Document:

Exhibit 4.1

 

TIDELANDS
BANCSHARES, INC.

 

as Issuer

 

 

INDENTURE

 

Dated as of June 20, 2008

 

 

WILMINGTON TRUST COMPANY

 

as Trustee

 

 

FIXED/FLOATING RATE JUNIOR SUBORDINATED DEBT
SECURITIES DUE 2038

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II DEBT SECURITIES

  	
  9

  
	
   

  	
   

  
	
  Section 2.01

  	
  Authentication and Dating

  	
  9

  
	
  Section 2.02

  	
  Form of Trustee’s Certificate of Authentication

  	
  10

  
	
  Section 2.03

  	
  Form and Denomination of Debt Securities

  	
  10

  
	
  Section 2.04

  	
  Execution of Debt Securities

  	
  10

  
	
  Section 2.05

  	
  Exchange and Registration of Transfer of Debt
  Securities

  	
  11

  
	
  Section 2.06

  	
  Mutilated, Destroyed, Lost or Stolen Debt Securities

  	
  14

  
	
  Section 2.07

  	
  Temporary Debt Securities

  	
  15

  
	
  Section 2.08

  	
  Payment of Interest

  	
  15

  
	
  Section 2.09

  	
  Cancellation of Debt Securities Paid, etc.

  	
  16

  
	
  Section 2.10

  	
  Computation of Interest

  	
  17

  
	
  Section 2.11

  	
  Extension of Interest Payment Period

  	
  18

  
	
  Section 2.12

  	
  CUSIP Numbers

  	
  19

  
	
  Section 2.13

  	
  Global Debentures

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE III PARTICULAR COVENANTS OF THE COMPANY

  	
  22

  
	
   

  	
   

  
	
  Section 3.01

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

  	
  22

  
	
  Section 3.02

  	
  Offices for Notices and Payments, etc.

  	
  23

  
	
  Section 3.03

  	
  Appointments to Fill Vacancies in Trustee’s Office

  	
  23

  
	
  Section 3.04

  	
  Provision as to Paying Agent

  	
  23

  
	
  Section 3.05

  	
  Certificate to Trustee

  	
  24

  
	
  Section 3.06

  	
  Additional Amounts

  	
  25

  
	
  Section 3.07

  	
  Compliance with Consolidation Provisions

  	
  25

  
	
  Section 3.08

  	
  Limitation on Dividends

  	
  25

  
	
  Section 3.09

  	
  Covenants as to the Trust

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV LISTS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Securityholders’ Lists

  	
  26

  
	
  Section 4.02

  	
  Preservation and Disclosure of Lists

  	
  27

  
	
  Section 4.03

  	
  Financial and Other Information

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIES OF THE TRUSTEE AND
  SECURITYHOLDERS

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Events of Default

  	
  29

  
	
  Section 5.02

  	
  Payment of Debt Securities on Default; Suit Therefor

  	
  31

  
	
  Section 5.03

  	
  Application of Moneys Collected by Trustee

  	
  32

  
	
  Section 5.04

  	
  Proceedings by Securityholders

  	
  33

  

 

i

 

	
  Section 5.05

  	
  Proceedings by Trustee

  	
  33

  
	
  Section 5.06

  	
  Remedies Cumulative and Continuing

  	
  33

  
	
  Section 5.07

  	
  Direction of Proceedings and Waiver of Defaults by
  Majority of Securityholders

  	
  34

  
	
  Section 5.08

  	
  Notice of Defaults

  	
  35

  
	
  Section 5.09

  	
  Undertaking to Pay Costs

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI CONCERNING THE TRUSTEE

  	
  35

  
	
   

  	
   

  
	
  Section 6.01

  	
  Duties and Responsibilities of Trustee

  	
  35

  
	
  Section 6.02

  	
  Reliance on
  Documents, Opinions, etc.

  	
  37

  
	
  Section 6.03

  	
  No Responsibility for Recitals, etc.

  	
  38

  
	
  Section 6.04

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

  	
  38

  
	
  Section 6.05

  	
  Moneys to be Held in Trust

  	
  38

  
	
  Section 6.06

  	
  Compensation and Expenses of Trustee

  	
  38

  
	
  Section 6.07

  	
  Officers’ Certificate as Evidence

  	
  39

  
	
  Section 6.08

  	
  Eligibility of Trustee

  	
  39

  
	
  Section 6.09

  	
  Resignation or Removal of Trustee

  	
  40

  
	
  Section 6.10

  	
  Acceptance by Successor Trustee

  	
  41

  
	
  Section 6.11

  	
  Succession by Merger, etc.

  	
  42

  
	
  Section 6.12

  	
  Authenticating Agents

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII CONCERNING THE SECURITYHOLDERS

  	
  43

  
	
   

  	
   

  
	
  Section 7.01

  	
  Action by Securityholders

  	
  43

  
	
  Section 7.02

  	
  Proof of Execution by Securityholders

  	
  44

  
	
  Section 7.03

  	
  Who Are Deemed Absolute Owners

  	
  44

  
	
  Section 7.04

  	
  Debt Securities Owned by Company Deemed Not
  Outstanding

  	
  45

  
	
  Section 7.05

  	
  Revocation of Consents; Future Holders Bound

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII SECURITYHOLDERS’ MEETINGS

  	
  46

  
	
   

  	
   

  
	
  Section 8.01

  	
  Purposes of Meetings

  	
  46

  
	
  Section 8.02

  	
  Call of Meetings by Trustee

  	
  46

  
	
  Section 8.03

  	
  Call of Meetings by Company or Securityholders

  	
  46

  
	
  Section 8.04

  	
  Qualifications for Voting

  	
  47

  
	
  Section 8.05

  	
  Regulations

  	
  47

  
	
  Section 8.06

  	
  Voting

  	
  47

  
	
  Section 8.07

  	
  Quorum; Actions

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX SUPPLEMENTAL INDENTURES

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Supplemental Indentures without Consent of
  Securityholders

  	
  49

  
	
  Section 9.02

  	
  Supplemental Indentures with Consent of
  Securityholders

  	
  50

  
	
  Section 9.03

  	
  Effect of Supplemental Indentures

  	
  51

  

 

ii

 

	
  Section 9.04

  	
  Notation on Debt Securities

  	
  51

  
	
  Section 9.05

  	
  Evidence of Compliance of Supplemental Indenture to
  be Furnished to Trustee

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE X REDEMPTION OF SECURITIES

  	
  52

  
	
   

  	
   

  
	
  Section 10.01

  	
  Optional Redemption

  	
  52

  
	
  Section 10.02

  	
  Special Event Redemption

  	
  52

  
	
  Section 10.03

  	
  Notice of Redemption; Selection of Debt Securities

  	
  52

  
	
  Section 10.04

  	
  Payment of Debt Securities Called for Redemption

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI CONSOLIDATION, MERGER, SALE, CONVEYANCE
  AND LEASE

  	
  54

  
	
   

  	
   

  
	
  Section 11.01

  	
  Company May Consolidate, etc., on Certain Terms

  	
  54

  
	
  Section 11.02

  	
  Successor Entity to be Substituted

  	
  54

  
	
  Section 11.03

  	
  Opinion of Counsel to be Given to Trustee

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII SATISFACTION AND DISCHARGE OF INDENTURE

  	
  55

  
	
   

  	
   

  
	
  Section 12.01

  	
  Discharge of Indenture

  	
  55

  
	
  Section 12.02

  	
  Deposited Moneys to be Held in Trust by Trustee

  	
  56

  
	
  Section 12.03

  	
  Paying Agent to Repay Moneys Held

  	
  56

  
	
  Section 12.04

  	
  Return of Unclaimed Moneys

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII IMMUNITY OF INCORPORATORS,
  STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
  57

  
	
   

  	
   

  	
   

  
	
  Section 13.01

  	
  Indenture and Debt Securities Solely Corporate
  Obligations

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV MISCELLANEOUS PROVISIONS

  	
  57

  
	
   

  	
   

  
	
  Section 14.01

  	
  Successors

  	
  57

  
	
  Section 14.02

  	
  Official Acts by Successor Entity

  	
  57

  
	
  Section 14.03

  	
  Surrender of Company Powers

  	
  57

  
	
  Section 14.04

  	
  Addresses for Notices, etc.

  	
  57

  
	
  Section 14.05

  	
  Governing Law

  	
  58

  
	
  Section 14.06

  	
  Evidence of Compliance with Conditions Precedent

  	
  58

  
	
  Section 14.07

  	
  Business Day Convention

  	
  58

  
	
  Section 14.08

  	
  Table of Contents, Headings, etc.

  	
  59

  
	
  Section 14.09

  	
  Execution in Counterparts

  	
  59

  
	
  Section 14.10

  	
  Separability

  	
  59

  
	
  Section 14.11

  	
  Assignment

  	
  59

  
	
  Section 14.12

  	
  Acknowledgment of Rights

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV SUBORDINATION OF DEBT SECURITIES

  	
  60

  
	
   

  	
   

  
	
  Section 15.01

  	
  Agreement to Subordinate

  	
  60

  

 

iii

 

	
  Section 15.02

  	
  Default on Senior Indebtedness

  	
  60

  
	
  Section 15.03

  	
  Liquidation;
  Dissolution; Bankruptcy

  	
  60

  
	
  Section 15.04

  	
  Subrogation

  	
  62

  
	
  Section 15.05

  	
  Trustee to Effectuate Subordination

  	
  63

  
	
  Section 15.06

  	
  Notice by the Company

  	
  63

  
	
  Section 15.07

  	
  Rights of the Trustee; Holders of Senior
  Indebtedness

  	
  63

  
	
  Section 15.08

  	
  Subordination May Not Be Impaired

  	
  64

  

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
   

  	
  Form of Debt
  Security

  
	
  EXHIBIT
  B

  	
   

  	
  Form of
  Certificate of Officer of the Company

  
	
  EXHIBIT
  C

  	
   

  	
  Form of Officer’s
  Financial Certificate

  

 

iv

 

THIS INDENTURE, dated as of June 20, 2008, between Tidelands
Bancshares, Inc., a bank holding company incorporated in South Carolina (hereinafter sometimes called
the “Company”), and Wilmington Trust Company, a Delaware banking corporation,
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 Fixed/Floating Rate Junior
Subordinated Debt Securities due 2038 (the “Debt Securities”) under this
Indenture and to provide, among other things, for the execution and
authentication, delivery and administration thereof, the Company has duly
authorized the execution of this Indenture.

 

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

 

ARTICLE I

DEFINITIONS

 

Section 1.01           Definitions.

 

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

 

“Additional Amounts”
has the meaning set forth in Section 3.06.

 

“Additional Provisions” has the meaning set forth in Section 15.01.

 

“Administrative Action” has the meaning specified
within the definition of “Tax Event” in this Section 1.01.

