Document:

First Amend. to Loan and Subordinated Debenture Purchase Agreement

 Exhibit 10.74 
  
 FIRST AMENDMENT 
  
 TO 
  
 LOAN AND SUBORDINATED DEBENTURE PURCHASE 
 AGREEMENT 
  
 BETWEEN 
  
 LASALLE BANK NATIONAL ASSOCIATION 
  
 AND 
  
 TAYLOR CAPITAL GROUP, INC. 
  
 First Amendment dated as of November 27, 2003 
 Original Loan and Subordinated Debenture Purchase Agreement dated as of November 27, 2002 

 AMENDMENT PROVISIONS: 
  

					
	 	  	PAGE

			
	 A.
	  	Amendments to Certain Provisions of Subsection 1.1 of the 2002 Loan Agreement	  	1
			
	 B.
	  	Representations and Warranties	  	1
			
	 C.
	  	Conditions	  	2
			
	 D.
	  	Additional Terms	  	2

  
 EXHIBITS: 
  
 EXHIBIT A - Form of Legal Opinion 

 FIRST AMENDMENT TO 
  
 LOAN AND SUBORDINATED DEBENTURE PURCHASE AGREEMENT 
  
 This FIRST AMENDMENT TO LOAN AND SUBORDINATED DEBENTURE PURCHASE AGREEMENT (“First Amendment”), dated as of
November 27, 2003, is entered into by and between TAYLOR CAPITAL GROUP, INC., a Delaware corporation (the “Borrower”), and LASALLE BANK NATIONAL ASSOCIATON, a national banking association (the “Lender”). 
  
 RECITALS :

  
 A. The parties hereto have entered into that certain Loan
and Subordinated Debenture Purchase Agreement, dated as of November 27, 2002, as previously amended, restated, supplemented or modified from time to time (the “2002 Loan Agreement”). 
  
 B. The parties hereto desire to amend and modify the 2002 Loan Agreement in
accordance with the terms and subject to the conditions set forth in this First Amendment. As amended and modified by this First Amendment, the 2002 Loan Agreement may be referred to as the “Agreement.” 
  
 C. The parties desire to amend the terms of the 2002 Loan Agreement to: (i)
extend the Revolving Loan Maturity Date; (ii) modify the definition of “Permitted Distributions” and (iii) address certain anticipated non-recurring charges. The parties agree to undertake such modifications in accordance with the terms,
subject to the conditions, and in reliance upon the recitals, representations, warranties, and covenants set forth herein, in the Agreement, and in the other Loan Documents, irrespective of whether entered into or delivered on or after November 27,
2002. 
  
 D. Capitalized terms used but not otherwise defined in
this First Amendment shall have the meanings respectively ascribed to them in the 2002 Loan Agreement. 
  
 NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 AGREEMENT : 
  
 A. Amendments to Certain Provisions of Subsection 1.1 of the 2002 Loan Agreement. 
  
 (i) The term “Revolving Loan Maturity Date” is
hereby deleted from subsection 1.1 of the 2002 Loan Agreement and replaced in its entirety with the following: 
  
 ““Revolving Loan Maturity Date” means November 27, 2004.” 

 (ii) The term “Permitted Distributions” is hereby deleted from subsection 1.1
of the 2002 Loan Agreement and replaced in its entirety with the following: 
  
 ““Permitted Distributions” means either or both of (a) during any calendar year, either or both of (i) cash dividends of Borrower (x) with respect to its preferred stock designated as 9% Non-cumulative
Perpetual Preferred Stock, Series A in an amount not to exceed $3,400,000 plus (y) additional cash dividends that do not exceed, in the aggregate, 25% of the net after tax income (determined in accordance with GAAP) of Borrower, if any, for such
calendar year, and (ii) cash dividends by a Subsidiary (other than the Trust) that do not exceed, in the aggregate, 60% of the net after tax income (determined in accordance with GAAP) of such Subsidiary, if any, for such calendar year, and (b) cash
distributions by the Trust (with respect to its outstanding securities as of the date of this Agreement).” 
  
 B. Representations and Warranties. The Borrower hereby represents and warrants to the Lender as follows: 
  
 (i) No Event of Default or Potential Event of Default has
occurred and is continuing (or would result from the amendments contemplated hereby). 
  
 (ii) The execution, delivery and performance by the Borrower of this First Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent or approval of, or notice to or action by any Person (including any Governmental Agency) in order to be effective and enforceable. 
  
