Document:

Prepared by MERRILL CORPORATION

 

 

GUARANTEE

AGREEMENT

 

NATIONAL

MERCANTILE BANCORP

 

Dated

as of July 16, 2001

 

 

 

TABLE

OF CONTENTS

 

 

 

	

  ARTICLE I

  DEFINITIONS AND INTERPRETATION

  
	

  Section 1.1

  	

   

  	

  Definitions

  and Interpretation

  	

   

  
	

  ARTICLE

  II

  POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

  
	

  Section

  2.1

  	

   

  	

  Powers

  and Duties of the Guarantee Trustee

  	

   

  
	

  Section

  2.2

  	

   

  	

  Certain

  Rights of 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

  GUARANTEE TRUSTEE

  
	

  Section 3.1

  	

   

  	

  Guarantee

  Trustee; Eligibility

  	

   

  
	

  Section

  3.2

  	

   

  	

  Appointment,

  Removal and Resignation of 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

  	

   

  
	

  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

  	

   

  

 

GUARANTEE

AGREEMENT

 

This GUARANTEE AGREEMENT

(the "Guarantee"), dated as of July 16, 2001, is executed and

delivered by National Mercantile Bancorp, a bank holding company incorporated

in California (the "Guarantor"), and The Bank of New York, 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

National Mercantile Capital Trust 1, a Delaware statutory business trust (the

"Issuer").

 

WHEREAS, pursuant to an

Amended and Restated Declaration of Trust (the "Declaration"), dated

as of July 16, 2001, among the trustees named therein of the Issuer, National

Mercantile Bancorp, 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

$15,000,000, designated the 10.25% Fixed Rate MMCapSSM (the

"Capital Securities");

 

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; and

 

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 at 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, which office at the date of execution of this

Guarantee Agreement is located at 101 Barclay Street, Floor 21 W, New York, NY

10286.

 

"Covered

Person" means any Holder of Capital Securities.

 

"Debentures"

means the junior subordinated debentures of the Guarantor, designated the

10.25% Junior Subordinated Deferrable Interest Debentures due July 25, 2031,

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 shall have 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 shall have 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 The Bank of New York, 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, any Affiliate of

the Guarantee Trustee, or any officers, directors, shareholders,

members, partners, employees, representatives, nominees, custodians or agents

of the Guarantee Trustee.

 

"Indenture"

means the Indenture dated as of July 16, 2001, between the Guarantor and The Bank

of New York, 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 including any Vice President, Assistant Vice President,

Secretary, Assistant Secretary or any other officer of the Guarantee Trustee

customarily performing functions similar to those performed by any of the above

designated officers and also, 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 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 curing 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) 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 such 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 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 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 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.

 

(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 any rececording, refiling or registration

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.

 

(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 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.

 

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 deemed to have knowledge of any Event of Default unless

the Guarantee Trustee shall have received written notice from the Guarantor or

a Holder of the Capital Securities (except in the case of a payment default),

or a Responsible Officer of the Guarantee Trustee charged with the

administration of this Guarantee shall have obtained actual knowledge, thereof.

 

ARTICLE

III

GUARANTEE

TRUSTEE

 

Section 3.1           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 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 50 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 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 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 out 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.

 

Section 3.2           Appointment Removal and

Resignation of 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.

 

(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 Agreement 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 payment of Distributions, Redemption Price,

Special Redemption Price, Liquidation Distribution or other sum 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;

 

(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 counsel determines that the action or proceeding so directed may not

lawfully be taken or if the Guarantor Trustee in good faith by its board of

directors or trustees, executive committees or a trust committee of directors

or trustees and/or Responsible Officers shall determine that the action or

proceedings 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 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 in connection with any employment

contract, benefit plan or other similar arrangement with or for the benefit of

one or more employees, officers, directors, or consultants, in connection with

a dividend reinvestment or stockholder stock purchase plan or in connection

with the issuance of capital stock of the Guarantor (or securities convertible

into or exercisable for such capital stock) as consideration in an acquisition

transaction entered into prior to occurrence of the Event of Default or the

applicable Extension Period, (iii) as a result of any exchange of conversion of

any class or series of the Guarantor's capital stock (or any capital stock of a

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.

 

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 performed or omitted by 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

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

Guarantor in an 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 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 Person 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

 

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.

 

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 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 at least 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):

 

The

Bank of New York

101

Barclay Street, Floor 21W

New

York, NY 10286

Attention:

Corporate Trust Administration

Telecopy:

212–815–5915

 

(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):

 

National

Mercantile Bancorp

1840

Century Park East

Los

Angeles, California 90067

Attention:

Scott A. Montgomery

Telecopy:

310–201–0629

 

(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.

 

 

 

                THIS

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

 

	

   

  	

   

  	

  NATIONAL MERCANTILE

  BANCORP,

  as Guarantor

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ 

  Scott. A Montgomery

  
	

   

  	

   

  	

  Name: Scott A.

  Montgomery

  
	

   

  	

   

  	

  Title: President and

  Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  THE BANK OF NEW YORK

  
	

   

  	

   

  	

  as Guarantee Trustee

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ 

  Mary LaGumina

  
	

   

  	

   

  	

  Name: MARY  LaGUMINA

  
	

   

  	

   

  	

  Title: Vice PresidentPrepared by MERRILL CORPORATION

 

 

NATIONAL

MERCANTILE BANCORP

as

Issuer

 

 

 

INDENTURE

 

Dated

as of July 16, 2001

 

 

THE

BANK OF NEW YORK

as

Trustee

 

JUNIOR

SUBORDINATED DEBT SECURITIES

 

 

 

 

	

  ARTICLE

  I

  DEFINITIONS

  
	

  Section 1.01

  	

   

  	

  Definitions

  	

   

  
	

  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

  	

   

  
	

  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

  	

   

  
	

  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

  	

