.

 

In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 15.02, such payment shall, subject to Section 15.06,
be held in trust for the benefit of, and shall be paid over or delivered to,
the holders of Senior Indebtedness or their respective representatives, or to
the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior Indebtedness (or
their representative or representatives or a trustee) notify the Trustee in
writing within 90 days of such payment of the amounts then due and owing on the

 

56

 

Senior Indebtedness and only the amounts
specified in such notice to the Trustee shall be paid to the holders of Senior
Indebtedness.

 

SECTION 15.03.  Liquidation; Dissolution; Bankruptcy.

 

Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company
on the Debt Securities; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Securityholders or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XV,
shall be paid by the Company, or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Securityholders or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness of the Company (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money’s worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Securityholders.

 

In the event that, notwithstanding the foregoing, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, prohibited by the foregoing, shall be received by the Trustee
before all Senior Indebtedness of the Company is paid in full, or provision is
made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, as calculated by the Company,
for application to the payment of all Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.

 

For purposes of this Article XV, the words “cash, property or
securities” shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article XV
with respect to the Debt Securities to the payment of all Senior Indebtedness
of the Company, that may at the time be outstanding, provided, that (a)
such Senior Indebtedness is assumed by the new corporation, if any, resulting
from any such reorganization or readjustment, and (b) the rights of the holders
of such Senior Indebtedness are not, without the consent of such

 

57

 

holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance, transfer or other disposition of its property
as an entirety, or substantially as an entirety, to another corporation upon
the terms and conditions provided for in Article XI of this Indenture
shall not be deemed a dissolution, winding-up, liquidation or reorganization
for the purposes of this Section 15.03 if such other corporation shall, as
a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article XI of this Indenture. Nothing in Section 15.02
or in this Section 15.03 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.06 of this Indenture.

 

SECTION 15.04.  Subrogation.

 

Subject to the payment in full of all Senior Indebtedness of the
Company, the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to such Senior Indebtedness
until all payments due on the Debt Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of such Senior Indebtedness of any cash, property or securities to which the
Securityholders or the Trustee would be entitled except for the provisions of
this Article XV, and no payment over pursuant to the provisions of this Article XV
to or for the benefit of the holders of such Senior Indebtedness by
Securityholders or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the holders of
the Debt Securities be deemed to be a payment or distribution by the Company to
or on account of such Senior Indebtedness. It is understood that the provisions
of this Article XV are and are intended solely for the purposes of
defining the relative rights of the holders of the Debt Securities, on the one
hand, and the holders of such Senior Indebtedness, on the other hand.

 

Nothing contained in this Article XV or elsewhere in this
Indenture, any Additional Provisions or in the Debt Securities is intended to
or shall impair, as between the Company, its creditors other than the holders
of Senior Indebtedness of the Company, and the holders of the Debt Securities,
the obligation of the Company, which is absolute and unconditional, to pay to
the holders of the Debt Securities all payments on the Debt Securities as and
when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the holders of the Debt
Securities and creditors of the Company, other than the holders of Senior
Indebtedness of the Company, nor shall anything herein or therein prevent the
Trustee or the holder of any Debt Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article XV of the holders of
such Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.

 

Upon any payment or distribution of assets of the Company referred to
in this Article XV, the Trustee, subject to the provisions of Article VI
of this Indenture, and the Securityholders shall be entitled to conclusively
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Securityholders, for the purposes of
ascertaining the Persons entitled to participate in such

 

58

 

distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XV.

 

SECTION 15.05.  Trustee to Effectuate Subordination.

 

Each Securityholder by such Securityholder’s acceptance thereof
authorizes and directs the Trustee on such Securityholder’s behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XV and appoints the Trustee such Securityholder’s
attorney-in-fact for any and all such purposes.

 

SECTION 15.06.  Notice by the Company.

 

The Company shall give prompt written notice to a Responsible Officer
of the Trustee at the Principal Office of the Trustee of any fact known to the
Company that would prohibit the making of any payment of moneys to or by the
Trustee in respect of the Debt Securities pursuant to the provisions of this Article XV.
Notwithstanding the provisions of this Article XV
or any other provision of this Indenture or any Additional Provisions, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of moneys to or by the Trustee in
respect of the Debt Securities pursuant to the provisions of this Article XV,
unless and until a Responsible Officer of the Trustee at the Principal Office
of the Trustee shall have received written notice thereof from the Company or a
holder or holders of Senior Indebtedness or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Article VI of this Indenture, shall be entitled in all
respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this Section 15.06
at least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Debt
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.