 (iii) This First Amendment, and the other Loan Documents (as
amended by this First Amendment) constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms. 
  
 (iv) All representations and warranties of the Borrower in the 2002 Loan Agreement are true and correct,
except, for the purposes of this First Amendment only, all references in Section 4 of the 2002 Loan Agreement to (x) the term “Borrower 2001 Audited Financial Statements Date” shall be deemed to refer to “December 31, 2002”; (y)
the term “Borrower 2001 Audited Financial Statements” shall be deemed to refer to “the consolidated and consolidating audited financial statements of the Borrower as of the year ending December 31, 2002”; and (z) the term
“Interim Financial Statements Date” shall be deemed to refer to call reports and regulatory filings (including Form FRY-9C filings) by the Subsidiary Bank for the period ending “September 30, 2003.” 
  
 (v) The Borrower’s obligations under the Agreement and
under the other Loan Documents are not subject to any defense, counterclaim, set-off, right to recoupment, abatement or other claim. 
  
 C. Conditions. Notwithstanding anything to the contrary contained elsewhere in the Agreement, the obligation of the Lender
to extend the Revolving Loan Maturity Date and amend the definition of “Permitted Distributions” as contemplated by this First Amendment shall be subject to the performance by the Borrower prior to the date on which this First Amendment is
executed (the “Amendment Closing Date”) of all of its agreements theretofore to be performed 

 under the Agreement and to the satisfaction of the following conditions precedent. The obligations to
continue to make disbursements of proceeds under the Revolving Loan are, and shall remain, subject to the conditions precedent in the 2002 Loan Agreement and to the receipt by the Lender of all the following in form and substance satisfactory to the
Lender and its counsel, and, where appropriate, duly executed and dated the Amendment Closing Date: 
  
 (i) a certificate of good standing of the Borrower, certified by the appropriate governmental official in its jurisdiction of
incorporation and dated within the five business days preceding the date hereof; 
  
 (ii) copies, certified by the Secretary or Assistant Secretary of the Borrower, of the (a) resolutions duly adopted by the board of
directors of the Borrower authorizing the execution, delivery and performance of this First Amendment and the other documents to be delivered by the Borrower pursuant to this First Amendment (the “Amendment-Related Documents”), and (b) the
Bylaws of the Borrower as currently in effect; 
  
 (iii) a written opinion of counsel for the Borrower, addressed to the Lender, substantially in the form of Exhibit A attached hereto. 
  
 appropriate, duly executed and dated the Amendment Closing Date: 
  

D. Additional Terms. 
  
 (i) Acknowledgment of Indebtedness under Agreement. The Borrower acknowledges and confirms that, as of the date hereof, the
Borrower is indebted to the Lender, without defense, setoff, or counterclaim, in the aggregate principal amount of zero and No/100 Dollars ($0.00) under the Revolving Loan. 

 (ii) The Agreement. All references in the 2002 Loan Agreement to the term
“Agreement” shall be deemed to refer to the Agreement referenced in this First Amendment. 
  
 (iii) First Amendment and 2002 Loan Agreement to be Read Together. This First Amendment supplements and is hereby made a part of
the 2002 Loan Agreement, and the 2002 Loan Agreement and this First Amendment shall from and after the date hereof be read together and shall constitute the Agreement. Except as otherwise set forth herein, the 2002 Loan Agreement shall remain in
full force and effect. 
  
 (iv) Loan
Documents. The term “Loan Documents,” as used in the Agreement, shall from and after the date hereof include the Amendment-Related Documents. 
  
 (v) Counterparts. This First Amendment may be executed by facsimile in one or more counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one and the same document. 
  
 (vi) Government Regulation. The Borrower shall not (a) be or become subject at any time to any law, regulation, or list of any
government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits the Lender from making any advance or extension of credit to the Borrower or from otherwise conducting business with the
Borrower, or (b) fail to provide documentary or other evidence of Borrower’s identity as may be requested by the Lender at any time to enable the Lender to verify the Borrower’s identity or to comply with any applicable law or regulation,
including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318. 
  
 [Remainder of Page Intentionally Left Blank] 

 IN WITNESS WHEREOF, the Borrower and the Lender have executed this First Amendment as of the date first
written above. 
  

					
	TAYLOR CAPITAL GROUP, INC.
			