 

“Applicable Depositary Procedures” means, with respect
to any transfer or transaction involving a Book-Entry Capital Security or a
Debt Security represented by a Global Debenture, the rules and procedures
of the Depositary for such Book-Entry Capital Security or Debt Security
represented by a Global Debenture, in each case to the extent applicable to
such transaction and as in effect from time to time.

 

“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.

 

“Book-Entry Capital Security” means a Capital Security
the ownership and transfers of which shall be reflected and made, as
applicable, through book entries by the Depositary.

 

“Business Day” means any day other than a Saturday,
Sunday or any other day on which banking institutions in Wilmington, Delaware,
The City of New York or Charleston, South
Carolina are permitted or required by law or executive order to close.

 

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

 

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

 

“Capital Securities Guarantee” means the guarantee
agreement that the Company will enter into with Wilmington Trust Company or
other Persons that operates directly or indirectly for the benefit of holders
of Capital Securities of the Trust.

 

“Capital Treatment Event” means, if the Company is
organized and existing under the laws of the United States or any state thereof
or the District of Columbia, the receipt by the Company and the Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of 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 Capital Securities as “Tier 1
Capital” (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), as then in effect and applicable to
the Company; provided, however, that the inability of the
Company to treat all or any portion of the aggregate Liquidation Amount of the
Capital Securities as “Tier 1 Capital” shall not constitute the basis for a
Capital Treatment Event if such inability results from the Company having 

 

2

 

preferred stock, minority interests in
consolidated subsidiaries and any other class of security or interest which the
Federal Reserve (or any successor regulatory authority with jurisdiction over
bank holding companies) may now or hereafter accord “Tier 1 Capital” treatment
that, in the aggregate, exceed the amount which may now or hereafter qualify
for treatment as “Tier 1 Capital” under applicable capital adequacy guidelines
of the Federal Reserve (or any successor regulatory authority with jurisdiction
over bank holding companies); provided, further, however,
that the distribution of the 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. 
For the avoidance of doubt, the inability of the Company to treat all or
any portion of the aggregate Liquidation Amount of the Capital Securities as
“Tier 1 Capital” as a result of the changes effected by the final rule adopted
by the Federal Reserve on March 1, 2005 shall not constitute the basis for
a Capital Treatment 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.

 

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

 

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

 

“Company” means Tidelands
Bancshares, Inc., a bank holding company incorporated in South Carolina, and, subject to the provisions
of Article XI, shall include its successors and assigns.

 

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

 

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

 

“Declaration” means the Amended and Restated
Declaration of Trust of the Trust, dated as of June 20,
2008, 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.

 

“Depositary” means an organization registered as a
clearing agency under the Exchange Act that is designated as Depositary by the
Company.  DTC will be the initial
Depositary (if one is designated by the Company).

 

3

 

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

 

“DTC” means The Depository Trust Company, a New York
corporation.

 

“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.

 

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

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

 

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

 

“Global Debenture” means a global certificate that
evidences all or part of the Debt Securities the ownership and transfers of
which shall be reflected and made, as applicable, through book entries by the
Depositary and the Depositary Participants.

 

“Indenture” means this Indenture 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 March 30, June 30, September 30 and December 30 of
each year, commencing on September 30, 2008, subject to Section 14.07.

 

“Interest Period” has the meaning set forth in Section 2.08.

 

“Interest Rate” means, a per annum rate of interest
equal to (1) with respect to any Interest Period (as defined herein) prior
to the Interest Period commencing on the Interest Payment Date in June 2013,
9.425%, and (2) with respect to any Interest Period commencing on or after
the Interest Payment Date in June 2013, LIBOR, as determined on the LIBOR
Determination Date for such Interest Period, plus 5.075%%; provided, however, that the Interest Rate
for any Interest Period commencing on or after the Interest Payment Date in June 2013
may not exceed the highest rate permitted by New York law, as the same may be
modified by United States law of general application.

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

“Major Depository Institution Subsidiary” means any
subsidiary of the Company that (i) is a depository institution and (ii) meets
the definition of “significant subsidiary” within the meaning of Rule 405
under the Securities Act.

 

“Maturity Date” means June 30,
2038, subject to Section 14.07.

 

“Officers’ Certificate” means a certificate signed by
the Chairman of the Board, the Chief Executive Officer, 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 counsel to the Company or may be other
counsel reasonably satisfactory to the Trustee. 
Each such opinion shall include the statements provided for in Section 14.06
if and to the extent required by the provisions of such Section.

 

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 X and XIV or provision satisfactory to the Trustee shall have been
made for giving such notice; and

 

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

 

5

 

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

 

“Optional Redemption Price” means an amount in cash
equal to 100% of the principal amount of the Debt Securities being redeemed
plus unpaid interest accrued on such Debt Securities to the related Optional
Redemption Date.

 

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

 

“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.

 

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

 

“Principal Office of the Trustee” means the office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of the execution of this Indenture shall be Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001.

 

“Reference Banks” has the meaning set forth in Section 2.10(b)(ii).

 

“Resale Restriction Termination Date” means, with
respect to any Debt Security, the date which is the later of (i) one year
(or such shorter period of time as permitted by Rule 144(b)(1) under
the Securities Act) after the later of (y) the date of original issuance
of such Debt Security and (z) the last date on which the Company or any
Affiliate (as defined in Rule 405 under the Securities Act) of the Company
was the holder of such Debt Security (or any predecessor thereto) and (ii) such
later date, if any, as may be required by any subsequent change in applicable
law.

 

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

 

“Securities Act” means the Securities Act of 1933, as
amended.

 

“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.

 

6

 

“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, as well as similar obligations arising from
off-balance sheet guarantees and direct credit substitutes 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 and other accrued liabilities 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, all obligations associated
with derivative products such as interest rate and foreign exchange contracts
and commodity contracts, 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 the obligations of the type
referred to in clauses (i) through (vi) above were incurred on or
prior to the date of this Indenture or thereafter incurred, unless, with the
prior approval of the Federal Reserve if not otherwise generally approved, it
is provided in the instrument creating or evidencing the same or pursuant to
which the same is outstanding that such obligations are not superior or are pari passu in right of payment to the Debt Securities; provided,
however, that Senior Indebtedness shall not include (A) any debt
securities issued to any trust other than the Trust (or a trustee of such
trust) that is a financing vehicle of the Company (a “financing entity”) in
connection with the issuance by such financing entity of equity or other securities
in transactions substantially similar in structure to the transactions
contemplated hereunder including the trust preferred securities issued by
Tidelands Statutory Trust I in February 2006 and in the Declaration or (B) any
guarantees of the Company in respect of the equity or other securities of any
financing entity referred to in clause (A) above.

 

“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
Section 10.02.

 

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

 

7

 

	
  Special Redemption During the 12-Month 

  Period Beginning June 30,

  	
   

  	
  Percentage of Principal Amount

  	
   

  
	
  2008

  	
   

  	
  104.125

  	
  %

  
	
  2009

  	
   

  	
  103.30

  	
  %

  
	
  2010

  	
   

  	
  102.48

  	
  %

  
	
  2011

  	
   

  	
  101.65

  	
  %

  
	
  2012

  	
   

  	
  100.83

  	
  %

  
	
  2013

  	
   

  	
  100

  	
  %

  

 

“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 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 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) if the Company is organized and
existing under the laws of the United States or any state thereof or the
District of Columbia, 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 or otherwise required to pay, or required to withhold
from distributions to holders of Trust Securities, more than a de minimis
amount of other taxes (including withholding taxes), duties, assessments or
other governmental charges.

 

8

 

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

 

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

 

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

 

“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 Code.

 

ARTICLE II

DEBT SECURITIES

 

Section 2.01           Authentication
and Dating.

 

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

 

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

 

The 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.

 

9

 

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 certificate represents Debt Securities referred
to in the within-mentioned Indenture.

 

	
   

  	
  Wilmington
  Trust Company, 

  not in its individual capacity 

  but solely 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 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 or Chief Financial Officer or
one of its Executive Vice Presidents, Senior Vice Presidents or Vice
Presidents, under its corporate seal (if legally required) which may be affixed
thereto or printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise, and which need not be attested. 
Only such Debt Securities as shall bear thereon a certificate of authentication
substantially in the form herein before recited, executed by the Trustee or the
Authenticating Agent by the manual or facsimile 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 

 

10

 

Company, although at the
date of the execution of this Indenture any such person was not such an
officer.

 

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

 

Section 2.05           Exchange
and Registration of Transfer of Debt Securities.

 

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

 

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

 

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

 

No service charge shall be made for any exchange or
registration of transfer of Debt Securities, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith other than exchanges
pursuant to Section 2.07, Section 9.04 or Section 10.04 not involving
any transfer.

 

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

 

Notwithstanding the foregoing, Debt Securities may not
be transferred prior to the Resale Restriction Termination Date except in
compliance with the legend set forth below, 

 

11

 

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

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.  THE
HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN PRIOR
TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE SECURITIES ACT) AFTER THE
LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE COMPANY WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST
OR PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF
ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO
THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE
144A”), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER”, AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2),
(3), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO
NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT  OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY.  THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION 

 

12

 

HEREIN, BY ITS ACCEPTANCE HEREOF
OR THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN
ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY AND NO PERSON
INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR
ANY INTEREST OR PARTICIPATION HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14
OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY OR
SUCH INTEREST OR PARTICIPATION IS NOT PROHIBITED BY SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING.  ANY PURCHASER OR HOLDER OF THIS SECURITY OR
ANY INTEREST OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT
IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN,
OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.

 

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

 

THIS SECURITY WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000
IN EXCESS THEREOF.  ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN DENOMINATIONS OF LESS THAN $100,000 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN FOR ANY PURPOSE, INCLUDING, BUT 

 

13

 

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

 

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

 

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 

 

14

 

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

 

Section 2.08           Payment
of Interest.

 

Each Debt Security will bear interest at the then
applicable Interest Rate (i) in the case of the initial Interest Period,
for the period from, and including, the date of original issuance of such Debt
Security to, but excluding, the initial Interest Payment Date and (ii) thereafter,
for the period from, and including, the first day following the end of the
preceding Interest Period to, but excluding, the applicable Interest Payment
Date or, in the case of the last Interest Period, the related Optional
Redemption Date, Special Redemption Date or Maturity Date, as applicable (each
such period, an “Interest Period”), on the principal thereof, on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on Deferred Interest and on any overdue installment of interest
(including Defaulted Interest), payable (subject to the provisions of Article XV)
on each Interest Payment Date and on the Maturity Date, any Optional Redemption
Date or the Special Redemption Date, as the case may be.  Interest and any Deferred Interest on any
Debt Security that is payable, and is punctually paid or duly provided for by
the Company, on any Interest Payment Date shall be paid to the Person in whose
name such 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, any Optional Redemption Date or the Special Redemption Date, as
the case may be, other than any Interest Payment Date shall be paid to the
Person to whom principal is paid.  In
case (i) the Maturity Date of any Debt Security or (ii) any Debt
Security or portion thereof is called for redemption and the related Optional
Redemption 

 

15

 

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

 

16

 

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, in which case the Trustee shall dispose of such Debt Securities as
directed by the Company.  The Company
shall promptly deliver or cause to be delivered to the Trustee for cancellation
any Debt Securities previously authenticated and delivered hereunder that the
Company or any Affiliate (as defined in Rule 405 under the Securities Act)
of the Company may have acquired in any manner whatsoever, and all Debt
Securities so delivered shall be promptly cancelled. Any such acquisition of
Debt Securities by the Company or any Affiliate of the Company shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debt Securities unless and until the same are surrendered to the Trustee for
cancellation.