   

  
	

  Section

  6. 10

  	

   

  	

  Acceptance

  by Successor Trustee

  	

   

  
	

  Section 6.11

  	

   

  	

  Succession by

  Merger, etc

  	

   

  
	

  Section 6.12

  	

   

  	

  Authenticating

  Agents

  	

   

  
	

  ARTICLE VII

  CONCERNING THE SECURITYHOLDERS

  
	

  Section 7.01

  	

   

  	

  Action by

  Securityholders

  	

   

  
	

  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 Holders 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

  	

   

  
	

  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

  	

   

  
	

  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

  	

   

  
	

  Section 14.09

  	

   

  	

  Execution in

  Counterparts

  	

   

  
	

  Section 14.10

  	

   

  	

  Separability

  	

   

  
	

  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

  	

   

  

 

 

THIS INDENTURE, dated as

of July 16, 2001, between National Mercantile Bancorp, a bank holding company

incorporated in California (hereinafter sometimes called the

"Company"), and The Bank of New York, 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

10.25% Junior Subordinated Deferrable Interest Debentures due July 25, 2031

(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; and

 

WHEREAS, all acts and

things necessary to make this Indenture a valid agreement according to its

terms, have been done and performed;

 

NOW, THEREFORE,

This Indenture Witnesseth:

 

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 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.

 

"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 New York City or Los Angeles, California are permitted or

required by any applicable law to close.

 

"Capital,

Securities" means undivided beneficial interests in the assets of the

Trust which 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 that the Company will enter into with The

Bank of New York or other Persons that operates directly or indirectly for the

benefit of holders of Capital Securities of the Trust.

 

"Capital Treatment

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 the

occurrence of any amendment to, or change in, the laws, rules or regulations of

the United States or any political subdivision thereof or therein, or as the

result of any official or administrative pronouncement or action or decision

interpreting or applying such laws, rules or regulations, which amendment or

change is effective or which pronouncement, action or decision is announced on

or after the date of original issuance of the Debt Securities, there is more

than an insubstantial risk that the Company will not, within 90 days of the

date of such opinion, be entitled to treat an amount equal to the aggregate

Liquidation Amount of the Capital Securities as "Tier I Capital" (or

the then equivalent thereof) for purposes of the capital adequacy guidelines of

the Federal Reserve, as then in effect and applicable to the Company; provided,

however, that the distribution of Debt Securities in connection with the

Liquidation of 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 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 National Mercantile Bancorp, a bank holding company incorporated in

California, and, subject to the provisions of Article XI, shall include its

successors and assigns.

 

"Comparable Treasury

Issue" means with respect to any Special Redemption Date, the United

States Treasury security selected by the Quotation Agent as having a maturity

comparable to the Remaining Life that would be utilized, at the time of

selection and in accordance with customary financial practice, in pricing new

issues of corporate debt securities of comparable maturity to the Remaining

Life. If no United States Treasury security has a maturity which is within a period

from three months before to three months after July 25, 2006, the two most

closely corresponding United States Treasury securities shall be used as the

Comparable Treasury Issue, and the Treasury Rate shall be interpolated or

extrapolated on a straight–line basis, rounding to the nearest month

using such securities.

 

"Comparable

Treasury Price" means (a) the average of five Reference Treasury Dealer

Quotations for such Special Redemption Date, after excluding the highest and

lowest such Reference Treasury Dealer Quotations, or (b) if the Trustee obtains

fewer than five such Reference Treasury Dealer Quotations, the average of all

such Quotations.

 

"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, 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.

 

"Institutional

Trustee" has the meaning set forth in the Declaration.

 

"Interest Payment

Date" means January 25th and July 25th of each year, commencing on January

25, 2002, during the term of this Indenture.

 

"Interest

Rate" means 10.25% per annum 

 

"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 the

occurrence 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.

 

"Liquidation

Amount" means the stated amount of $ 1,000 per Trust Security.

 

"Maturity

Date" means July 25, 2031.

 

"Officers'

Certificate" means a certificate signed by the Chairman of the Board of

Directors, 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.

 

"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 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.

 

The term

"outstanding," when used with reference to Debt Securities, subject

to the provisions of Section 7.04, means, 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 Ten and Fourteen 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.

 

"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.

 

"Primary Treasury

Dealer" means a primary United States Government securities dealer in New

York City.

 

"Principal Office

of the Trustee," or other similar term, 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 101 Barclay

Street, Floor 21 West, New York, NY 10286.

 

"Quotation

Agent" means Salomon Smith Barney Inc. and its successors; provided,

however, that if the foregoing shall cease to be a Primary Treasury Dealer,

the Company shall substitute therefor another Primary Treasury Dealer.

 

"Redemption

Date" has the meaning set forth in Section 10.01.

 

"Redemption

Price" means the price set forth in the following table for any Redemption

Date or Special Redemption Date that occurs within the twelve–month

period beginning in the relevant date indicated below, expressed in percentage

of the principal amount of the Debt Securities being redeemed:

 

	

  Year Beginning

  	

   

  	

  Percentage

  
	

  July

  25, 2006

  	

   

  	

  107.6875%

  
	

  July

  25, 2007

  	

   

  	

  106.1500%

  
	

  July

  25, 2008

  	

   

  	

  104.6125%

  
	

  July

  25, 2009

  	

   

  	

  103.0750%

  
	

  July

  25, 2010

  	

   

  	

  101.5375%

  
	

  July

  25, 2011 and after

  	

   

  	

  100.0000%

  

 

 

plus accrued and unpaid

interest on such Debt Securities to the Redemption Date or, in the case of a

redemption due to the occurrence of a Special Event, to the Special Redemption

Date.

 

"Reference Treasury

Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury

Dealer selected by the Trustee after consultation with the Company.