	 	 	 By:
	 	       /s/ J. CHRISTOPHER ALSTRIN

	 	 	 	 	 Name: J. Christopher Alstrin

	 	 	 	 	 Title: Chief Financial Officer

	
	LASALLE BANK NATIONAL ASSOCIATION
			
	 	 	 By:
	 	       /s/ CHARLES J. GRIFFIN

	 	 	 	 	 Name: Charles J. Griffin

	 	 	 	 	 Title: Vice PresidentEXHIBIT 4.2

 EXHIBIT 4.2 
  
 FORM OF DEBT SECURITY 
 [FORM OF FACE OF
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 OR ANY INTEREST OR
PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE
COMPANY WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, 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) 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), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION 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, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER 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 CLAUSE (C) OR (E) ABOVE 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. 
  

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 THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE
MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. 
  
 THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER
PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, 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 OR SUCH INTEREST OR PARTICIPATION 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 OR PARTICIPATION
HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, 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 AND HOLDING 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 REGISTRAR AND TRANSFER AGENT 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 MINIMUM DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN DENOMINATIONS OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE 
  

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 SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN FOR ANY PURPOSE,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.

  
 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 (THE “FDIC”). THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF THE 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. 
  
 Floating Rate Junior Subordinated Debt Security due 2034 
 of 
 FIDELITY BANKSHARES, INC. 
  
 Fidelity Bankshares, Inc., a bank holding company incorporated in Delaware (the “Company”, which term includes any
successor permitted under the Indenture (as defined herein)), for value received, promises to pay to Wilmington Trust Company, not in its individual capacity but solely as Institutional Trustee for Fidelity Capital Trust II, a Delaware statutory
trust, or registered assigns, the principal amount of TWENTY TWO MILLION SIX HUNDRED EIGHTY-ONE THOUSAND Dollars ($22,681,000) on January 23, 2034 (the “Maturity Date”) (or any Optional Redemption Date or the Special Redemption Date, each
as defined herein, or any earlier date of acceleration of the maturity of this Debt Security), and to pay interest on the outstanding principal amount of this Debt Security from December 19, 2003, or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on January 23, April 23, July 23 and October 23 of each year, commencing on April 23, 2004 (each, an “Interest
Payment Date”), at a floating rate per annum, which, with respect to any Interest Period (as defined in the Indenture), will be equal to LIBOR (as defined in the Indenture), as determined on the LIBOR Determination Date (as defined in the
Indenture) for such Interest Period, plus 2.85% (the “Interest Rate”) (provided that the Interest Rate for any Interest 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) until the principal hereof shall have been paid or duly provided for, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at an annual rate equal to the then applicable Interest Rate, compounded quarterly. The amount of interest payable for any Interest Period shall be computed on the basis of a 360-day year and the actual number of days
elapsed in such Interest Period. 
  
 The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debt Security (or one or more Predecessor Securities, as defined in the Indenture) is

  

 3 

 registered at the close of business on the “regular record date” for such interest installment, which shall be
the fifteenth day prior to such Interest Payment Date, whether or not such day is a Business Day (as defined herein). Any such interest installment (other than Deferred Interest (as defined herein)) not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and may be paid to the Person in whose name this Debt Security (or one or more Predecessor Securities) is registered at the close of business on a special record date to be
fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the holders of the Debt Securities not less than 10 days prior to such special record date, all as more fully provided in the Indenture. 
  
 Payment of the principal of and premium, if any, and interest on this Debt
Security due on the Maturity Date, any Optional Redemption Date or the Special Redemption Date, as the case may be, shall be made in immediately available funds against presentation and surrender of this Debt Security at the office or agency of the
Trustee maintained for that purpose in Wilmington, Delaware, or at the office or agency of any other Paying Agent appointed by the Company maintained for that purpose in Wilmington, Delaware or Dover, Delaware. Payment of interest on this Debt
Security due on any Interest Payment Date other than the Maturity Date, any Optional Redemption Date or the Special Redemption Date, as the case may be, shall be made at the option of the Company by check mailed to the holder thereof at such address
as shall appear in the Debt Security Register or by wire transfer of immediately available funds to an account appropriately designated by the holder hereof. Notwithstanding the foregoing, so long as the holder of this Debt Security is the
Institutional Trustee, payment of the principal of and premium, if any, and interest on this Debt Security shall be made in immediately available funds when due at such place and to such account as may be designated by the Institutional Trustee. All
payments in respect of this Debt Security shall be payable in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts. 
  