 

Section 2.10           Computation
of Interest.

 

(a)           The amount of interest payable on the
Debt Securities will be computed (i) with respect to any Interest Period
prior to the Interest Period commencing on or after the Interest Payment Date
in June 2013, on the basis of a 360-day year consisting of twelve 30-day
months and (ii) with respect to any Interest Period commencing on or after
the Interest Payment Date in June 2013, on the basis of a 360-day year and
the actual number of days elapsed in such Interest Period.

 

(b)           LIBOR shall be determined by the
Calculation Agent for each Interest Period commencing on or after the Interest
Payment Date in June 2013 in accordance with the following provisions:

 

(i)            On
the second LIBOR Business Day (provided, that on such day commercial banks are
open for business (including dealings in foreign currency deposits) in London
(a “LIBOR Banking Day”), and otherwise the next preceding LIBOR Business Day
that is also a LIBOR Banking Day) prior to the Interest
Payment Date that commences such Interest Period (each such day, a
“LIBOR Determination Date”), LIBOR shall equal the rate, as obtained by the
Calculation Agent, for three-month U.S. Dollar deposits in Europe, which
appears on Telerate (as defined in the International Swaps and Derivatives
Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) page 3750
or such other page as may replace such page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date, as reported by Bloomberg
Financial Markets Commodities News or any successor service (“Telerate Page 3750”).
 “LIBOR Business Day” means any day that
is not a Saturday, Sunday or other day on which commercial banking institutions
in the City of New York or Wilmington, Delaware are authorized or obligated by
law or executive order to be closed.  If
such rate is superseded on Telerate Page 3750 by a corrected rate before
12:00 noon (London time) on such LIBOR Determination Date, the corrected rate
as so substituted will be LIBOR for such LIBOR Determination Date.

 

(ii)           If,
on such LIBOR Determination Date, such rate does not appear on Telerate Page 3750,
the Calculation Agent shall determine the arithmetic mean of the 

 

17

 

offered
quotations of the Reference Banks to leading banks in the London interbank
market for three-month U.S. Dollar deposits in Europe (in an amount determined
by the Calculation Agent) by reference to requests for quotations as of
approximately 11:00 a.m. (London time) on such LIBOR Determination Date
made by the Calculation Agent to the Reference Banks.  If, on such LIBOR Determination Date, at
least two of the Reference Banks provide such quotations, LIBOR shall equal the
arithmetic mean of such quotations.  If,
on such LIBOR Determination Date, only one or none of the Reference Banks
provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of
the offered quotations that at least two leading banks in The City of New York
(as selected by the Calculation Agent) are quoting on such LIBOR Determination
Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m.
(London time) (in an amount determined by the Calculation Agent). As used
herein, “Reference Banks” means four major banks in the London interbank market
selected by the Calculation Agent.

 

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

 

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

 

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

 

Section 2.11           Extension
of Interest Payment Period.

 

So long as no Event of
Default pursuant to Sections 5.01(b), (e), (f), (g), (h) or (i) of
this Indenture has occurred and is continuing, the Company shall have the
right, from time to time and without causing an Event of Default, to defer
payments of interest on the Debt Securities by extending the interest payment
period on the Debt Securities at any time and from time to time during the term
of the Debt Securities, for up to 20 consecutive quarterly periods (each such
extended interest payment period, together with all previous and further
consecutive extensions thereof, is referred to herein as an “Extension Period”).  No Extension Period may end on a date other
than an Interest Payment Date or extend beyond the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be.  During any Extension 

 

18

 

Period, interest will
continue to accrue on the Debt Securities, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
“Deferred Interest”) will accrue at an annual rate equal to the Interest Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  No interest or Deferred Interest (except any Additional Amounts that may be due and payable)
shall be due and payable during an Extension Period, except at the end
thereof.  At the end of any Extension
Period, the Company shall pay all Deferred Interest then accrued and unpaid on
the Debt Securities; provided, however, that during any Extension
Period, the Company shall be subject to the restrictions set forth in Section 3.08.  Prior to the termination of any Extension
Period, the Company may further extend such Extension Period, provided,
that no Extension Period (including all previous and further consecutive
extensions that are part of such Extension Period) shall exceed 20 consecutive
quarterly periods.  Upon the termination
of any Extension Period and upon the payment of all Deferred Interest, the
Company may commence a new Extension Period, subject to the foregoing
requirements.  The Company must give the
Trustee notice of its election to begin or extend an Extension Period no later
than the close of business on the fifteenth Business Day prior to the
applicable Interest Payment Date.  The
Trustee shall give notice of the Company’s election to begin or extend an
Extension Period to the Securityholders, promptly after receipt of notice from
the Company of its election to begin or extend an Extension Period.

 

Section 2.12           CUSIP
Numbers.

 

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

 

Section 2.13           Global
Debentures.

 

(a)           Upon the election of an owner of
beneficial interests in outstanding Debt Securities, the Debt Securities owned
by such beneficial owner shall be issued in the form of one or more Global
Debentures.  Each Global Debenture issued
under this Indenture shall be registered in the name of the Depositary
designated by the Company for such Global Debenture or a nominee of such
Depositary and delivered to such Depositary or a nominee thereof or custodian
therefor, and each such Global Debenture shall constitute a single Debt
Security for all purposes of this Indenture.

 

(b)           Notwithstanding any other provision
in this Indenture, no Global Debenture may be exchanged in whole or in part for
Debt Securities in certificated form, and no transfer of a Global Debenture in
whole or in part may be, registered in the name of any Person other than the
Depositary for such Global Debenture or a nominee thereof unless (i) such
Depositary advises the Trustee and the Company in writing that such Depositary
is no longer 

 

19

 

willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Debenture, and no
qualified successor is appointed by the Company within ninety (90) days of
receipt by the Company of such notice, (ii) such Depositary ceases to be a
clearing agency registered under the Exchange Act and no successor is appointed
by the Company within ninety (90) days after obtaining knowledge of such event
or (iii) an Event of Default shall have occurred and be continuing.  Upon obtaining knowledge of the occurrence of
any event specified in clause (i), (ii) or (iii) above, the Trustee
shall notify the Depositary and instruct the Depositary to notify all owners of
beneficial interests in such Global Debenture of the occurrence of such event
and of the availability of Debt Securities in certificated form to such
beneficial owners requesting the same. 
Upon the issuance of such Debt Securities in certificated form and the
registration in the Debt Security Register of such Debt Securities in the names
of the holders thereof, the Trustee shall recognize such holders as holders of
Debt Securities for all purposes of this Indenture and the Debt Securities.

 

(c)           If any Global Debenture is to be
exchanged for Debt Securities in certificated form or canceled in part, or if a
Debt Security in certificated form is to be exchanged in whole or in part for a
beneficial interest in any Global Debenture, then either (i) such Global
Debenture shall be so surrendered for exchange or cancellation as provided
herein or (ii) the principal amount thereof shall be reduced or increased,
subject to Section 2.03, by an amount equal to the portion thereof to be
so exchanged or canceled, or equal to the principal amount of such Debt
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Debt
Security registrar, whereupon the Trustee, in accordance with the Applicable
Depositary Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records.  Upon any such surrender or adjustment of a
Global Debenture by the Depositary, accompanied by registration instructions,
the Company shall execute and the Trustee shall authenticate and deliver Debt
Securities issuable in exchange for such Global Debenture (or any portion
thereof) in accordance with the instructions of the Depositary.  The Trustee may conclusively rely on, and
shall be fully protected in relying on, such instructions.

 

(d)           Every Debt Security authenticated and
delivered upon registration of transfer of, or in exchange for or in lieu of, a
Global Debenture or any portion thereof shall be authenticated and delivered in
the form of, and shall be, a Global Debenture, unless such Debt Security is
registered in the name of a Person other than the Depositary for such Global
Debenture or a nominee thereof.

 

(e)           Debt Securities distributed to
holders of Book-Entry Capital Securities (as defined in the Declaration) upon
the dissolution of the Trust shall be distributed in the form of one or more
Global Debentures registered in the name of the Depositary or its nominee, and
deposited with the Debt Securities registrar, as custodian for such Depositary,
or with such Depositary, for credit by the Depositary to the owners of
beneficial interests in such Book-Entry Capital Securities.  Debt Securities distributed to holders of
Capital Securities in certificated form upon the dissolution of the Trust shall
be issued in certificated form.

 

(f)            The Depositary or its nominee, as
the registered owner of a Global Debenture, shall be the holder of such Global
Debenture for all purposes under this Indenture and the Debt Securities, and
owners of beneficial interests in a Global Debenture shall hold such 

 

20

 

interests pursuant to the Applicable Depositary
Procedures.  Accordingly, any such
owner’s beneficial interest in a Global Debenture shall be shown only on, and
the transfer of such interest shall be effected only through, records
maintained by the Depositary or its nominee or its Depositary
Participants.  The Debt Securities
registrar and the Trustee shall be entitled to deal with the Depositary for all
purposes of this Indenture relating to a Global Debenture as the sole holder of
the Debt Security and shall have no obligation to any beneficial owner of a
Global Debenture.  Neither the Trustee
nor the Debt Securities registrar shall have any liability in respect of any
transfers affected by the Depositary or its Depositary Participants.

 

(g)           The rights of owners of beneficial
interests in a Global Debenture shall be exercised only through the Depositary
and shall be limited to those established by law and agreements between such
owners and the Depositary and/or its Depositary Participants.

 

(h)           No owner of any beneficial interest
in any Global Debenture shall have any rights under this Indenture with respect
to such Global Debenture, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner and holder of
such Global Debenture for all purposes under the Indenture.  None of the Company, the Trustee nor any
agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a Global Debenture or maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and such beneficial owners, the operation of customary practices
governing the exercise of the rights of the Depositary or its nominee as holder
of any Debt Security.