 

The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself or herself to be a holder of
Senior Indebtedness of the Company (or a trustee or representative on behalf of
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
such Senior Indebtedness to participate in any payment or distribution pursuant
to this Article XV, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

 

59

 

SECTION 15.07.  Rights of the Trustee, Holders of Senior
Indebtedness.

 

The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XV in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture or any Additional Provisions shall
deprive the Trustee of any of its rights as such holder.

 

With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture or any Additional Provisions
against the Trustee. The Trustee shall not owe or be deemed to owe any
fiduciary duty to the holders of such Senior Indebtedness and, subject to the
provisions of Article VI of this Indenture, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Securityholders, the Company or any other Person money or assets to
which any holder of such Senior Indebtedness shall be entitled by virtue of
this Article XV or otherwise.

 

Nothing in this Article XV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06.

 

SECTION 15.08.  Subordination May Not Be Impaired.

 

No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company, with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.

 

Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company may, at any time and from
time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV
or the obligations hereunder of the holders of the Debt Securities to the
holders of such Senior Indebtedness, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness, or otherwise amend or supplement
in any manner such Senior Indebtedness or any instrument evidencing the same or
any agreement under which such Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (c) release any
Person liable in any manner for the collection of such Senior Indebtedness; and
(d) exercise or refrain from exercising any rights against the Company, and any
other Person.

 

JPMorgan Chase Bank, N.A., in its capacity as Trustee, hereby accepts
the trusts in this Indenture declared and provided, upon the terms and
conditions herein above set forth.

 

60

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.

 

	 
	
   

  	
  HCSB
  Financial Corporation

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	 

	 
	
   

  	
  Title:

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  JPMorgan Chase
  Bank, N.A., as Trustee

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	 

	 
	
   

  	
  Title:Exhibit 4.2

 

GUARANTEE AGREEMENT

 

HCSB FINANCIAL
CORPORATION

 

Dated as of December
21, 2004

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  
	
  DEFINITIONS AND INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  Definitions and Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
  POWERS,
  DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  Powers and Duties of the Guarantee Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.2.

  	
  Certain Rights of the Guarantee Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.3.

  	
  Not Responsible for Recitals or Issuance
  of Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.4.

  	
  Events of Default; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.5.

  	
  Events of Default; Notice

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  THE GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  The Guarantee Trustee; Eligibility

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.2.

  	
  Appointment, Removal and Resignation of
  the Guarantee Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  
	
  GUARANTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
  Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2.

  	
  Waiver of Notice and Demand

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.3.

  	
  Obligations Not Affected

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.4.

  	
  Rights of Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.5.

  	
  Guarantee of Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.6.

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.7.

  	
  Independent Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.8.

  	
  Enforcement

  	
   

  

 

i

 

	
  ARTICLE
  V

  
	
  LIMITATION
  OF TRANSACTIONS; SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
  Limitation of Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.2.

  	
  Ranking

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
  Exculpation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.2.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.3.

  	
  Compensation; Reimbursement of Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2.

  	
  Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.3.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.4.

  	
  Benefit

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.5.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.6.

  	
  Counterparts

  	
   

  

 

ii

 

GUARANTEE AGREEMENT

 

This GUARANTEE
AGREEMENT (the “Guarantee”), dated as of December
21, 2004, is executed and delivered by HCSB
Financial Corporation, incorporated in South
Carolina (the “Guarantor”), and JPMorgan Chase Bank, N.A., as trustee
(the “Guarantee Trustee”), for the benefit of the Holders (as defined herein)
from time to time of the Capital Securities (as defined herein) of HCSB Financial Trust I, a Delaware statutory
trust (the “Issuer”).

 

WHEREAS,
pursuant to an Amended and Restated Declaration of Trust (the “Declaration”),
dated as of December 21, 2004, among the
trustees named therein of the Issuer, HCSB
Financial Corporation, as sponsor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof securities, having an aggregate liquidation amount
of up to $6,000,000, designated the TP
Securities (the “Capital Securities”); and

 

WHEREAS, as
incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Guarantee, to pay to the Holders of Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the purchase by each Holder of the Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit
of the Holders.

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1.                       Definitions
and Interpretation.