 

"Reference Treasury

Dealer Quotations" means, with respect to each Reference Treasury Dealer

and any Special Redemption Date, the average, as determined by the Quotation

Agent, of the bid and asked prices for

the Comparable Treasury Issue (expressed in each case as a percentage of

its principal amount) quoted in writing to the Trustee by such Reference

Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day

preceding such Special Redemption Date.

 

"Remaining

Life" means, with respect to any Debt Security, the period from the

Special Redemption Date for such Debt Security to July 25, 2006.

 

"Responsible

Officer" means, with respect to the Trustee, any officer within the

Principal Office of the Trustee, 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

Trust 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, in the instrument creating or evidencing the same

or pursuant to which the same is outstanding, it is provided that such

obligations are not superior or are pari

passu in right of payment to the Debt Securities.

 

"Special Event"

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

Event.

 

"Special Redemption

Date" has the meaning set forth in 10.02.

 

"Special Redemption

Price" means (1) if the Special Redemption Date is before July 25, 2006,

the greater of (a) 100% of the principal amount of the Debt Securities being

redeemed pursuant to Section 10.02 or (b) as determined by a Quotation Agent,

the sum of the present values of the principal amount and the premium payable

as part of the Redemption Price with respect to a redemption as of July 25,

2006 together with the present value of scheduled payments of interest over the

Remaining Life of such Debt Securities, discounted to the Special Redemption

Date on a semi–annual basis (assuming a 360–day year consisting of

twelve 30–day months) at the Treasury Rate plus 0.50%, plus, in the case

of either (a) or (b), accrued and unpaid interest on such Debt Securities to

the Special Redemption Date and (2) if the Special Redemption Date is on or

after July 25, 2006, the Redemption Price for such Special Redemption Date.

 

"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 days of the date of such opinion, subject to more than a de minimis

amount of other taxes, duties, assessments or other governmental charges.

 

"Treasury

Rate" means (i) the yield, under the heading which represents the average

for the week immediately prior to the date of calculation, appearing in the

most recently published statistical release designated H.15 (519) or any

successor publication which is published weekly by the Federal Reserve and

which establishes yields on actively traded United States Treasury securities

adjusted to constant maturity under the caption "Treasury Constant

Maturities," for the maturity corresponding to the Remaining Life (if no

maturity is within three months before or after the Remaining Life, yields for

the two published maturities most closely corresponding to the Remaining Life

shall be determined and the Treasury Rate shall be interpolated or extrapolated

from such yields on a straight–line basis, rounding to the nearest month)

or (ii) if such release (or any successor release) is not published during the

week preceding the calculation date or does not contain such yields, the rate

per annum equal to the semi–annual equivalent yield to maturity of the

Comparable Treasury Issue, calculated using a price for the Comparable Treasury

Issue (expressed as a percentage of its principal amount) equal to the

Comparable Treasury Price for such Special Redemption Date. The Treasury Rate

shall be calculated on the third Business Day preceding the Special Redemption

Date.

 

"Trust" means

National Mercantile Capital Trust 1, the Delaware business 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.

 

"Trust

Securities" means Common Securities and Capital Securities of National

Mercantile Capital Trust 1.

 

"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 $15,464,000 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, Chief Financial Officer or

one of its Vice Presidents and by its Secretary, any Assistant Secretary,

Treasurer or any Assistant Treasurer, 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)           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 of the Company as the case may be; and

 

(b)           an Opinion of Counsel prepared in

accordance with Section 14.06 which shall also state:

 

(1)           that such Debt Securities, when

authenticated and delivered by the Trustee and issued by the Company in each

case in the manner and subject to any conditions specified in such Opinion of

Counsel, will constitute valid and legally binding obligations of the Company;

and

 

(2)           that all laws and requirements in

respect of the execution and delivery by the Company of the Debt Securities,

have been complied with and that authentication and delivery of the Debt

Securities by the Trustee will not violate the terms of this Indenture.

 

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 holders.

 

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.

 

                                                                 , AS TRUSTEE

 

By                                             

       Authorized Officer

 

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 its Chairman of the Board of Directors, Vice Chairman,

President, Chief Financial Officer, Executive Vice President, Senior Vice

President or Vice President, under its corporate seal 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 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 in

this Article Two provided. 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 corporate trust 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 his 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 next 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 (the "Restrictive Securities

Legend"), unless otherwise determined by the Company in accordance with

applicable law:

 

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 IT 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 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 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

(D) 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 (C) OR (D) 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 AGREES THAT IT WILL COMPLY WITH THE

FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY

BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN

EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT

SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS

AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF

1986, AS AMENDED (THE "CODE"), (EACH A "PLAN"), OR AN

ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY

PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS"

OF ANY PLAN MAY ACQUIRE OR HOLD 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 WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH

CERTIFICATE 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 LIQUIDATION 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 LIQUIDATION 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 (THE "FDIC"). 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

AND IS NOT SECURED.

 

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

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 corporate trust 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 Interest Rate from and including the original date of

issuance of such Debt Security until the Maturity Date 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 on any

overdue installment of interest (including Defaulted Interest), payable

(subject to the provisions of Article XII) on each Interest Payment Date

commencing on January 25, 2002. Interest and any Deferred Interest on any Debt

Security that is payable, and is punctually paid or duly provided for, 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 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, 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 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 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 tenth day of the month

in which an Interest Payment shall occur, 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 or any Authenticating Agent, 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. All Debt Securities

canceled by any Authenticating Agent shall be delivered to the Trustee. The

Trustee shall destroy all canceled Debt Securities unless the Company otherwise

directs the Trustee in writing. 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.

 

The

amount of interest payable for any period will be computed on the basis of a

360–day year of twelve 30–day months.

 

Section 2.11         Extension of Interest Payment

Period.