 

(i)            Global Debentures shall bear the
following legend on the face thereof:

 

THIS SECURITY IS A GLOBAL DEBENTURE WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE,
AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED 

 

21

 

REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

ARTICLE III

PARTICULAR COVENANTS OF THE COMPANY

 

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

 

(a)           The Company covenants and agrees that
it will duly and punctually pay or cause to be paid all payments due in respect
of the Debt Securities at the place, at the respective times and in the manner
provided in this Indenture and the Debt Securities.  Payment of the principal of and premium, if
any, and interest on the Debt Securities due on the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be, will be
made by the Company in immediately available funds against presentation and
surrender of such Debt Securities.  At
the option of the Company, each installment of interest on the Debt Securities
due on an Interest Payment Date other than the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be, 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 of immediately available funds to any
account with a banking institution located in the United States designated by
such holders to the Paying Agent no later than the related record date.  Notwithstanding anything to the contrary
contained in this Indenture or any Debt Security, if the Trust or the trustee
of the Trust is the holder of any Debt Security, then all payments in respect
of such Debt Security shall be made by the Company in immediately available
funds when due.

 

(b)           The Company will treat the Debt
Securities as indebtedness, and the interest payable in respect of such Debt
Securities (including any Additional Amounts) 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 provided, that (i) any beneficial owner thereof that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code (A) has
provided an Internal Revenue Service Form W-9 (or any substitute or successor
form) in the manner required establishing its status as a “United States
person” for U.S. federal income tax purposes, and (B) the Internal Revenue
Service has neither notified the Issuer that the taxpayer identification number
furnished by such beneficial owner is incorrect nor notified the Issuer that
there is underreporting by such beneficial owner, and (ii) any beneficial
owner thereof that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Code has provided an Internal Revenue Service Form W-8 BEN,
Internal Revenue Service Form W-8ECI, or Internal Revenue Service Form W-8EXP,
as applicable (or any substitute or successor form) in the manner required
establishing its non-U.S. status for U.S. federal income tax purposes.

 

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

 

22

 

(d)           As of the date of this Indenture, the
Company represents 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 premium, if any, 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 Wilmington, Delaware an office or
agency where the Debt Securities may be presented for payment, an office or
agency where the Debt Securities may be presented for registration of transfer
and for exchange as provided in this Indenture and an office or agency where
notices and demands to or upon the Company in respect of the Debt Securities or
of this Indenture may be served.  The
Company 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 Principal
Office of the Trustee.  In case the
Company shall fail to maintain any such office or agency in Wilmington,
Delaware, or shall fail to give such notice of the location or of any change in
the location thereof, presentations and demands may be made and notices may be
served at the Principal Office of the Trustee.

 

In addition to any such office or agency, the Company
may from time to time designate one or more offices or agencies outside
Wilmington, Delaware 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 Wilmington, Delaware
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,

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)           The Company hereby initially appoints
the Trustee to act as paying agent for the Debt Securities (the “Paying
Agent”).

 

Section 3.05           Certificate
to Trustee.

 

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

 

24

 

Section 3.06           Additional
Amounts.

 

If and for so long as the Trust is the holder of all
Debt Securities and is subject to or otherwise required to pay (or is required
to withhold from distributions to holders of Trust Securities) any additional
taxes (including withholding taxes), duties, assessments or other governmental
charges as a result of a Tax Event, the Company will pay such additional
amounts (the “Additional Amounts”) on the Debt Securities or the Trust
Securities, as the case may be, as shall be required so that the net amounts
received and retained by the holders of Debt Securities or Trust Securities, as
the case may be, after payment of all taxes (including withholding taxes),
duties, assessments or other governmental charges, will be equal to the amounts
that such holders would have received and retained had no such taxes (including
withholding taxes), duties, assessments or other governmental charges been
imposed.

 

Whenever in this Indenture or the Debt Securities
there is a reference in any context to the payment of principal of or premium,
if any, or interest on the Debt Securities, such mention shall be deemed to
include mention of payments of the Additional Amounts provided for in this Section to
the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to the provisions of this Section and
express mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made, provided,
however, that, notwithstanding anything to the contrary contained in
this Indenture or any Debt Security, the deferral of the payment of interest
during an Extension Period pursuant to Section 2.11 shall not defer the
payment of any Additional Amounts that may be due and payable.

 

Section 3.07           Compliance
with Consolidation Provisions.

 

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

 

Section 3.08           Limitation
on Dividends.

 

If (i) there shall have occurred and be
continuing a Default or 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, (B) make
any payment of principal of or premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the
Debt Securities or (C) make any payment under any guarantees of the
Company that rank pari passu in all respects with
or junior in interest to the Capital Securities Guarantee (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company (I) in
connection with any employment contract, benefit plan or other similar 

 

25

 

arrangement with or for
the benefit of one or more employees, officers, directors or consultants, (II) in
connection with a dividend reinvestment or stockholder stock purchase plan or (III) in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the occurrence of (i), (ii) or
(iii) above, (b) as a result of any exchange 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 in interest 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 may succeed to the Company’s ownership of such
Common Securities.  The Company, as owner
of the Common Securities, shall use commercially reasonable efforts to cause
the Trust (a) to remain a statutory trust, except in connection with a
distribution of Debt Securities to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities or
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

 

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.

 

26

 

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:

 

(i)            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

 

(ii)           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.

 

27

 

(c)           Each and every holder of Debt
Securities, by receiving and holding the same, agrees with the Company and the
Trustee that none of the Company, the Trustee or 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).

 

Section 4.03           Financial
and Other Information.

 

(a)           The Company shall deliver, by
hardcopy or electronic transmission, to each Securityholder (i) each
Report on Form 10-K and Form 10-Q, if any, prepared by the Company
and filed with the Securities and Exchange Commission in accordance with the
Exchange Act within 10 Business Days after the filing thereof or (ii) if
the Company is (a) not then subject to Section 13 or 15(d) of
the Exchange Act (a “Private Entity”) or (b) exempt from reporting
pursuant to Rule 12g3-2(b) thereunder, the information required by Rule 144A(d)(4) under
the Securities Act.  Notwithstanding the
foregoing, so long as a Holder of the Debt Securities is The Park Avenue Bank
or an entity that holds a pool of trust preferred securities and/or debt
securities as collateral for its securities or a trustee thereof, and the
Company is (i) a Private Entity that, on the date of original issuance of
the Debt Securities, is required to provide audited consolidated financial
statements to its primary regulatory authority, (ii) a Private Entity
that, on the date of original issuance of the Debt Securities, is not required
to provide audited consolidated financial statements to its primary regulatory
authority but subsequently becomes subject to the audited consolidated
financial statement reporting requirements of that regulatory authority or (iii) subject
to Section 13 or 15(d) of the Exchange Act on the date of original
issuance of the Debt Securities or becomes so subject after the date hereof but
subsequently becomes a Private Entity, then, within 90 days after the end of
each fiscal year, beginning with the fiscal year in which the Debt Securities
were originally issued if the Company was then subject to (x) Section 13
or 15(d) of the Exchange Act or (y) audited consolidated financial
statement reporting requirements of its primary regulatory authority or,
otherwise, the earliest fiscal year in which the Company becomes subject to (1) Section 13
or 15(d) of the Exchange Act or (2) the audited consolidated
financial statement reporting requirements of its primary regulatory authority,
the Company shall deliver, by hardcopy or electronic transmission, to each
Securityholder, unless otherwise provided pursuant to the preceding sentence, (A) a
copy of the Company’s audited consolidated financial statements (including
balance sheet and income statement) covering the related annual period and (B) the
report of the independent accountants with respect to such financial
statements.  In addition to the
foregoing, the Company shall deliver to each Securityholder within 30 days
after the end of the fiscal year of the Company, Form 1099 or such other
annual U.S. federal income tax information statement required by the Code
containing such information with regard to the Debt Securities held by such
holder as is required by the Code and the income tax regulations of the U.S.
Treasury thereunder.

 

(b)           If and so long as the Holder of the
Debt Securities is The Park Avenue Bank or an entity that holds a pool of trust
preferred securities and/or debt securities or a trustee thereof, the Company
will cause copies of its reports on Form FR
Y-9C to be delivered to such Holder promptly following their filing with
the Federal Reserve.

 

28

 

(c)           The Company shall furnish to each
Securityholder and any designee of each Securityholder, a duly completed and
executed certificate in the form attached hereto as Exhibit C,
including the financial statements referenced in such Exhibit, to the extent
such financial statements are not otherwise provided pursuant to Section 4.03(a) above,
which certificate and financial statements shall be so furnished by the Company
not later than forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Company and not later than ninety
(90) days after the end of each fiscal year of the Company.

 

ARTICLE V

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

 

Section 5.01           Events
of Default.

 

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

 

(a)           the Company defaults in the payment
of any interest upon any Debt Security when it becomes due and payable, 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 any interest upon any Debt Security, including any Additional Amounts in
respect thereof, following the nonpayment of any such interest for twenty or
more consecutive Interest Periods; or

 

(c)           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, whether at
maturity, upon redemption, by acceleration of maturity pursuant to Section 5.01
of this Indenture or otherwise; or

 

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

 

(e)           a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the Company in
an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appoints a receiver, liquidator,
assignee, custodian, trustee, sequestrator or other 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, appointment or order shall
remain unstayed and in effect for a period of 90 consecutive days; or

 

29

 

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

 

(g)           a court or administrative or
governmental agency or body shall enter a decree or order for the appointment
of a receiver of a Major Depository Institution Subsidiary or all or
substantially all of its property in any liquidation, insolvency or similar
proceeding with respect to such Major Depository Institution Subsidiary or all
or substantially all of its property; or

 

(h)           a Major Depository Institution
Subsidiary shall consent to the appointment of a receiver for it or all or
substantially all of its property in any liquidation, insolvency or similar
proceeding with respect to it or all or substantially all of its property; or

 

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

 

If an Event of Default specified under clause (b) of
this Section 5.01 occurs and is continuing with respect to the Debt
Securities, then, in each and every such case, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Debt
Securities then outstanding hereunder, by notice in writing to the Company (and
to the Trustee if given by Securityholders), may declare the entire principal
of the Debt Securities and any premium and interest accrued, but unpaid,
thereon to be due and payable immediately, and upon any such declaration the
same shall become immediately due and payable. 
If an Event of Default specified under clause (e), (f), (g), (h) or
(i) of this Section 5.01 occurs, then, in each and every such case,
the entire principal amount of the Debt Securities and any premium and interest
accrued, but unpaid, thereon shall ipso  facto become immediately
due and payable without further action.

 

The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Debt Securities shall
have become due by acceleration, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Debt
Securities and all payments on the Debt Securities which shall have become due
otherwise than by acceleration (with interest upon all such payments and
Deferred Interest, to the extent permitted by law) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other amounts
due to the Trustee pursuant to Section 6.06, if any, and (ii) all
Events of Default under this Indenture, other than the non-payment of the
payments in respect of Debt Securities which shall have become due by 

 

30

 

acceleration, shall have
been cured, waived or otherwise remedied as provided herein, then, in each and
every such case, the holders of a majority in aggregate principal amount of the
Debt Securities then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults and rescind and annul such acceleration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon; provided, however, that if the Debt Securities are held
by the Trust or a trustee of the Trust, such waiver or rescission and annulment
shall not be effective until the holders of a majority in aggregate liquidation
amount of the outstanding Capital Securities of the Trust shall have consented
to such waiver or rescission and annulment.