 

In this
Guarantee, unless the context otherwise requires:

 

(a)                                  capitalized
terms used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;

 

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

 

(c)                                  all
references to “the Guarantee” or “this Guarantee” are to this Guarantee as
modified, supplemented or amended from time to time;

 

(d)                                 all
references in this Guarantee to Articles and Sections are to Articles and
Sections of this Guarantee, unless otherwise specified;

 

(e)                                  terms
defined in the Declaration as of the date of execution of this Guarantee have
the same meanings when used in this Guarantee, unless otherwise defined in this
Guarantee or unless the context otherwise requires; and

 

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

 

 

“Beneficiaries”
means any Person to whom the Issuer is or hereafter becomes indebted or liable.

 

“Corporate
Trust Office” means the office of the Guarantee Trustee at which the corporate
trust business of the Guarantee Trustee shall, at any particular time, be
principally administered.

 

“Covered
Person” means any Holder of Capital Securities.

 

“Debentures”
means the junior subordinated debentures of HCSB
Financial Corporation, designated the Junior Subordinated Debt
Securities due 2035, held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.

 

“Event of
Default” has the meaning set forth in Section 2.4.

 

“Guarantee
Payments” means the following payments or distributions, without duplication,
with respect to the Capital Securities, to the extent not paid or made by the
Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration)
which are required to be paid on such Capital Securities to the extent the
Issuer has funds available in the Property Account (as defined in the
Declaration) therefor at such time, (ii) the Redemption Price (as defined in
the Indenture) to the extent the Issuer has funds available in the Property
Account therefor at such time, with respect to any Capital Securities called
for redemption by the Issuer, (iii) the Special Redemption Price (as defined in
the Indenture) to the extent the Issuer has funds available in the Property
Account therefor at such time, with respect to Capital Securities called for
redemption upon the occurrence of a Special Event (as defined in the
Indenture), and (iv) upon a voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders of the Capital Securities in exchange
therefor as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Capital
Securities to the date of payment, to the extent the Issuer has funds available
in the Property Account therefor at such time, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of
the Issuer after satisfaction of liabilities to creditors of the Issuer as
required by applicable law (in either case, the “Liquidation Distribution”).

 

“Guarantee
Trustee” means JPMorgan Chase Bank, N.A., until a Successor Guarantee Trustee
has been appointed and has accepted such appointment pursuant to the terms of
this Guarantee and thereafter means each such Successor Guarantee Trustee.

 

“Holder” means
any holder, as registered on the books and records of the Issuer, of any
Capital Securities; provided, however, that, in determining whether the holders
of the requisite percentage of Capital Securities have given any request,
notice, consent or waiver hereunder, “Holder” shall not include the Guarantor
or any Affiliate of the Guarantor.

 

“Indemnified
Person” means the Guarantee Trustee (including in its individual capacity), any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Guarantee Trustee.

 

2

 

“Indenture”
means the Indenture, dated as of December 21,
2004, between the Guarantor and JPMorgan Chase Bank, N.A., not in its
individual capacity but solely as trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued to the Institutional
Trustee of the Issuer.

 

“Liquidation
Distribution” has the meaning set forth in the definition of “Guarantee
Payments” herein.

 

“Majority in
liquidation amount of the Capital Securities” means Holder(s) of outstanding
Capital Securities, voting together as a class, but separately from the holders
of Common Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to, but excluding, the date
upon which the voting percentages are determined) of all Capital Securities
then outstanding.

 

“Obligations”
means any costs, expenses or liabilities (but not including liabilities related
to taxes) of the Issuer, other than obligations of the Issuer to pay to holders
of any Trust Securities the amounts due such holders pursuant to the terms of
the Trust Securities.

 

“Officer’s
Certificate” means, with respect to any Person, a certificate signed by one
Authorized Officer of such Person. Any Officer’s Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee shall include:

 

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

 

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

 

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

 

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

 

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

 

“Responsible
Officer” means, with respect to the Guarantee Trustee, any officer within the
Corporate Trust Office of the Guarantee Trustee with direct responsibility for
the administration of any matters relating to this Guarantee, including any
vice president, any assistant vice president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated

 

3

 

officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of
and familiarity with the particular subject.

 

“Successor
Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 3.1.

 

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

 

ARTICLE
II

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

SECTION 2.1.                       Powers
and Duties of the Guarantee Trustee.

 

(a)                                  This
Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders
of the Capital Securities, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder of Capital Securities exercising his or
her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.