 

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 ten consecutive semi–annual

periods (each such extended interest payment 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. 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 the

Interest Rate, compounded semi-annually from the date such Deferred Interest

would have been payable were it not for the Extension Period, both 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, but each

installment of interest that would otherwise have been due and payable during

such Extension Period shall bear Deferred Interest. 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 ten consecutive semi–annual

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 foregoing requirements. The

Company must give the Trustee notice of its election to begin such Extension

Period at least one Business Day prior to the earlier of (i) the next

succeeding date on which interest on the Debt Securities would have been

payable except for the election to begin such Extension Period or (ii) the date

such interest is payable, but in any event not later than the related regular

record date. 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 "CUSIP" numbers (if

then generally in use), and, if so, the Trustee shall use "CUSIP"

numbers 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 numbers 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 numbers.

 

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 the principal of and premium, if any, and interest 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 Person to the paying agent no later than the related record

date.

 

(b) The

Company will treat the Debt Securities as indebtedness, and the amounts payable

in respect of the principal amount of such Debt Securities as interest, for all

U.S. federal income tax purposes. All payments in respect of such Debt

Securities will be made free and clear of U.S. withholding tax to any

beneficial owner thereof that has provided an Internal Revenue Service Form W8

BEN (or any substitute or successor form) establishing its non–US status

for U.S. federal income tax purposes.

 

(c) As

of the date of this Indenture, the Company 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.

 

(d) As

of the date of this Indenture, the Company believes that the likelihood that it

would exercise its right under Section 2.11 to defer payments of interest on

the Debt Securities by commencing an Extension Period at any time during which

the Debt Securities are outstanding is remote because of the restrictions that

would be imposed on the Company's ability to declare or pay dividends or

distributions on, or to redeem, purchase or make a liquidation payment with

respect to, any of its outstanding equity and on the Company's ability to make

any payments of principal of or interest on, or repurchase or redeem, any of

its debt securities that rank pari passu

in all respects with (or junior in interest to) the Debt Securities.

 

Section 3.02         Offices for Notices and Payments,

etc.

 

So long as any of the

Debt Securities remain outstanding, the Company will maintain in Los Angeles,

California, 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 in this Indenture provided 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 will give

to the Trustee written notice of the location of any such office or agency and

of any change of location thereof. Until otherwise designated from time to time

by the Company in a notice to the Trustee, or specified as contemplated by Section

2.05, such office or agency for all of the above purposes shall be the office

or agency of the Trustee. In case the Company shall fail to maintain any such

office or agency in Los Angeles, California, 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 corporate trust

office of the Trustee.

 

In addition to any such

office or agency, the Company may from time to time designate one or more

offices or agencies outside Los Angeles, California, 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 Los

Angeles, California, 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,

 

(1)  that it will hold all sums held by it as such

agent for the payment of the principal of and premium, if any, or interest, if

any, 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 of the principal of and premium, if any, or

interest, if any, 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 principal of and

premium, if any, or interest, if any, 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 principal, premium or interest 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 of the principal of and premium, if any, or

interest, if any, 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 principal of and premium, if any, or interest, if

any, on the Debt Securities, deposit

with a paying agent a sum sufficient to pay the principal, premium or interest

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.

 

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 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.

 

Section 3.06         Additional Interest.

 

If and for so long as

the Trust is the holder of all Debt Securities and is required to pay any

additional 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 after paying taxes,

duties, assessments or other governmental charges will be equal to the amounts

the Trust would have received if no such 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 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 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, or merge into itself, or sell or convey all or

substantially all of its property 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 payment 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 (other than (a) repurchases, redemptions or

other acquisitions of shares of capital stock of the Company in connection with

any employment contract, benefit plan or other similar arrangement with or for

the benefit of one or more employees, officers, directors or consultants, in

connection with a dividend reinvestment or stockholder stock purchase plan or

in connection with the issuance of capital stock of the Company (or securities

convertible into or exercisable for such capital stock) as consideration in an

acquisition transaction entered into prior to the occurrence of any of (i),

(ii) or (iii), above, (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).

 

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 business 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 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 its

election, 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 Trustee 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 to the

effect that, in the opinion of the Trustee, 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 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 of

Default 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, and

continuance of such default for a period of 30 days; for the avoidance of

doubt, an extension of any interest payment 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

or otherwise; or

 

(c)  the Company defaults in the performance of, or

breaches, any of its covenants or agreements in Sections 3.06, 3.07, 3.08 and

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 at least 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

 

(d) 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

 

(e)  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

 

(f)  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 such 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

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

the interest accrued thereon, if any, to be due and payable immediately, and

upon any such declaration the same shall become immediately due and payable.

 

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 the principal of and premium, if any,

on the Debt Securities which shall have become due otherwise than by

acceleration (with interest upon such principal and premium, if any, 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, and if any and (ii) all Events of

Default under this Indenture, other than the non–payment of the principal

of or premium, if any, on Debt Securities which shall have become due by

acceleration, shall have been cured, waived or otherwise remedied as provided

herein –– then and in 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.

 

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) or

5.01(b) 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 for principal and

premium, if any, or interest, or both, as the case may be, 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 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 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 for principal (and

premium, if any), and interest on the 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

for principal (and premium, if any) and interest, respectively; 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.

 

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 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 (subject to the

provisions of Section 6.01) the Trustee shall have the right to decline to

follow any such direction if the Trustee 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

accelerating 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 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 such trust, such waiver or

modification to such waiver shall not be effective until the holders of a

majority in liquidation preference of 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 shall not be effective until each holder of the Trust

Securities of the Trust shall have consented to such waiver. Upon any such

waiver, the 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 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 received

notice or obtained actual knowledge 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) and (e) 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 his 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 Securities outstanding,

or 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.

 

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 man would exercise or use under the circumstances in the

conduct of his 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 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 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 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; and

 

(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.