 

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

 

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

 

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

 

31

 

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;

 

32

 

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

 

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

 

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

 

Section 5.04           Proceedings by Securityholders.

 

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

 

Notwithstanding any other provisions in this
Indenture, the right of any holder of any Debt Security to receive payment of
the principal of and 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, 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 

 

33

 

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 at the time outstanding and, if the Debt
Securities are held by the Trust or a trustee of the Trust, the holders of a
majority in aggregate liquidation amount of the outstanding Capital Securities
of the Trust shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to such
Debt Securities; provided, however, that if the Debt Securities
are held by the Trust or a trustee of the Trust, such time, method and place or
such exercise, as the case may be, may not be so directed until the holders of
a majority in aggregate liquidation amount of the outstanding Capital
Securities of the Trust shall have directed such time, method and place or such
exercise, as the case may be; provided, further, that (subject to
the provisions of Section 6.01) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine that the
action so directed would be unjustly prejudicial to the holders not taking part
in such direction or if the Trustee being advised by counsel determines that
the action or proceeding so directed may not lawfully be taken or if a
Responsible Officer of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.  Prior to any declaration of acceleration, or ipso
facto acceleration, of the maturity of the Debt Securities, the holders
of a majority in aggregate principal amount of the Debt Securities at the time
outstanding may on behalf of the holders of all of the Debt Securities waive
(or modify any previously granted waiver of) any past Default or Event of Default
and its consequences, except a default (a) in the payment of principal of
or premium, if any, or interest on any of the Debt Securities, (b) in
respect of covenants or provisions hereof which cannot be modified or amended
without the consent of the holder of each Debt Security affected, or (c) 
in respect of the covenants contained in Section 3.09; provided, however,
that if the Debt Securities are held by the Trust or a trustee of the Trust,
such waiver or modification to such waiver shall not be effective until the
holders of a majority in aggregate liquidation amount of the outstanding
Capital Securities of the Trust shall have consented to such waiver or
modification to such waiver; provided, further, that if the
consent of the holder of each outstanding Debt Security is required, such
waiver or modification to such waiver shall not be effective until each holder
of the outstanding Capital Securities of the Trust shall have consented to such
waiver or modification to such waiver. 
Upon any such waiver or modification to such waiver, the Default or
Event of Default covered thereby shall be deemed to be cured for all purposes
of this Indenture and the Company, the Trustee and the holders of the Debt
Securities shall be restored to their former positions and rights hereunder,
respectively; but no such waiver or modification to such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.  Whenever any Default
or Event of Default hereunder shall have been 

 

34

 

waived as permitted by
this Section, said Default or Event of Default shall for all purposes of the
Debt Securities and this Indenture be deemed to have been cured and to be not
continuing.

 

Section 5.08           Notice of Defaults.

 

The Trustee shall, within 90 days after a Responsible
Officer of the Trustee shall have actual knowledge or received written notice
of the occurrence of a default with respect to the Debt Securities, mail to all
Securityholders, as the names and addresses of such holders appear upon the
Debt Security Register, notice of all defaults with respect to the Debt
Securities known to the Trustee, unless such defaults shall have been cured
before the giving of such notice (the term “default” for the purpose of this Section is
hereby defined to be any event specified in 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 or premium, if
any, or interest on any of the Debt Securities, the Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders.

 

Section 5.09           Undertaking to Pay Costs.

 

All parties to this Indenture agree, and each holder
of any Debt Security by such holder’s acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 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 outstanding Debt Securities (or, if such Debt
Securities are held by the Trust or a trustee of the Trust, more than 10% in
liquidation amount of the outstanding Capital Securities), to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of or premium, if any, or interest on any Debt Security against the
Company on or after the same shall have become due and payable or to any suit
instituted in accordance with Section 14.12.

 

ARTICLE VI

CONCERNING THE TRUSTEE

 

Section 6.01           Duties and Responsibilities of Trustee.

 

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

 

35

 

person would exercise or
use under the circumstances in the conduct of such person’s own affairs.

 

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

 

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

 

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

 

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

 

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

 

(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; and

 

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

 

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.

 

36

 

Section 6.02           Reliance on Documents, Opinions, etc.

 

Except as otherwise
provided in Section 6.01:

 

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

 

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

 

(c)           the Trustee may consult
with counsel of its selection and any advice or Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;

 

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

 

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

 

(f)            the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of a majority in
aggregate principal amount of the outstanding Debt Securities affected thereby;
provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms
of this Indenture, the Trustee may require reasonable indemnity against such
expense or liability as a condition to so proceeding; and

 

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

 

37

 

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, any Authenticating Agent, any Paying
Agent, 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 President, the
Chief Operating Officer, a Vice President, the Treasurer or an Assistant
Treasurer of the Company.

 

Section 6.06           Compensation and Expenses of Trustee.

 

The Company covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed to in writing between the Company and the Trustee (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Company will pay or reimburse the Trustee
upon its written request for all documented reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance that
arises from its negligence, willful misconduct or bad faith.  The Company also covenants to indemnify each
of the Trustee (including in its individual capacity) and any predecessor Trustee
(and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee), except
to the extent such loss, damage, claim, liability or expense results from the
negligence, willful misconduct or bad faith of such 

 

38

 

indemnitee, arising out
of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim or
liability in the premises.  The
obligations of the Company under this Section 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 clause (e), (f),
(g), (h) or (i) of Section 5.01, the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable federal or state bankruptcy, insolvency or other similar law.

 

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

 

Notwithstanding anything in this Indenture or any Debt
Security to the contrary, the Trustee shall have no obligation whatsoever to
advance funds to pay any principal of or interest on or other amounts with
respect to the Debt Securities or otherwise advance funds to or on behalf of
the Company.

 

Section 6.07           Officers’ Certificate as Evidence.

 

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

 

Section 6.08           Eligibility of Trustee.

 

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

 

39

 

such corporation or
national association shall be deemed to be its combined capital and surplus as
set forth in its most recent records of condition so published.

 

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

 

In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, 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 or herself 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:

 

(i)            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;

 

(ii)           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

 

(iii)          the Trustee shall become incapable of acting,
or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or 

 

40

 

any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation,

 

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

 

(c)           Upon prior written
notice to the Company and the Trustee, the holders of a majority in aggregate
principal amount of the Debt Securities at the time outstanding may at any time
remove the Trustee and nominate a successor Trustee, which shall be deemed
appointed as successor Trustee unless within ten Business Days after such
nomination the Company objects thereto, in which case or in the case of a
failure by such holders to nominate a successor Trustee, the Trustee so removed
or any Securityholder, upon the terms and conditions and otherwise as in
subsection (a) of this Section, 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 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 indenture supplemental hereto which shall contain such provisions as
shall be deemed necessary or desirable to confirm that all of the rights,
powers, trusts and duties of the retiring Trustee shall be vested in the
successor Trustee, 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 the 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
hereunder.  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.

 

41

 

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

 

In no event shall a retiring Trustee 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, 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,
however, 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 thereof or of the District of Columbia authorized under

 

42

 

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
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 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 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, the Trustee
may, and upon the request of the Company shall, promptly appoint a successor
Authenticating Agent eligible under this Section, 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 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 or aggregate liquidation amount of the Capital Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number
of instruments of similar tenor executed by such Securityholders or holders of
Capital Securities, as the case may be, in person or by agent or proxy
appointed in writing, or (b) by the record of such holders of Debt
Securities voting in

 

43

 

favor thereof at any
meeting of such Securityholders duly called and held in accordance with the
provisions of Article VIII or of such holders of Capital Securities duly
called and held in accordance with the provisions of the Declaration, or (c) by
a combination of such instrument or instruments and any such record of such a
meeting of such Securityholders or holders of Capital Securities, as the case
may be, or (d) by any other method the Trustee deems satisfactory.

 

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

 

Section 7.02           Proof of Execution by
Securityholders.

 

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

 

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

 

Section 7.03           Who Are Deemed Absolute Owners.

 

Prior to due presentment for registration of transfer
of any Debt Security, the Company, the Trustee, any Authenticating Agent, any
Paying Agent, any transfer agent and any Debt Security registrar may deem the
Person in whose name such Debt Security shall be registered upon the Debt
Security Register to be, and may treat such Person as, the absolute owner of
such Debt Security (whether or not such Debt Security shall be overdue) for the
purpose of receiving payment of or on account of the principal of and premium,
if any, and interest on such Debt Security and for all other purposes; and none
of the Company, the Trustee, any Authenticating Agent, any Paying Agent, any
transfer agent or any Debt Security registrar shall be affected by any notice to
the contrary.  All such payments so made
to any holder for the

 

44

 

time being or upon such
holder’s order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debt Security.

 

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 request,
demand, authorization, direction, notice, consent or waiver under this
Indenture, Debt Securities which are owned by the Company or any other obligor
on the Debt Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company
(other than the Trust) or any other obligor on the Debt Securities shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination, provided, that for the purposes of determining whether
the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, 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 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.

 

45

 

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 the City of New York, the Borough of
Manhattan, or Wilmington, Delaware, 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 Wilmington, Delaware or Charleston, South Carolina 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.

 

46

 

Section 8.04           Qualifications for Voting.

 

To be entitled to vote at any meeting of
Securityholders, a Person shall be (a) a holder of one or more Debt
Securities or (b) a Person appointed by an instrument in writing as proxy
by a holder of one or more 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 deem appropriate.

 

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

 

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

 

Section 8.06           Voting.

 

The vote upon any resolution submitted to any meeting
of holders of Debt Securities with respect to which such meeting is being held
shall be by written ballots on which shall be subscribed the signatures of such
holders or of their representatives by proxy and the serial number or numbers
of the Debt Securities held or represented by them.  The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in triplicate of all votes cast at
the meeting. A record in duplicate of the proceedings of each meeting of
Securityholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the

 

47

 

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

 

48

 

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 the Trustee upon such default;

 

(c)           to cure any ambiguity or to correct
or supplement any provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make 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 then outstanding;

 

(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), provided, that any such action shall not
adversely affect the interests of the holders of the Debt Securities then
outstanding (it being understood, for purposes of this proviso, that transfer
restrictions on Debt Securities substantially similar to those applicable to
Capital Securities shall not be deemed to adversely affect the holders of the
Debt Securities);

 

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

 

49

 

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

 

50

 

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

 

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

 

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

 

It shall not be necessary for the consent of the
Securityholders under this Section 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.

 

51

 

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 as conclusive evidence that any supplemental
indenture executed pursuant hereto complies with the requirements of this Article IX.  The Trustee shall also 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.