 

(b)                                 If
an Event of Default actually known to a Responsible Officer of the Guarantee
Trustee has occurred and is continuing, the Guarantee Trustee shall enforce
this Guarantee for the benefit of the Holders of the Capital Securities.

 

(c)                                  The
Guarantee Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee, and no implied covenants shall be read into this Guarantee against
the Guarantee Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.4(b)) and is actually known to a
Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.

 

(d)                                 No
provision of this Guarantee shall be construed to relieve the Guarantee Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

 

(i)                                     prior
to the occurrence of any Event of Default and after the curing or waiving of
all Events of Default that may have occurred:

 

(A)                              the
duties and obligations of the Guarantee Trustee shall be determined solely by
the express provisions of this Guarantee, and the

 

4

 

Guarantee Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee, and no implied covenants or
obligations shall be read into this Guarantee against the Guarantee Trustee;
and

 

(B)                                in
the absence of bad faith on the part of the Guarantee Trustee, the Guarantee
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to the requirements
of this Guarantee; but in the case of any such certificates or opinions
furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty
to examine the same to determine whether or not on their face they conform to
the requirements of this Guarantee;

 

(ii)                                  the
Guarantee Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Guarantee Trustee, unless it shall be
proved that such Responsible Officer of the Guarantee Trustee or the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;

 

(iii)                               the
Guarantee 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 written
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee; and

 

(iv)                              no
provision of this Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds is not reasonably assured to it under the
terms of this Guarantee, or security and indemnity, reasonably satisfactory to
the Guarantee Trustee, against such risk or liability is not reasonably assured
to it.

 

SECTION 2.2.                       Certain
Rights of the Guarantee Trustee.

 

(a)                                  Subject
to the provisions of Section 2.1:

 

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

 

(ii)                                  Any
direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate.

 

5

 

(iii)                               Whenever,
in the administration of this Guarantee, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer’s Certificate of the Guarantor
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.

 

(iv)                              The
Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument or other writing (or any rerecording, refiling
or reregistration thereof).

 

(v)                                 The
Guarantee Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters 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 accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of this
Guarantee from any court of competent jurisdiction.

 

(vi)                              The
Guarantee Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided, however, that nothing contained in
this Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon
the occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee.

 

(vii)                           The
Guarantee 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, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.

 

(viii)                        The
Guarantee Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.

 

6

 

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

 

(x)                                   Whenever
in the administration of this Guarantee the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders of a Majority in liquidation amount of the
Capital Securities, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received and (C) shall be
protected in conclusively relying on or acting in accordance with such
instructions.

 

(xi)                                The
Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Guarantee.

 

(b)                                 No
provision of this Guarantee shall be deemed to impose any duty or obligation on
the Guarantee 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 Guarantee 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 Guarantee Trustee shall be construed to be a
duty.

 

SECTION 2.3.                       Not
Responsible for Recitals or Issuance of Guarantee.

 

The recitals
contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Guarantee Trustee does not assume any responsibility for their
correctness. The Guarantee Trustee makes no representation as to the validity
or sufficiency of this Guarantee.

 

SECTION 2.4.                       Events
of Default; Waiver.

 

(a)                                  An
Event of Default under this Guarantee will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder.

 

(b)                                 The
Holders of a Majority in liquidation amount of the Capital Securities may,
voting or consenting as a class, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and shall be deemed to
have been cured, for every purpose of this Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

 

7

 

SECTION 2.5.                       Events
of Default; Notice.

 

(a)                                  The
Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Capital Securities, notices of all Events of Default actually known to a
Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, however, that
the Guarantee Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Capital Securities.

 

(b)                                 The
Guarantee Trustee shall not be charged with knowledge of any Event of Default
unless the Guarantee Trustee shall have received written notice thereof from
the Guarantor or a Holder of the Capital Securities, or a Responsible Officer
of the Guarantee Trustee charged with the administration of this Guarantee
shall have actual knowledge thereof.

 

ARTICLE
III

THE GUARANTEE TRUSTEE

 

SECTION 3.1.                       The
Guarantee Trustee; Eligibility.

 

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

 

(i)                                     not
be an Affiliate of the Guarantor; and

 

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

 

(b)                                 If
at any time the Guarantee Trustee shall cease to be eligible to so act under
Section 3.1(a), the Guarantee Trustee shall immediately resign in the manner
and with the effect set forth in Section 3.2(c).