 

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 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;

 

(e) the

Trustee shall not be liable for any action taken or omitted by it in good faith

and 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 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 man would exercise or use under the

circumstances in the conduct of his 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 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;

 

(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; and

 

(h) 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.

 

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 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

Vice Chairman, the President, the Chief Financial Officer, the Chief Operating

Officer, a Vice President, the Treasurer or an Assistant Treasurer of the

Company.

 

Section 6.06         Compensation and Expenses of

Trustee.

 

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 expenses and disbursements of its counsel and

of all Persons not regularly in its employ) except any such expense,

disbursement or advance as may arise from its negligence or bad faith. The

Company also covenants to indemnify each of the Trustee or 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) incurred

without negligence or bad faith on the part of the Trustee and 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 of 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 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 (d), (e) or (f) 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.

 

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 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 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 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 50 million U.S. dollars ($50,000,000) and subject to supervision or

examination by federal, state, or District of Columbia authority. If such

corporation publishes reports of condition at least annually, pursuant to law

or to the requirements of the aforesaid supervising or examining authority,

then for the purposes of this Section 6.08 the combined capital and surplus of

such corporation shall be deemed to be its combined capital and surplus as set

forth in its most recent 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 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.

 

(a)  The Trustee, or any trustee or trustees

hereafter appointed, 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 on the Debt Security Register. Upon receiving such notice of

resignation, the Company shall promptly appoint a successor trustee or trustees

by written instrument, in duplicate, executed by order of its Board of

Directors, one copy of which instrument shall be delivered to the resigning

Trustee and one copy to the successor Trustee. If no successor Trustee 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 Trustee may petition any court of competent jurisdiction for the appointment

of a successor Trustee, 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 and all others similarly

situated, petition any such court for the appointment of a successor Trustee.

Such court may thereupon, after such notice, if any, as it may deem proper and

prescribe, appoint a successor Trustee.

 

(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 a 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, 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 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

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.

 

(d) Any

resignation or removal of the Trustee and appointment of a successor Trustee

pursuant to any of the provisions of this Section 6.09 shall become effective

upon acceptance of appointment by the successor Trustee as provided in Section

6.10.

 

Section 6.10         Acceptance by Successor Trustee.

 

Any successor Trustee

appointed as provided in Section 6.09 shall execute, acknowledge and deliver to

the Company and to its predecessor Trustee an instrument accepting such

appointment hereunder, and thereupon the resignation or removal of the retiring

Trustee shall become effective and such successor Trustee, without any further

act, deed or conveyance, shall become vested with all the rights, powers,

duties and obligations with respect to the Debt Securities of its predecessor

hereunder, with like effect as if originally named as Trustee herein; but,

nevertheless, on the written request of the Company or of the successor

Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due

it pursuant to the provisions of Section 6.06, execute and deliver an

instrument transferring to such successor Trustee all the rights and powers of

the Trustee so ceasing to act and shall duly assign, transfer and deliver to

such successor Trustee all property and money held by such retiring Trustee

thereunder. Upon request of any such successor Trustee, the Company shall

execute any and all instruments in writing for more fully and certainly vesting

in and confirming to such successor Trustee all such rights and powers. Any

Trustee ceasing to act shall, nevertheless, retain a lien upon all property or

funds held or collected by such Trustee 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 under the provisions

of Section 6.08.

 

In no event shall a

retiring Trustee be liable for the acts or omissions of any successor Trustee

hereunder.

 

Upon acceptance of

appointment by a successor Trustee as provided in this Section 6.10, the

Company shall mail notice of the succession of such Trustee hereunder 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 Business

Days after the acceptance of appointment by the successor Trustee, the successor

Trustee shall cause such notice to be mailed at the expense of the Company.

 

Section 6.11         Succession by Merger, etc.

 

Any corporation into

which the Trustee may be merged or converted or with which it may be

consolidated, or any corporation resulting from any merger, conversion or

consolidation to which the Trustee shall be a party, or any corporation

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 corporation 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 corporation 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 corporation 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

corporation 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 corporation into

which any Authenticating Agent may be merged or converted or with which it may

be consolidated, or any corporation resulting from any merger, consolidation or

conversion to which any Authenticating Agent shall be a party, or any

corporation succeeding to all or substantially all of the corporate trust

business of any Authenticating Agent, shall be the successor of such

Authenticating Agent hereunder, if such successor corporation 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.

 

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.

 

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 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 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 (c) by a combination

of such instrument or instruments and any such record of such a meeting of such

Securityholders or (d) by any other method the Trustee deems satisfactory.

 

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 his 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 him 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 his 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.

 

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 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

Holders 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:

 

(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 New York, 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 Los Angeles, California 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 (a) be 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.

 

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 think fit.

 

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 of 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 him; 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 him or instruments in writing as aforesaid duly

designating him 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.

 

Section 8.07         Quorum; Actions.

 

The Persons entitled to

vote a majority in 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 principal

amount of the Debt Securities, the Persons holding or representing such

specified percentage in 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 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 a majority

in 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

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 a not less than such specified

percentage in 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.

 

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

corporation to the Company, or successive successions, and the assumption by

the successor corporation 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 the­Trustee 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 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 that were 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 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 (voting as a class), 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 the consent of the holders of

each Debt Security then outstanding and affected thereby (i) extend the fixed

maturity of any Debt Security, or reduce the principal amount thereof or any

premium thereon, or reduce the rate or extend the time of payment of interest

thereon, or reduce any amount payable on redemption thereof or make the

principal thereof or any interest or premium thereon payable in any coin or

currency other than that provided in the Debt Securities, 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 preference of Trust Securities shall have consented to such

supplemental indenture; provided further, that if the consent of the

Securityholder of each outstanding Debt Security is required, such supplemental

indenture shall not be effective until each holder of the Trust 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 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 thereby 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.