 

The Company shall have the right, subject to the
receipt by the Company of the 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 (provided that all accrued
and unpaid interest has been paid on all Debt Securities for all Interest
Periods terminating on or prior to such date) from time to time in part, on any
Interest Payment Date on or after June 30,
2013 (each, an “Optional Redemption Date”), at the Optional 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, or cause the Trustee to mail
(at the expense of the Company), a notice of such redemption at least 30 and
not more than 60 days prior to the date fixed for redemption to the holders of
Debt Securities so to be redeemed as a whole or in part at their last addresses
as the same appear on the Debt Security Register.  Such mailing shall be by first class
mail.  The notice if mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice. 
In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Debt Security designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any other Debt Security.

 

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 price (or manner of calculation of the price) at which Debt
Securities are to be redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Debt Securities, 

 

52

 

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
Optional Redemption Date or the Special Redemption Date specified in the notice
of redemption given as provided in this Section, the Company will deposit with
the Trustee or with one or more Paying Agents an amount of money sufficient to
redeem on such date all the Debt Securities so called for redemption at the
applicable price therefor, together with unpaid interest accrued to such date.

 

The Company will give the Trustee notice not less than
45 nor more than 75 days prior to the date fixed for redemption as to the price
at which the Debt Securities are to be redeemed and the aggregate principal
amount of Debt Securities to be redeemed and the Trustee shall select, in such
manner as in its sole discretion it shall deem appropriate and fair, the Debt
Securities or portions thereof (in integral multiples of $1,000) to be
redeemed.

 

Section 10.04         Payment
of Debt Securities Called for Redemption.

 

If notice of redemption has been given as provided in Section 10.03,
the Debt Securities or portions of Debt Securities with respect to which such
notice has been given shall become due and payable on the related Optional
Redemption Date or Special Redemption Date (as the case may be) and at the
place or places stated in such notice at the applicable price therefor,
together with unpaid interest accrued thereon to said Optional Redemption Date
or the Special Redemption Date (as the case may be), and on and after said
Optional 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 unpaid interest accrued thereon to said date)
interest on the Debt Securities or portions of Debt Securities so called for
redemption shall cease to accrue.  On
presentation and surrender of such Debt Securities at a place of payment
specified in said notice, such Debt Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable price
therefor, together with unpaid interest, if any, accrued thereon to said
Optional Redemption Date or the Special Redemption Date (as the case may be); provided,
however, that interest payable on any Interest Payment Date on or prior
to said Optional Redemption Date or the Special Redemption Date will be paid to
the holders on the relevant regular record date.

 

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.

 

53

 

ARTICLE XI

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

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

 

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

 

Section 11.02         Successor
Entity to be Substituted.

 

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

 

54

 

of all of the covenants
and conditions of this Indenture to be performed or observed by the Company,
such successor corporation 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 corporation 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 corporation 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 corporation 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
the Maturity Date, any Optional Redemption Date or the Special 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 

 

55

 

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

 

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

 

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

 

Section 12.03         Paying
Agent to Repay Moneys Held.

 

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

 

Section 12.04         Return
of Unclaimed Moneys.

 

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

 

56

 

ARTICLE XIII

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

 

Section 13.01         Indenture
and Debt Securities Solely Corporate Obligations.

 

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

 

ARTICLE XIV

MISCELLANEOUS PROVISIONS

 

Section 14.01         Successors.

 

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

 

Section 14.02         Official
Acts by Successor Entity.

 

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

 

Section 14.03         Surrender
of Company Powers.

 

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

 

Section 14.04         Addresses
for Notices, etc.

 

Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Securityholders on the Company may be given or served in writing 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 such purpose) to the Company at 875
Lowcountry Blvd., Mount Pleasant, South Carolina 29464, Attention: Chief Financial Officer.  Any notice, direction, request or demand by
any 

 

57

 

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
Wilmington Trust Company at Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate Capital Markets.

 

Section 14.05         Governing
Law.

 

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

 

Section 14.06         Evidence
of Compliance with Conditions Precedent.

 

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

 

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

 

Section 14.07         Business
Day Convention.

 

Notwithstanding anything to the contrary contained
herein, if any Interest Payment Date after the Interest Payment Date in June 2013,
other than the Maturity Date, any Optional Redemption Date or the Special
Redemption Date, falls on a day that is not a Business Day, then any interest
payable will be paid on, and such Interest Payment Date will be moved to, the
next succeeding Business Day, and additional interest will accrue for each day
that such payment is delayed as a result thereof.  If any Interest Payment Date on or prior to
the Interest Payment Date in June 2013, the Maturity Date, any Optional
Redemption Date or the Special Redemption Date falls on a day that is not a
Business Day, then the principal, premium, if any, and/or interest payable on
such date will be paid on the next succeeding Business Day, and no additional
interest will accrue in respect of such payment made on such next succeeding
Business Day.

 

58

 

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, illegal or unenforceable provision had never been
contained herein or therein.

 

Section 14.11         Assignment.

 

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

 

Section 14.12         Acknowledgment
of Rights.

 

The Company acknowledges that, with respect to any
Debt Securities held by the Trust or a trustee of the Trust, if such 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 aggregate liquidation amount of the outstanding Capital Securities of the
Trust have so directed in writing such 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 trustee’s rights under
this Indenture without first instituting any legal proceedings against such
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, on or principal of the Debt Securities on the date
such interest, premium, if any, or principal is otherwise due and payable (or,
in the case of redemption, on the related Optional Redemption Date or the
Special Redemption Date (as the case may be)), the Company acknowledges that a
holder of outstanding 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 

 

59

 

holder on or after the
respective due date (or Optional Redemption Date or Special Redemption Date (as
the case may be)) specified in the Debt Securities.

 

ARTICLE XV

SUBORDINATION OF DEBT SECURITIES

 

Section 15.01         Agreement
to Subordinate.

 

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

 

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

 

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

 

Section 15.02         Default
on Senior Indebtedness.

 

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

 

In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Securityholder when such
payment is prohibited by the preceding paragraph of this Section, 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
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, 

 

60

 

winding-up, liquidation
or reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due upon
all Senior Indebtedness of the Company shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company on the Debt Securities; and upon any such dissolution,
winding-up, 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 or to the Trustee.

 

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 or any Securityholder 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, transfer or other disposition of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided for in Article XI of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of
such 

 

61

 

consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XI of
this Indenture.  Nothing in Section 15.02
or in this Section shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 6.06 of this Indenture.

 

Section 15.04         Subrogation.

 

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

 

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

 

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

 

62

 

Section 15.05         Trustee
to Effectuate Subordination.

 

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

 

Section 15.06         Notice
by the Company.

 

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

 

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

 

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 

 

63

 

any other holder of Senior
Indebtedness, and nothing in this Indenture or any Additional Provisions shall
deprive the Trustee of any of its rights as such holder.

 

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

 

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

 

Section 15.08         Subordination
May Not Be Impaired.

 

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

 

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

 

64

 

Wilmington Trust Company, 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.

 

	
   

  	
  TIDELANDS
  BANCSHARES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By::

  	
    /s/ Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
  Name: Robert E.
  Coffee, Jr.

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By::

  	
    /s/ W.
  Thomas Morris, II

  
	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

  

 

65

 

EXHIBIT A

 

FORM OF DEBT SECURITY

 

[FORM OF FACE
OF SECURITY]

 

[THIS SECURITY IS A GLOBAL DEBENTURE WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE,
AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS THIS SECURITY IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE
HEREOF AND (Z) THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE (AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE HOLDER OF
THIS 

 

(1) Only applicable
if this Debt Security is a Global Debt Security.

 

A-1

 

SECURITY OR SUCH INTEREST OR
PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF
ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO
THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE
144A”), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER”, AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2),
(3), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO
NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) OR
(E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN
ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY AND NO PERSON
INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR
ANY INTEREST OR PARTICIPATION HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14
OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY OR
SUCH INTEREST OR PARTICIPATION IS NOT PROHIBITED BY SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING.  ANY PURCHASER OR HOLDER OF THIS 

 

A-2

 

SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT IS
NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN,
OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.

 

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

 

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

 

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

 

A-3

 

Fixed/Floating Rate
Junior Subordinated Debt Security due 2038

 

of

TIDELANDS
BANCSHARES, INC.

 

Tidelands Bancshares, Inc.,
a bank holding company incorporated in South
Carolina (the “Company”, which term includes any successor permitted
under the Indenture (as defined herein)), for value received, promises to pay
to Wilmington Trust Company, not in its individual capacity but solely as
Institutional Trustee for Tidelands Statutory
Trust II, a Delaware statutory trust, or registered assigns, the
principal amount of Six Million One Hundred
Eighty-Six Thousand Dollars ($6,186,000) on June 30, 2038 (the “Maturity Date”) (or any Optional
Redemption Date or the Special Redemption Date, each as defined herein, or any
earlier date of acceleration of the maturity of this Debt Security), and to pay
interest on the outstanding principal amount of this Debt Security from June 20, 2008, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or
duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on March 30, June 30, September 30
and December 30 of each year, commencing on September 30, 2008
(each, an “Interest Payment Date”), at a per annum rate (the “Interest Rate”)
equal to (i) with respect to any Interest Period (as defined in the
Indenture) prior to the Interest Period commencing on Interest Payment Date (as
defined in the Indenture) in June 2013, 9.425%, and (ii) with respect
to any Interest Period commencing on or after the Interest Payment Date in June 2013,
LIBOR (as defined in the Indenture), as determined on the LIBOR Determination
Date (as defined in the Indenture) for such Interest Period plus 5.075%% (the “Interest Rate”) (provided
that the Interest Rate for any Interest Period commencing on or after the
Interest Payment Date in June 2013 may not exceed the highest rate
permitted by New York law, as the same may be modified by United States law of
general application) until the principal hereof shall have been paid or duly
provided for, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at an annual rate equal to the then applicable
Interest Rate, compounded quarterly.  The
amount of interest payable shall be computed with respect to any Interest
Period prior to the Interest Period commencing on the Interest Payment Date in June 2013,
on the basis of a 360-day year consisting of twelve 30-day months and (ii) with
respect to any Interest Period commencing on or after the Interest Payment Date
in June 2013, on the basis of a 360-day year and the actual number of days
elapsed in such Interest Period.

 

The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Debt Security (or one
or more Predecessor Securities, as defined in the Indenture) is registered at
the close of business on the “regular record date” for such interest
installment, which shall be the fifteenth day prior to such Interest Payment
Date, whether or not such day is a Business Day (as defined herein).  Any such interest installment (other than Deferred
Interest (as defined herein)) not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and
may be paid to the Person in whose name this Debt Security (or one or more
Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof 

 

A-4

 

shall be given to the
holders of the Debt Securities not less than 10 days prior to such special
record date, all as more fully provided in the Indenture.