 Notwithstanding anything to the contrary contained herein, if any Interest
Payment Date, other than the Maturity Date, any Optional 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 Date, any Optional 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. 
  
 So long as no Event of Default has occurred and is continuing, 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 payment period on the Debt Securities at any time and from time to time during the term
of the Debt Securities, for up to 20 consecutive quarterly periods (each such extended interest payment period, together with all previous and further consecutive extensions thereof, is referred to herein as an “Extension Period”). No
Extension Period may end on a date other than an Interest Payment Date or extend beyond the Maturity Date, any Optional Redemption Date or the Special Redemption Date, as the case may 
  

 4 

 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 applicable law. No interest or Deferred Interest (except any Additional Amounts (as defined in the Indenture) that may be due and payable)
shall be due and payable during an Extension Period, except at the end thereof. At the end of any Extension Period, the Company shall pay all Deferred Interest then accrued and unpaid on the Debt Securities; provided, however, that during any
Extension Period, the Company may not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock, (ii) make any payment of principal of
or premium, if any, or interest 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 (iii) make any payment under any guarantees of the
Company that rank in all respects pari passu with or junior in respect to the Capital Securities Guarantee (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company (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 Company (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to such Extension Period, (b) as a result of any
exchange 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). Prior to the termination of any Extension Period, the Company may further extend such Extension Period, provided, that no Extension Period (including all
previous and further consecutive extensions that are part of such Extension Period) shall exceed 20 consecutive quarterly periods. 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 foregoing requirements. The Company must give the Trustee notice of its election to begin or extend an Extension Period at least one Business Day prior to the regular record date applicable to the next succeeding
Interest Payment Date. 
  
 The indebtedness evidenced by this Debt
Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture), and this Debt Security is issued subject to the provisions of the
Indenture with respect thereto. Each holder of this Debt Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the 
  

 5 

 Trustee on such holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination so provided and (c) appoints the Trustee such holder’s attorney-in-fact for any and all such purposes. Each holder hereof, by such holder’s acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. 
  
 The Company waives diligence, presentment, demand for payment, notice of
nonpayment, notice of protest, and all other demands and notices. 
  
 This Debt Security shall not be entitled to any benefit under the Indenture hereinafter referred to and shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee. 
  
 The provisions of this Debt Security
are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 
  

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

									
	 	 	 	 	 	 	 FIDELITY BANKSHARES, INC.

					
	 	 	 	 	 	 	 By:
	 	  

	 	 	 	 	 	 	 	 	 Name:

	 	 	 	 	 	 	 	 	 Title:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 Dated:
            ,            
	 	 	 	 	 	 

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

									
	 	 	 	 	 	 	 WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
the Trustee

					
	 	 	 	 	 	 	 By:
	 	  

	 	 	 	 	 	 	 	 	 Authorized Officer

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 Dated:
            ,            
	 	 	 	 	 	 

  
  

 7 

 [FORM OF REVERSE OF SECURITY] 
  
 This Debt Security is one of a duly authorized series of debt securities of the Company (collectively, the “Debt
Securities”), all issued or to be issued pursuant to an Indenture (the “Indenture”), dated as of December 19, 2003, duly executed and delivered between the Company and Wilmington Trust Company, as Trustee (the “Trustee”), to
which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debt Securities
of which this Debt Security is a part. 
  
 Upon the occurrence and
continuation of a Tax Event, an Investment Company Event or a Capital Treatment Event (each, a “Special Event”), the Company shall have the right to redeem this Debt Security, at its option, in whole with all other Debt Securities but not
in part, at any time, within 90 days following the occurrence of such Special Event (the “Special Redemption Date”), at the Special Redemption Price (as defined herein). In the event that the Special Redemption Date falls on a day prior to
the LIBOR Determination Date for any Interest Period, then the Company shall be required to pay to Securityholders, on the Business Day following such LIBOR Determination Date, any additional amount of interest that would have been payable on the
Special Redemption Date had the amount of interest determined on such LIBOR Determination Date been known on the first day of such Interest Period. 
  
 The Company shall also have the right to redeem this Debt Security at its option, 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 Interest Payment Date on or after January 23, 2009 (each, an “Optional Redemption Date”), at the Optional Redemption
Price (as defined herein). 
  