 

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 the Federal Reserve, if then required under applicable capital guidelines

or policies of the Federal Reserve, to redeem the Debt Securities, in whole or

in part, on any January 25th or July 25th on or after July 25, 2006 (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 the Federal Reserve if then required

under applicable capital guidelines or policies of the Federal Reserve, to

redeem the Debt Securities, in whole 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.

 

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

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.

 

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 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 on the Special Redemption Date (as the

case may be) 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 accrued interest to the date fixed for redemption.

 

The Company will give

the Trustee notice not less than 45 nor more than 60 days prior to the

redemption date as to 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 (as the case may be) (unless the Company shall default in the payment of

such Debt Securities at the redemption price, together with interest accrued 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 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.

 

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 the property or capital stock of the Company or its successor or successors

as an entirety, or substantially as an entirety, 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, upon any such consolidation, merger

(where the Company is not the surviving corporation), sale, conveyance,

transfer or other disposition, the due and punctual payment of the principal of

(and premium, if any) and interest on all of the Debt Securities in accordance

with their terms, according to their tenor, and the due and punctual

performance and observance of all the covenants and conditions of this

Indenture to be kept or performed by the Company, shall be expressly assumed by

supplemental indenture satisfactory in form to the Trustee executed and

delivered to the Trustee by the entity formed by such consolidation, or into

which the Company shall have been merged, or by the entity which shall have

acquired such property or capital stock.

 

Section 11.02       Successor Entity to be Substituted.

 

In case of any such

consolidation, merger, sale, conveyance, transfer or other disposition and upon

the assumption by the successor entity, by supplemental indenture, executed and

delivered to the Trustee and satisfactory in form to the Trustee, of the due

and punctual payment of the principal of and premium, if any, 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 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, 2.08, 3.01, 3.02, 3.04, 6.06, 6.09

and 12.04 hereof shall survive until such Debt Securities shall mature or are

redeemed, as the case may be, and are paid. Thereafter, Sections 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 it 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.

 

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 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 by being deposited postage prepaid by registered or

certified mail in a post office letter box addressed (until another address is

filed by the Company, with the Trustee for the purpose) to National Mercantile

Bancorp at 1840 Century Park East, Los Angeles, California 90067, Attention:

Scott A. Montgomery. 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 the Trustee, addressed to the Trustee, 101 Barclay Street,

Floor 21W, New York, NY 10286, Attention: Corporate Trust Administration.

 

Section 14.05       Governing Law.

 

This Indenture and each

Debt Security shall be deemed to be a contract made under the law of the State

of New York, and for all purposes shall be governed by and construed in

accordance with the law of said State, without regard to conflict of laws

principles thereof.

 

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.

 

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; (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 has made such examination or investigation as is

necessary to enable him 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.

 

In any case where the

date of payment of interest on or principal of the Debt Securities is not a

Business Day, the payment of such interest on or principal of the Debt

Securities need not be made on such date but may be made on the next succeeding

Business Day, with the same force and effect as if made on the date of payment

and no interest shall accrue for the period from and after such date, except if

such Business Day is in the next succeeding calendar year, such payment will be

made on the immediately preceding 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       Separability.

 

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.

 

The Company will have

the right at all times to assign any of its rights or obligations under this

Indenture to a direct or indirect wholly owned Subsidiary of the Company,

provided 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 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 or by any Board Resolution (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 principal of, and premium, if any, and interest 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 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 then, in either case,

no payment shall be made by the Company with respect to the principal of, or

premium, if any, or interest 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 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 account of the

principal (and premium, if any) or interest 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 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 or transfer of its property as an entirety, or

substantially as an entirety, to another corporation upon the terms and

conditions provided for in Article IX 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 IX 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 the principal of (and premium, if

any) and interest 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 the

principal of (and premium, if any) and interest 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 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 monies 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 monies 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 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.

 

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 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.

 

The Bank of New York in

its capacity as trustee hereby accepts the trusts in this Indenture declared

and provided, upon the terms and conditions herein above set forth.

 

 

 

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.

 

	

   

  	

  NATIONAL MERCANTILE

  BANCORP

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

  /s/ Scott A.

  Montgomery

  
	

   

  	

   

  	

  Name: Scott A.

  Montgomery

  
	

   

  	

   

  	

  Title: President and

  Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  THE BANK OF NEW YORK,

  Trustee

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

  /s/ [ILLEGIBLE]

  
	

   

  	

   

  	

  Name: [ILLEGIBLE]

  
	

   

  	

   

  	

  Title: Vice President

  

 

 

EXHIBIT A

 

FORM OF

JUNIOR SUBORDINATED 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 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 IT 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 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 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 (D) 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 (C) OR (D) 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 AGREES THAT

IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS

SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT

IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR

ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT

OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL

REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (EACH A

"PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN

ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON

INVESTING "PLAN ASSETS", OF ANY PLAN MAY ACQUIRE OR HOLD 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 WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH

CERTIFICATE 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 LIQUIDATION 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 LIQUIDATION 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 (THE

"FDIC"). 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 AND IS NOT SECURED.