 

Payment of the principal of and premium, if any, and
interest on this Debt Security due on the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be, shall be
made in immediately available funds against presentation and surrender of this
Debt Security at the office or agency of the Trustee maintained for that
purpose in Wilmington, Delaware, or at the office or agency of any other Paying
Agent appointed by the Company maintained for that purpose in Wilmington,
Delaware.  Payment of interest on this
Debt Security due on any Interest Payment Date other than the Maturity Date,
any Optional Redemption Date or the Special Redemption Date, as the case may
be, shall be made at the option of the Company by check mailed to the holder
thereof at such address as shall appear in the Debt Security Register or by
wire transfer of immediately available funds to an account appropriately
designated by the holder hereof. 
Notwithstanding the foregoing, so long as the holder of this Debt
Security is the Institutional Trustee, payment of the principal of and premium,
if any, and interest on this Debt Security shall be made in immediately
available funds when due at such place and to such account as may be designated
by the Institutional Trustee.  All
payments in respect of this Debt Security shall be payable in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts.

 

Notwithstanding anything to the contrary contained
herein, if any Interest Payment Date after the Interest Payment Date in June 2013,
other than the Maturity Date, any Optional Redemption Date or the Special
Redemption Date, falls on a day that is not a Business Day, then any interest
payable will be paid on, and such Interest Payment Date will be moved to, the
next succeeding Business Day, and additional interest will accrue for each day
that such payment is delayed as a result thereof.  If any Interest Payment Date on or prior to
the Interest Payment Date in June 2013, the Maturity Date, any Optional
Redemption Date or the Special Redemption Date falls on a day that is not a
Business Day, then the principal, premium, if any, and/or interest payable on
such date will be paid on the next succeeding Business Day, and no additional
interest will accrue in respect of such payment made on such next succeeding
Business Day.

 

So long as no Event of Default pursuant to Sections
5.01(b), (e), (f), (g), (h) or (i) of the Indenture has occurred and
is continuing, the Company shall have the right, from time to time and without
causing an Event of Default, to defer payments of interest on the Debt
Securities by extending the interest payment period on the Debt Securities at
any time and from time to time during the term of the Debt Securities, for up
to 20 consecutive quarterly periods (each such extended interest payment
period, together with all previous and further consecutive extensions thereof,
is referred to herein as an “Extension Period”).  No Extension Period may end on a date other
than an Interest Payment Date or extend beyond the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be.  During any Extension Period, interest will
continue to accrue on the Debt Securities, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
“Deferred Interest”) will accrue at an annual rate equal to the Interest Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  No 

 

A-5

 

interest or Deferred
Interest (except any Additional Amounts (as defined in the Indenture) that may
be due and payable) shall be due and payable during an Extension Period, except
at the end thereof.  At the end of any
Extension Period, the Company shall pay all Deferred Interest then accrued and
unpaid on the Debt Securities; provided, however, that during any
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s capital stock, (ii) make any payment
of principal of or premium, if any, or interest on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu
in all respects with or junior in interest to the Debt Securities or (iii) make
any payment under any guarantees of the Company that rank in all respects pari passu with or junior in respect to the Capital
Securities Guarantee   (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company (A) in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, (B) in connection with a dividend reinvestment
or stockholder stock purchase plan or (C) in connection with the issuance
of capital stock of the Company (or securities convertible into or exercisable
for such capital stock), as consideration in an acquisition transaction entered
into prior to such Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company’s capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company’s capital stock or of any class or series of the Company’s indebtedness
for any class or series of the Company’s capital stock, (c) the purchase
of fractional interests in shares of the Company’s capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder’s rights plan, or the issuance of rights, stock
or other property under any stockholder’s rights plan, or the redemption or
repurchase of rights pursuant thereto or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock).  Prior to
the termination of any Extension Period, the Company may further extend such
Extension Period, provided, that no Extension Period (including all
previous and further consecutive extensions that are part of such Extension
Period) shall exceed 20 consecutive quarterly periods.  Upon the termination of any Extension Period
and upon the payment of all Deferred Interest, the Company may commence a new
Extension Period, subject to the foregoing requirements.  The Company must give the Trustee notice of
its election to begin or extend an Extension Period no later than the close of
business on the fifteenth Business Day prior to the applicable Interest Payment
Date.

 

The indebtedness evidenced by this Debt Security is,
to the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture), and this Debt Security is issued subject to the provisions of
the Indenture with respect thereto.  Each
holder of this Debt Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee
on such holder’s behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination so provided and (c) appoints
the Trustee such holder’s attorney-in-fact for any and all such purposes.  Each holder hereof, by such holder’s
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.

 

A-6

 

The Company waives diligence, presentment, demand for
payment, notice of nonpayment, notice of protest, and all other demands and
notices.

 

This Debt Security shall not be entitled to any
benefit under the Indenture hereinafter referred to and shall not be valid or
become obligatory for any purpose until the certificate of authentication
hereon shall have been signed by or on behalf of the Trustee.

 

The provisions of this
Debt Security are continued on the reverse side hereof and such continued
provisions shall for all purposes have the same effect as though fully set
forth at this place.

 

This Debt Security may
contain more than one counterpart of the signature page and this Debt
Security may be executed and authenticated by the affixing of the signature of
a proper officer of the Company, and the signature of the Trustee providing
authentication, 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
the Company had executed, and the Trustee had authenticated, a single signature
page.

 

A-7

 

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

 

	
   

  	
  TIDELANDS BANCSHARES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Dated: 
                                            ,       

 

 

CERTIFICATE OF AUTHENTICATION

 

 

This certificate represents Debt Securities referred
to in the within-mentioned Indenture.

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  not in its individual
  capacity but solely as

  
	
   

  	
  the Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  

 

Dated: 
                                            ,

 

A-8

 

[FORM OF
REVERSE OF SECURITY]

 

This Debt Security is one of a duly authorized series
of debt securities of the Company (collectively, the “Debt Securities”), all
issued or to be issued pursuant to an Indenture (the “Indenture”), dated as of June 20, 2008, duly executed and delivered
between the Company and Wilmington Trust Company, as Trustee (the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Debt Securities of which this Debt Security is a part.

 

Upon the occurrence and continuation of a Tax Event,
an Investment Company Event or a Capital Treatment Event (each, a “Special
Event”), the Company shall have the right to redeem this Debt Security, at its
option, in whole with all other Debt Securities but not in part, at any time,
within 90 days following the occurrence of such Special Event (the “Special
Redemption Date”), at the Special Redemption Price (as defined herein).

 

The Company shall also have the right to redeem this
Debt Security at its option, in whole or (provided that all accrued and unpaid
interest has been paid on all Debt Securities for all Interest Periods
terminating on or prior to such date) from time to time in part, on any
Interest Payment Date on or after June 30,
2013 (each, an “Optional Redemption Date”), at the Optional Redemption
Price (as defined herein).

 

Any redemption pursuant to the preceding two paragraphs
will be made, subject to receipt by the Company of prior approval from the
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’ prior written
notice.  If the Debt Securities are only
partially redeemed by the Company, the Debt Securities will be redeemed pro
rata or by any other method utilized by the Trustee.  In the event of redemption of this Debt
Security in part only, a new Debt Security or Debt Securities for the
unredeemed portion hereof will be issued in the name of the holder hereof upon
the cancellation hereof.

 

“Optional Redemption Price” means an amount in cash
equal to 100% of the principal amount of this Debt Security being redeemed plus
unpaid interest accrued thereon to the related Optional Redemption Date.

 

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

 

	
  Special Redemption During the 12-Month

  Period Beginning June 30,

  	
   

  	
  Percentage of Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  104.125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  103.30

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  102.48

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  101.65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
  100.83

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
  100

  	
  %

  

 

A-9

 

In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal of all of the
Debt Securities may be declared, and, in certain cases, shall ipso  facto
become, due and payable, and upon any such declaration of acceleration shall
become due and payable, in each case, in the manner, with the effect and
subject to the conditions provided in the Indenture.

 

The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Debt Securities at the time outstanding affected
thereby, as specified in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the Debt
Securities; provided, however, that no such supplemental
indenture shall, among other things, without the consent of the holders of each
Debt Security then outstanding and affected thereby (i) change the
Maturity Date of any Debt Security, or reduce the principal amount thereof or
any premium thereon, or reduce the rate (or manner of calculation of the rate)
or extend the time of payment of interest thereon, or reduce (other than as a
result of the maturity or earlier redemption of any such Debt Security in
accordance with the terms of the Indenture and such Debt Security) or increase
the aggregate principal amount of Debt Securities then outstanding, or change
any of the redemption provisions, or make the principal thereof or any interest
or premium thereon payable in any coin or currency other than United States
Dollars, or impair or affect the right of any holder to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Debt Securities the
holders of which are required to consent to any such supplemental
indenture.  The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount
of the Debt Securities at the time outstanding, on behalf of the holders of all
the Debt Securities, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture,
and its consequences, except (a) a default in payments due in respect of
any of the Debt Securities, (b) in respect of covenants or provisions of
the Indenture which cannot be modified or amended without the consent of the
holder of each Debt Security affected, or (c) in respect of the covenants
of the Company relating to its ownership of Common Securities of the
Trust.  Any such consent or waiver by the
holder of this Debt Security (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such holder and upon all future holders and
owners of this Debt Security and of any Debt Security issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debt Security.

 

A-10

 

No reference herein to the Indenture and no provision
of this Debt Security or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to make all payments due
on this Debt Security at the time and place and at the rate and in the money
herein prescribed.

 

As provided in the Indenture and subject to certain
limitations herein and therein set forth, this Debt Security is transferable by
the holder hereof on the Debt Security Register (as defined in the Indenture)
of the Company, upon surrender of this Debt Security for registration of
transfer at the office or agency of the Trustee in Wilmington, Delaware, or at
any other office or agency of the Company in Wilmington, Delaware, accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the holder hereof or such holder’s
attorney duly authorized in writing, and thereupon one or more new Debt
Securities of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees.  No service charge will be made for any such
registration of transfer, but the Company or the Trustee may require payment of
a sum sufficient to cover any tax, fee or other governmental charge payable in
relation thereto as specified in the Indenture.

 

Prior to due presentment for registration of transfer
of this Debt Security, the Company, the Trustee, any Authenticating Agent, any
Paying Agent, any transfer agent and the Debt Security registrar may deem and
treat the holder hereof as the absolute owner hereof (whether or not this Debt
Security shall be overdue and notwithstanding any notice of ownership or
writing hereon) for the purpose of receiving payment of the principal of and
premium, if any, and interest on this Debt Security and for all other purposes,
and none of the Company, the Trustee, any Authenticating Agent, any Paying
Agent, any transfer agent or any Debt Security registrar shall be affected by
any notice to the contrary.

 

As provided in the Indenture and subject to certain
limitations herein and therein set forth, Debt Securities are exchangeable for
a like aggregate principal amount of Debt Securities of different authorized
denominations, as requested by the holder surrendering the same.