 

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

 

8

 

SECTION 3.2.                       Appointment,
Removal and Resignation of the Guarantee Trustee.

 

(a)                                  Subject
to Section 3.2(b), the Guarantee Trustee may be appointed or removed without
cause at any time by the Guarantor except during an Event of Default.

 

(b)                                 The
Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until
a Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.

 

(c)                                  The
Guarantee Trustee appointed to office shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.

 

(d)                                 If
no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 3.2 within 60 days after delivery of an
instrument of removal or resignation, the Guarantee Trustee resigning or being
removed may petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

 

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

 

(f)                                    Upon
termination of this Guarantee or removal or resignation of the Guarantee
Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee
Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3
accrued to the date of such termination, removal or resignation.

 

ARTICLE
IV

GUARANTEE

 

SECTION 4.1.                       Guarantee.

 

(a)                                  The
Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
the Guarantee Payments (without duplication of amounts theretofore paid by the
Issuer), as and when due, regardless of any defense (except as defense of
payment by the Issuer), right of set-off or counterclaim that the Issuer may
have or assert. The Guarantor’s obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer to pay such amounts to the Holders.

 

9

 

(b)                                 The
Guarantor hereby also agrees to assume any and all Obligations of the Issuer
and in the event any such Obligation is not so assumed, subject to the terms
and conditions hereof, the Guarantor hereby irrevocably and unconditionally
guarantees to each Beneficiary the full payment, when and as due, of any and
all Obligations to such Beneficiaries. This Guarantee is intended to be for the
Beneficiaries who have received notice hereof.

 

SECTION 4.2.                       Waiver
of Notice and Demand.

 

The Guarantor
hereby waives notice of acceptance of this Guarantee and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.

 

SECTION 4.3.                       Obligations
Not Affected.

 

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

 

(a)                                  the
release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or
condition relating to the Capital Securities to be performed or observed by the
Issuer;

 

(b)                                 the
extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Special Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities (other
than an extension of time for the payment of the Distributions, Redemption
Price, Special Redemption Price, Liquidation Distribution or other sums payable
that results from the extension of any interest payment period on the
Debentures or any extension of the maturity date of the Debentures permitted by
the Indenture);

 

(c)                                  any
failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on
the Holders pursuant to the terms of the Capital Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;

 

(d)                                 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 Issuer or any of the assets of the Issuer;

 

(e)                                  any
invalidity of, or defect or deficiency in, the Capital Securities;

 

10

 

(f)                                    the
settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or

 

(g)                                 any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 4.3 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances.

 

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

 

SECTION 4.4.                       Rights
of Holders.

 

(a)                                  The
Holders of a Majority in liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of this Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee; provided, however, that (subject to
Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee shall determine that the
actions so directed would be unjustly prejudicial to the Holders not taking
part in such direction or if the Guarantee Trustee being advised by legal
counsel determines that the action or proceeding so directed may not lawfully
be taken or if the Guarantee Trustee in good faith by its board of directors or
trustees, executive committee or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceeding so directed
would involve the Guarantee Trustee in personal liability.

 

(b)                                 Any
Holder of Capital Securities may institute a legal proceeding directly against
the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee,
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other Person. The Guarantor waives any right or remedy to
require that any such action be brought first against the Issuer, the Guarantee
Trustee or any other Person before so proceeding directly against the
Guarantor.

 

SECTION 4.5.                       Guarantee
of Payment.

 

This Guarantee
creates a guarantee of payment and not of collection.

 

SECTION 4.6.                       Subrogation.

 

The Guarantor
shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor

 

11

 

in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust
for the Holders and to pay over such amount to the Holders.

 

SECTION 4.7.                       Independent
Obligations.

 

The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 4.3
hereof.

 

SECTION 4.8.                       Enforcement.

 

A Beneficiary
may enforce the Obligations of the Guarantor contained in Section 4.1(b)
directly against the Guarantor, and the Guarantor waives any right or remedy to
require that any action be brought against the Issuer or any other person or
entity before proceeding against the Guarantor.

 

The Guarantor
shall be subrogated to all rights (if any) of any Beneficiary against the
Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor
under this Guarantee; provided, however, that the Guarantor shall
not (except to the extent required by applicable provisions of law) be entitled
to enforce or exercise any rights that it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if, after giving effect to such payment, any
amounts are due and unpaid under this Guarantee.