 Any redemption pursuant to the
preceding two paragraphs will be made, subject to receipt by the Company of prior approval from the Office of Thrift Supervision (the “OTS”) if then required under applicable capital guidelines or policies of the OTS, upon not less than 30
days’ nor more than 60 days’ prior written notice. If the Debt Securities are only partially redeemed by the Company, the Debt Securities will be redeemed pro rata or by any other method utilized by the Trustee. In the event of redemption
of this Debt Security in part only, a new Debt Security or Debt Securities for the unredeemed portion hereof will be issued in the name of the holder hereof upon the cancellation hereof. 
  
 “Optional Redemption Price” means an amount in cash equal to 100% of the principal amount of this Debt Security
being redeemed plus unpaid interest accrued thereon to the related Optional Redemption Date. 
  
 “Special Redemption Price” means, with respect to the redemption of this Debt Security following a Special Event, an amount in cash equal to 104.125% of the principal amount of this Debt Security to be
redeemed prior to January 23, 2005 and thereafter equal to the percentage of the principal amount of this Debt Security that is specified below for the 
  

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 Special Redemption Date plus, in each case, unpaid interest accrued thereon to the Special Redemption Date: 

 

				
	 Special Redemption During the 12-Month
 Period Beginning January 23,

	  	Percentage of Principal Amount

	 
	 2005
	  	103.300	%
	 2006
	  	102.415	%
	 2007
	  	101.650	%
	 2008
	  	100.825	%
	 2009 and thereafter
	  	100.000	%

  
 In case an Event of
Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debt Securities may be declared, and, in certain cases, shall ipso facto become, due and payable, and upon any such declaration of
acceleration shall become due and payable, in each case, in the manner, with the effect and subject to the conditions provided in the Indenture. 
  
 The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of a majority in aggregate principal amount of
the Debt Securities at the time outstanding affected thereby, as specified in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the
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, among other things, without the 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 the 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 holder to institute suit for payment thereof, or (ii) reduce the aforesaid percentage of Debt Securities the holders of which are required to consent to any such supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding, on behalf of the holders of all the Debt Securities, to waive any past default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture, and its consequences, except (a) a default in payments due in respect of any of the Debt Securities, (b) in respect of covenants or provisions of the Indenture which cannot be modified or amended without the
consent of the holder of each Debt Security affected, or (c) in respect of the covenants of the Company relating to its ownership of Common Securities of the Trust. Any 
  

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 such consent or waiver by the holder of this Debt Security (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners of this Debt Security and of any Debt Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this Debt Security. 
  
 No reference herein to the Indenture and no provision of this Debt Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to make all payments due on
this Debt Security at the time and place and at the rate and in the money herein prescribed. 
  
 As provided in the Indenture and subject to certain limitations herein and therein set forth, this Debt Security is transferable by the holder hereof on the Debt Security Register (as defined in the Indenture) of the
Company, upon surrender of this Debt Security for registration of transfer at the office or agency of the Trustee in Wilmington, Delaware, or at any other office or agency of the Company in Wilmington, Delaware or Dover, Delaware, accompanied by a
written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Debt Securities of
authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such registration of transfer, but the Company or the Trustee may require payment
of a sum sufficient to cover any tax, fee or other governmental charge payable in relation thereto as specified in the Indenture. 
  
 Prior to due presentment for registration of transfer of this Debt Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent, any
transfer agent and the Debt Security registrar may deem and treat the holder hereof as the absolute owner hereof (whether or not this Debt Security shall be overdue and notwithstanding any notice of ownership or writing hereon) for the purpose of
receiving payment of the principal of and premium, if any, and interest on this Debt Security and for all other purposes, and none of the Company, the Trustee, any Authenticating Agent, any Paying Agent, any transfer agent or any Debt Security
registrar shall be affected by any notice to the contrary. 
  
 As
provided in the Indenture and subject to certain limitations herein and therein set forth, Debt Securities are exchangeable for a like aggregate principal amount of Debt Securities of different authorized denominations, as requested by the holder
surrendering the same. 
  
 The Debt Securities are issuable only
in registered certificated form without coupons. 
  
 No recourse
shall be had for the payment of the principal of or premium, if any, or interest on this Debt Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder,
officer, director, employee or agent, past, present or future, as such, of the Company or of any predecessor or successor corporation of the Company, whether by virtue of any constitution, 
  

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 statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. 
  
 All terms used but not defined in this Debt Security shall have the meanings assigned to them in the Indenture. 
  
 THIS DEBT SECURITY SHALL 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. 
  

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