 

 

 

10.25%

Junior Subordinated Debt Security

 

of

 

National

Mercantile Bancorp

 

National

Mercantile Bancorp, a California corporation (the "Company"), for

value received promises to pay to [________________] (the "Holder")

or registered assigns, the principal sum of [________________] ($[___________])

on July 25, 2031, and to pay interest on 

said principal sum from January 25, 2002, or from the most recent

interest payment date (each such date, an "Interest Payment Date") to

which interest has been paid or duly provided for, semi­annually (subject to

deferral as set forth herein) in arrears on January 25th and July 25th, of each

year commencing January 25, 2002, at a fixed annual rate equal to 10.25% (the

"Interest Rate") until the principal hereof shall have become due and

payable, 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 10.25%

compounded semi–annually. The amount of interest payable on any Interest

Payment Date shall be computed on the basis of a 360–day year of twelve

30–day months. In the event that any date on which the principal or

interest is payable on this Debt Security is not a Business Day, then payment

payable on such date will be made on the next succeeding day that is a Business

Day (and without any interest or other payment in respect of any such delay),

except that, if such Business Day is in the next succeeding calendar year, such

payment shall be made on the immediately preceding Business Day, in each case

with the same force and effect as if made on such date. 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 said Indenture) is registered at the close of business on the Record

Date for such interest installment, which shall be the close of business on the

15th day next preceding such Interest Payment Date. Any such interest

installment not punctually paid or duly provided for shall forthwith cease to

be payable to the registered holders on such Record Date and may be paid to the

Person in whose name this Debt Security (or one or more Predecessor Debt

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 registered holders of the Debt Securities not

less than 10 days prior to such special record date, all as more fully provided

in the Indenture. The principal of and interest on this Debt Security shall be

payable at the office or agency of the Trustee (or other paying agent appointed

by the Company) maintained for that purpose 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; provided, however, that payment of

interest may be made at the option of the Company by check mailed to the

registered holder at such address as shall appear in the Debt Security Register

or by wire transfer 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, the payment of the principal of and interest on this

Debt Security will be made in immediately available funds at such place and to

such account as may be designated by the Trustee.

 

So long as no Event of

Default has occurred and is continuing, the Company shall have the right, from

time to time, 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 10 consecutive semi–annual

periods (each such extended interest payment 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). 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 the Interest Rate, compounded

semi–annually from the date such Deferred Interest would have been

payable were it not for the Extension Period, both to the extent permitted by

law. No Extension Period may end on a date other than an Interest Payment Date.

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, during any such 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 or (ii)

make any payment of principal of or interest or premium, if any, on or repay,

repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior

in interest to the Debt Securities (other than (a) repurchases, redemptions or

other acquisitions of shares of capital stock of the Company in connection with

any employment contract, benefit plan or other similar arrangement with or for

the benefit of one or more employees, officers, directors or consultants, in

connection with a dividend reinvestment or stockholder stock purchase plan or

in connection with the issuance of capital stock of the Company (or securities

convertible into or exercisable for such capital stock) as consideration in an

acquisition transaction entered into prior to the applicable Extension Period,

(b) as a result of any exchange or conversion of any class or series of the

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 period, provided that such period together with all

such previous and further consecutive extensions thereof shall not exceed 10

consecutive semi–annual 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 foregoing

requirements. No interest or Deferred Interest shall be due and payable during

an Extension Period, except at the end thereof, but each installment of

interest that would otherwise have been due and payable during such Extension

Period shall bear Deferred Interest. The Company must give the Trustee notice

of its election to begin such Extension Period at least one Business Day prior

to the earlier of (i) the date interest on the Debt Securities would have been

payable except for the election to begin such Extension Period or (ii) the date

such interest is payable, but in any event not less than one Business Day prior

to such record 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, 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 Trustee on his or her behalf to take such action as

may be necessary or appropriate to acknowledge or effectuate the subordination

so provided and (c) appoints the Trustee his or her attorney–in–fact for any and all such purposes. Each holder

hereof, by his or her 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

demand, presentment for payment, notice of nonpayment, notice of protest, and

all other notices.

 

This Debt Security shall

not be entitled to any benefit under the Indenture hereinafter referred to, 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.

 

 

                                IN

WITNESS WHEREOF, the Company has duly executed this certificate.

 

	

   

  	

  National Mercantile

  Bancorp

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

  Dated:   [_____], [____]

  	

   

  	

   

  

 

CERTIFICATE

OF AUTHENTICATION

 

This

is one of the Debt Securities referred to in the within–mentioned

Indenture.

 

	

   

  	

  THE BANK OF NEW YORK,

  as the Trustee

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Authorized Officer

  
	

   

  	

   

  	

   

  
	

  Dated:   [_____], [____]

  	

   

  	

   

  

 

 

[FORM

OF REVERSE OF SECURITY]

 

This Debt Security is

one of a duly authorized series of Debt Securities of the Company, all issued

or to be issued pursuant to an Indenture (the "Indenture") dated as

of July 16, 2001, duly executed and delivered between the Company and The Bank

of New York, 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

(referred to herein as the "Debt Securities") of which this Debt

Security is a part. The summary of the terms of this Debt Security contained

herein does not purport to be complete and is qualified by reference to the

Indenture.

 

Upon the occurrence and

continuation of a Tax Event, an Investment Company Event or a Capital Treatment

Event, this Debt Security may become due and payable, in whole but not in part,

at any time, within 90 days following the occurrence of such Tax Event,

Investment Company Event or Capital Treatment Event (the "Special

Redemption Date"), as the case may be, at the Special Redemption Price.

The Company shall also have the right to redeem this Debt Security at the

option of the Company, in whole or in part, on any January 25th or July 25th on

or after July 25, 2006 (a "Redemption Date"), at the Redemption

Price.

 

Any redemption pursuant

to the preceding paragraph will be made, subject to the receipt by the Company

of prior approval from the Board of Governors of the Federal Reserve System

(the "Federal Reserve") if then required under applicable capital

guidelines or policies of the Federal Reserve, upon not less than 30 days' nor

more than 60 days' notice. If the Debt Securities are only partially redeemed

by the Company, the Debt Securities will be redeemed pro rata or by lot

or by any other method utilized by the Trustee.