 

ARTICLE
V

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 5.1.                       Limitation
of Transactions.

 

So long as any
Capital Securities remain outstanding, if (a) there shall have occurred and be
continuing an Event of Default or (b) the Guarantor shall have selected an
Extension Period as provided in the Declaration and such period, or any
extension thereof, shall have commenced and be continuing, then the Guarantor
may not (x) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Guarantor’s capital stock or (y) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Guarantor that rank pari passu
in all respects with or junior in interest to the Debentures (other than (i)
payments under this Guarantee, (ii) repurchases, redemptions or other
acquisitions of shares of capital stock of the Guarantor (A) in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors, or consultants, (B)
in connection with a dividend reinvestment or stockholder stock purchase plan
or (C) in connection with the issuance of capital stock of the Guarantor (or
securities convertible into or exercisable for such capital stock), as
consideration in an acquisition transaction entered into prior to the
occurrence of the Event of Default or the applicable Extension Period, (iii) as
a result of any exchange, reclassification, combination or conversion of any
class or series of the Guarantor’s capital stock (or any capital stock of a

 

12

 

subsidiary of
the Guarantor) for any class or series of the Guarantor’s capital stock or of
any class or series of the Guarantor’s indebtedness for any class or series of
the Guarantor’s capital stock, (iv) the purchase of fractional interests in shares
of the Guarantor’s capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(v) any declaration of a dividend in connection with any stockholder’s rights
plan, or the issuance of rights, stock or other property under any stockholder’s
rights plan, or the redemption or repurchase of rights pursuant thereto, or
(vi) any dividend in the form of stock, warrants, options or other rights where
the dividend stock or the stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is
being paid or ranks pari passu
with or junior to such stock).

 

SECTION 5.2.                       Ranking.

 

This Guarantee
will constitute an unsecured obligation of the Guarantor and will rank
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined in the Indenture) of the Guarantor. By their
acceptance thereof, each Holder of Capital Securities agrees to the foregoing
provisions of this Guarantee and the other terms set forth herein.

 

The right of
the Guarantor to participate in any distribution of assets of any of its
subsidiaries upon any such subsidiary’s liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor of
that subsidiary. Accordingly, the Guarantor’s obligations under this Guarantee
will be effectively subordinated to all existing and future liabilities of the
Guarantor’s subsidiaries, and claimants should look only to the assets of the
Guarantor for payments thereunder. This Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Guarantor, including
Senior Indebtedness of the Guarantor, under any indenture or agreement that the
Guarantor may enter into in the future or otherwise.

 

ARTICLE
VI

TERMINATION

 

SECTION 6.1.                       Termination.

 

This Guarantee
shall terminate as to the Capital Securities (i) upon full payment of the
Redemption Price or the Special Redemption Price, as the case may be, of all
Capital Securities then outstanding, (ii) upon the distribution of all of the
Debentures to the Holders of all of the Capital Securities or (iii) upon full
payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities
or under this Guarantee.

 

13

 

ARTICLE
VII

INDEMNIFICATION

 

SECTION 7.1.                       Exculpation.

 

(a)                                  No
Indemnified Person shall be liable, responsible or accountable in damages or
otherwise to the Guarantor or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission of such Indemnified Person in good
faith in accordance with this Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Person’s negligence or willful misconduct with respect to such
acts or omissions.

 

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

 

SECTION 7.2.                       Indemnification.

 

(a)                                  The
Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any and all loss, liability, damage, claim
or expense incurred without negligence or willful misconduct on the part of the
Indemnified Person, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including but not limited to
the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of the
Indemnified Person’s powers or duties hereunder. The obligation to indemnify as
set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

 

(b)                                 Promptly
after receipt by an Indemnified Person under this Section 7.2 of notice of the
commencement of any action, such Indemnified Person will, if a claim in respect
thereof is to be made against the Guarantor under this Section 7.2, notify the
Guarantor in writing of the commencement thereof; but the failure so to notify
the Guarantor (i) will not relieve the Guarantor from liability under paragraph
(a) above unless and to the extent that the Guarantor did not otherwise learn
of such action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve the
Guarantor from any obligations to any Indemnified Person other than the
indemnification obligation provided in paragraph (a) above. The Guarantor shall
be entitled to appoint counsel of the Guarantor’s choice at the Guarantor’s

 

14

 

expense to represent the
Indemnified Person in any action for which indemnification is sought (in which
case the Guarantor shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the Indemnified Person or Persons
except as set forth below); provided, however, that such counsel
shall be satisfactory to the Indemnified Person. Notwithstanding the Guarantor’s
election to appoint counsel to represent the Indemnified Person in any action,
the Indemnified Person shall have the right to employ separate counsel
(including local counsel), and the Guarantor shall bear the reasonable fees,
costs and expenses of such separate counsel (and local counsel), if (i) the use
of counsel chosen by the Guarantor to represent the Indemnified Person would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the Indemnified
Person and the Guarantor and the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it and/or other
Indemnified Persons which are different from or additional to those available
to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory
to the Indemnified Person to represent the Indemnified Person within a
reasonable time after notice of the institution of such action or (iv) the
Guarantor shall authorize the Indemnified Person to employ separate counsel at
the expense of the Guarantor. The Guarantor will not, without the prior written
consent of the Indemnified Persons, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the Indemnified Persons are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each Indemnified Person from
all liability arising out of such claim, action, suit or proceeding.

 

SECTION 7.3.                       Compensation;
Reimbursement of Expenses.

 

Other than as
provided in the Fee Agreement of even date herewith between Cohen Bros. &
Company, the Guarantee Trustee and Delaware Trustee (as defined in the
Declaration), the Guarantor agrees:

 

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

 

(b)                                 except
as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
request for all reasonable expenses, disbursements and advances incurred or
made by it in accordance with any provision of this Guarantee (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 negligence or willful misconduct.

 

The provisions
of this Section 7.3 shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee.

 

15

 

ARTICLE
VIII

MISCELLANEOUS

 

SECTION 8.1.                       Successors
and Assigns.

 

All guarantees
and agreements contained in this Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Capital Securities then outstanding. Except in
connection with any merger or consolidation of the Guarantor with or into
another entity or any sale, transfer or lease of the Guarantor’s assets or
capital stock to another entity, in each case to the extent permitted under the
Indenture, the Guarantor may not assign its rights or delegate its obligations
under this Guarantee without the prior approval of the Holders of not less than
a Majority in liquidation amount of the Capital Securities.

 

SECTION 8.2.                       Amendments.

 

Except with
respect to any changes that do not adversely affect the rights of Holders of
the Capital Securities in any material respect (in which case no consent of
Holders will be required), this Guarantee may be amended only with the prior
approval of the Holders of not less than a Majority in liquidation amount of
the Capital Securities. The provisions of the Declaration with respect to
amendments thereof shall apply equally with respect to amendments of the
Guarantee.

 

SECTION 8.3.                       Notices.

 

All notices
provided for in this Guarantee shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by first class
mail, as follows:

 

(a)                                  If
given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set
forth below (or such other address as the Guarantee Trustee may give notice of
to the Holders of the Capital Securities):

 

JPMorgan Chase
Bank, N.A.

600 Travis Street, 50th Floor

Houston, Texas 77002

Attention:  Institutional Trust Services
HCSB Financial Trust I

Telecopy:  (713) 216-2101

Telephone: (713) 216-4181

 

(b)                                 If
given to the Guarantor, at the Guarantor’s mailing address set forth below (or
such other address as the Guarantor may give notice of to the Holders of the
Capital Securities and to the Guarantee Trustee):

 

16

 

HCSB
Financial Corporation
5201 Broad Street
Loris, South Carolina 29569

Attention: James R. Clarkson

Telecopy: (843) 716-6136

Telephone: (843) 756-6333

 

(c)                                  If
given to any Holder of the Capital Securities, at the address set forth on the
books and records of the Issuer.

 

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

 

SECTION 8.4.                       Benefit.

 

This Guarantee
is solely for the benefit of the Holders of the Capital Securities and, subject
to Section 2.1(a), is not separately transferable from the Capital Securities.

 

SECTION 8.5.                       Governing
Law.

 

THIS GUARANTEE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

SECTION 8.6.                       Counterparts.

 

This Guarantee
may contain more than one counterpart of the signature page and this Guarantee
may be executed by the affixing of the signature of the Guarantor and the
Guarantee Trustee to any of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have
the same force and effect as though all of the signers had signed a single
signature page.

 

17

 

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

 

	
   

  	
  HCSB FINANCIAL
  CORPORATION,

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

18

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