 

"Redemption

Price" means the price set forth in the following table for any Redemption

Date or Special Redemption Date that occurs within the twelve–month

period beginning in the relevant date indicated below, expressed in percentage

of the principal amount of the Debt Securities being redeemed:

 

	

  Year

  Beginning

  	

   

  	

  Percentage

  
	

  July 25, 2006

  	

   

  	

  107.6875%

  
	

  July 25, 2007

  	

   

  	

  106.1500%

  
	

  July 25, 2008

  	

   

  	

  104.6125%

  
	

  July 25, 2009

  	

   

  	

  103.0750%

  
	

  July 25, 2010

  	

   

  	

  101.5375%

  
	

  July 25, 2011 and

  after

  	

   

  	

  100.0000%

  

 

 

plus accrued and unpaid

interest on such Debentures to the Redemption Date or Special Redemption Date,

as the case may be.

 

"Special

Redemption Price" means (1) if the Special Redemption Date is before July

25, 2006, the greater of (a) 100% of the principal amount of the Debt

Securities being redeemed pursuant to Section 10.02 or (b) as determined by a

Quotation Agent, the sum of the present values of the principal amount and the

premium payable as part of the Redemption Price with respect to a redemption as

of July 25, 2006 together with the present value of scheduled payments of

interest over the Remaining Life of such Debt Securities, discounted to the

Special Redemption Date on a semi–annual basis (assuming a 360–day

year consisting of twelve 30–day months) at the Treasury Rate plus 0.50%,

plus, in the case of either (a) or (b), accrued and unpaid interest on such

Debt Securities to the Special Redemption Date and (2) if the Special

Redemption Date is on or after July 25, 2006, the Redemption Price for such

Special Redemption Date.

 

"Comparable

Treasury Issue" means with respect to any Special Redemption Date the

United States Treasury security selected by the Quotation Agent as having a

maturity comparable to the Remaining Life that would be utilized, at the time

of selection and in accordance with customary financial practice, in pricing

new issues of corporate debt securities of comparable maturity to the Remaining

Life. If no United States Treasury security has a maturity which is within a

period from three months before to three months after July 25, 2006, the two

most closely corresponding United States Treasury securities shall be used as

the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or

extrapolated on a straight–line basis, rounding to the nearest month

using such securities.

 

"Comparable

Treasury Price" means (a) the average of five Reference Treasury Dealer

Quotations for such Special Redemption Date, after excluding the highest and

lowest such Reference Treasury Dealer Quotations, or (b) if the Trustee obtains

fewer than five such Reference Treasury Dealer Quotations, the average of all

such Quotations.

 

"Primary Treasury

Dealer" shall mean a primary United States Government securities dealer in

New York City.

 

"Quotation

Agent" means Salomon Smith Barney Inc. and its successors; provided,

however, that if the foregoing shall cease to be a Primary Treasury Dealer,

the Company shall substitute therefor another Primary Treasury Dealer.

 

"Reference Treasury

Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury

Dealer selected by the Trustee after consultation with the Company.

 

"Reference Treasury

Dealer Quotations" means, with respect to each Reference Treasury Dealer

and any Special Redemption Date, the average, as determined by the Quotation

Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed

in each case as a percentage of its principal amount) quoted in writing to the

Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on

the third Business Day preceding such Special Redemption Date.

 

"Treasury

Rate" means (i) the yield, under the heading which represents the average

for the week immediately prior to the date of calculation, appearing in the

most recently published statistical release designated H.15 (519) or any

successor publication which is published weekly by the Federal Reserve and

which establishes yields on actively traded United States Treasury securities

adjusted to constant maturity under the caption "Treasury Constant

Maturities", for the maturity corresponding to the Remaining Life (if no

maturity is within three months before or after the Remaining Life, yields for

the two published maturities most closely corresponding to the Remaining Life

shall be determined and the Treasury Rate shall be interpolated or extrapolated

from such yields on a straight–line basis, rounding to the nearest month)

or (ii) if such release (or any successor release) is not published during the

week preceding the calculation date or does not contain such yields, the rate

per annum equal to the semi–annual equivalent yield to maturity of the

Comparable Treasury Issue, calculated using a price for the Comparable Treasury

Issue (expressed as a percentage of its principal amount) equal to the

Comparable Treasury Price for such Special Redemption Date. The Treasury Rate

shall be calculated on the third Business Day preceding the Special Redemption

Date.

 

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.

 

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 due and payable,

and upon such declaration of acceleration shall become due and payable, 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 not less than 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) extend the fixed maturity of the Debt Securities, or reduce the

principal amount thereof or any redemption premium thereon, or reduce the rate

or extend the time of payment of interest thereon, or make the principal of, or

interest or premium on, the Debt Securities payable in any coin or currency

other than that provided in the Debt Securities, or impair or affect the right

of any holder of Debt Securities to institute suit for the 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 affected thereby as

provided in the Indenture, on behalf of all of the holders of 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 default in the payment of the principal of or

premium, if any, or interest on any of the Debt Securities. Any such consent or

waiver by the registered 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 pay the principal of and premium, if any, and interest 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 registered holder hereof on the Debt

Security Register of the Company, upon surrender of this Debt Security for

registration of transfer at the office or agency of the Trustee in the City and

State of New York accompanied by a written instrument or instruments of

transfer in form satisfactory to the Company or the Trustee duly executed by

the registered holder hereof or his 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 may require payment of a sum sufficient to cover any

tax or other governmental charge payable in relation thereto.

 

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 registered 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 or on account of the principal hereof and interest due

hereon 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.

 

No recourse shall be had

for the payment of the principal of or the 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 or

director, past, present or future, as such, of the Company or of any

predecessor or successor corporation, whether by virtue of any constitution,

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.

 

The Debt Securities are

issuable only in registered certificated form without coupons. 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 a different authorized denomination, as requested by the holder

surrendering the same.

 

All terms used in this

Debt Security that are defined in the Indenture shall have the meanings

assigned to them in the Indenture.

 

THE LAW OF THE STATE OF NEW YORK SHALL

GOVERN THE INDENTURE AND THE DEBT SECURITIES, WITHOUT REGARD TO CONFLICT OF

LAWS PRINCIPLES THEREOF.

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