 

The Debt Securities are issuable only in registered
certificated form without coupons.

 

No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this Debt Security, or for any
claim based hereon, or otherwise in respect hereof, or based on or in respect
of the Indenture, against any incorporator, stockholder, officer, director, employee
or agent, past, present or future, as such, of the Company or of any
predecessor or successor corporation of the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.

 

All terms used but not defined in this Debt Security
shall have the meanings assigned to them in the Indenture.

 

A-11

 

THIS DEBT SECURITY SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.

 

A-12

 

EXHIBIT B

 

FORM OF CERTIFICATE OF OFFICER OF THE COMPANY

 

Pursuant
to Section 3.05 of the Indenture, dated as of June 20, 2008 (as
amended or supplemented from time to time, the “Indenture”), between Tidelands
Bancshares, Inc., as issuer (the “Company”), and Wilmington Trust Company,
as trustee, the undersigned certifies that he/she is a [principal executive
officer, principal financial officer or principal accounting officer] of the
Company and in the course of the performance by the undersigned of his/her
duties as an officer of the Company, the undersigned would normally have
knowledge of any default by the Company in the performance of any covenants
contained in the Indenture, and the undersigned hereby further certifies that
he/she has no knowledge of any default for the fiscal year ending on
                    ,
20       [, except as follows: specify each such default and the nature thereof].

 

Capitalized
terms used herein, and not otherwise defined herein, have the respective
meanings assigned thereto in the Indenture.

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of

 

                        ,
20        .

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-1

 

EXHIBIT C

 

Form of
Officer’s Financial Certificate

 

The undersigned, the
[Chief Financial Officer] [Treasurer] [Executive Vice President] hereby
certifies, pursuant to Section 4.03(c) of the Indenture, dated as of June 20,
2008, among Tidelands Bancshares, Inc. (the “Company”), Wilmington Trust
Company, as property trustee, Wilmington Trust Company, as Delaware trustee and
the administrators named therein, that, as of
                          ,
20          , the Company had
the following ratios and balances:

 

[BANK] HOLDING COMPANY

 

As of [Quarterly Financial
Dates]

 

	
  Tier 1 Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Tangible Common
  Equity as a Percentage of Tangible Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on
  Average Assets (annualized)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Interest
  Margin (annualized)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Efficiency Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Double Leverage
  (exclude trust preferred as equity)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  	
   

  

 

C-1

 

*A table describing the
quarterly report calculation procedures is attached.

 

[FOR FISCAL
YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended
                            ,
20          .]

 

[FOR FISCAL
QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income statement)
of the Company and its consolidated subsidiaries for the fiscal quarter and
[six/nine] month period ended
                            ,
20          ].

 

The financial statements
fairly present in all material respects, in accordance with U.S. generally
accepted accounting principals (“GAAP”), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in
financial condition as of the date, and for the
[           quarter interim]
[annual] period ended
                          ,
20          , and such
financial statements have been prepared in accordance with GAAP consistently
applied throughout the period involved (except as otherwise noted therein).

 

C-2

 

IN WITNESS WHEREOF, the
undersigned has executed this Officer’s Certificate as of this
           day of
                                    ,
20          .

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Tidelands
  Bancshares, Inc.

  
	
   

  	
  875 Lowcountry
  Boulevard

  
	
   

  	
  Mt. Pleasant, SC 29464

  
	
   

  	
  (843) 388-8433

  

 

C-3

 

Financial Definitions

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
  Tier
  1 Risk Weighted Assets

  	
   

  	
  BHCK7206

  Schedule HC-R

  	
   

  	
  Tier
  1 Risk Ratio: core Capital (Tier 1)/Risk-Adjusted Assets

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Double Leverage

  	
   

  	
  (BHCP0365)/(BCHCP3210)

  Schedule PC in the LP

  	
   

  	
  Total
  equity investments in subsidiaries divided by the total equity capital. This
  field is calculated at the parent company level. “Subsidiaries” include bank,
  bank holding company, and non-bank subsidiaries.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+/BHCK2744/(BHCK2122+BHCK2744)
  Schedules HC-C, HC-M & HC-N

  	
   

  	
  Total
  Nonperforming Assets  (NPLs+Foreclosed
  Real Estate+Other Nonaccrual & Repossessed Assets)/Total
  Loans+Foreclosed Real Estate

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tangible
  Common Equity as a Percentage of Tangible Assets

  	
   

  	
  (BHDM3210-BHCK3163)/BHCK2170-BHCK3163)

  Schedule HC

  	
   

  	
  (Equity
  Capital – Goodwill)/(Total Assets – Goodwill)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Reserves to Non-Performing loans

  	
   

  	
  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)

  Schedules HC &
  HC-N & HC-R

  	
   

  	
  Total
  Loan Loss and Allocated Transfer Risk Reserves/Total Nonperforming Loans
  (Nonaccrual + Restructured)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Net Charge-Offs to Loans

  	
   

  	
  (BHCK4635-BHCK4605)/(BHCK3516)

  Schedules HI-B & HC-K

  	
   

  	
  Net
  charge offs for the period as a percentage of average loans.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Return
  on Average Assets (annualized)

  	
   

  	
  (BHCK4340/BHCK3368)

  Schedules HI & HC-K

  	
   

  	
  Net
  Income as a percentage of Assets.

  

 

C-4

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
  Net
  Interest Margin (annualized)

  	
   

  	
  (BHCK4519/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985)

  Schedules HI Memorandum and
  HC-K

  	
   

  	
  (Net
  Interest Income Fully Taxable Equivalent, if available/Average Earning
  Assets)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Efficiency
  Ration

  	
   

  	
  (BHCK4093)/(BHCK4519+BHCK4079)

  Schedule HI

  	
   

  	
  (Non-interest
  Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus
  Non-interest Income)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Assets

  	
   

  	
  (BHCKB528+BHCK5369)/(BHCK2170)

  Schedule HC

  	
   

  	
  Total
  Loans & Leases (Net of Unearned Income & Gross of
  Reserve)/Total Assets

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Deposits

  	
   

  	
  (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)

  Schedule HC

  	
   

  	
  Total
  Loans & Leases (Net of Unearned Income & Gross of
  Reserve)/Total Deposits (Includes Domestic and Foreign Deposits)

  

 

C-5

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
  Total
  Assets

  	
   

  	
  (BHCK2170)

  Schedule HC

  	
   

  	
  The
  sum of total assets. Includes cash and balances due from depository
  institutions; securities; federal funds sold and securities purchased under
  agreements to resell; loans and lease financing receivables; trading assets;
  premises and fixed assets; other real estate owned; investments in
  unconsolidated subsidiaries and associate companies; customer’s liability on
  acceptances outstanding; intangible assets; and other assets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income

  	
   

  	
  (BHCK4300)
  Schedule HI

  	
   

  	
  The
  sum of income (loss) before extraordinary items and other adjustments and
  extraordinary items; and other adjustments, net of income taxes.

  

 

C-6Exhibit 10.1

 

AMENDED AND
RESTATED DECLARATION OF TRUST

 

OF

 

TIDELANDS
STATUTORY TRUST II

 

Dated as of June 20, 2008

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  INTERPRETATION AND DEFINITIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  ORGANIZATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Name

  	
   

  	
  10

  
	
  Section 2.2.

  	
   

  	
  Office

  	
   

  	
  10

  
	
  Section 2.3.

  	
   

  	
  Purpose

  	
   

  	
  10

  
	
  Section 2.4.

  	
   

  	
  Authority

  	
   

  	
  10

  
	
  Section 2.5.

  	
   

  	
  Title to Property of the Trust

  	
   

  	
  11

  
	
  Section 2.6.

  	
   

  	
  Powers and Duties of the Trustees
  and the Administrators

  	
   

  	
  11

  
	
  Section 2.7.

  	
   

  	
  Prohibition of Actions by the Trust
  and the Trustees

  	
   

  	
  15

  
	
  Section 2.8.

  	
   

  	
  Powers and Duties of the
  Institutional Trustee

  	
   

  	
  16

  
	
  Section 2.9.

  	
   

  	
  Certain Duties and Responsibilities
  of the Trustees and the Administrators

  	
   

  	
  18

  
	
  Section 2.10.

  	
   

  	
  Certain Rights of Institutional
  Trustee

  	
   

  	
  20

  
	
  Section 2.11.

  	
   

  	
  Delaware Trustee

  	
   

  	
  22

  
	
  Section 2.12.

  	
   

  	
  Execution of Documents

  	
   

  	
  22

  
	
  Section 2.13.

  	
   

  	
  Not Responsible for Recitals or
  Issuance of Securities

  	
   

  	
  22

  
	
  Section 2.14.

  	
   

  	
  Duration of Trust

  	
   

  	
  23

  
	
  Section 2.15.

  	
   

  	
  Mergers

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  SPONSOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Sponsor’s Purchase of Common
  Securities

  	
   

  	
  25

  
	
  Section 3.2.

  	
   

  	
  Responsibilities of the Sponsor

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  TRUSTEES AND ADMINISTRATORS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Number of Trustees

  	
   

  	
  25

  
	
  Section 4.2.

  	
   

  	
  Delaware Trustee

  	
   

  	
  25

  
	
  Section 4.3.

  	
   

  	
  Institutional Trustee; Eligibility

  	
   

  	
  26

  
	
  Section 4.4.

  	
   

  	
  Administrators

  	
   

  	
  26

  
	
  Section 4.5.

  	
   

  	
  Appointment, Removal and
  Resignation of the Trustees and the Administrators

  	
   

  	
  27

  
	
  Section 4.6.

  	
   

  	
  Vacancies Among Trustees

  	
   

  	
  28

  
	
  Section 4.7.

  	
   

  	
  Effect of Vacancies

  	
   

  	
  29

  
	
  Section 4.8.

  	
   

  	
  Meetings of the Trustees and the
  Administrators

  	
   

  	
  29

  
	
  Section 4.9.

  	
   

  	
  Delegation of Power

  	
   

  	
  29

  
	
  Section 4.10.

  	
   

  	
  Merger, Conversion, Consolidation
  or Succession to Business

  	
   

  	
  30

  

 

 

	
  ARTICLE V

  
	
  DISTRIBUTIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Distributions

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  ISSUANCE OF SECURITIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  General Provisions Regarding
  Securities

  	
   

  	
  30

  
	
  Section 6.2.

  	
   

  	
  Paying Agent, Transfer Agent, Calculation
  Agent and Registrar

  	
   

  	
  32

  
	
  Section 6.3.

  	
   

  	
  Form and Dating

  	
   

  	
  32

  
	
  Section 6.4.

  	
   

  	
  Book-Entry Capital Securities

  	
   

  	
  33

  
	
  Section 6.5.

  	
   

  	
  Mutilated, Destroyed, Lost or
  Stolen Certificates

  	
   

  	
  36

  
	
  Section 6.6.

  	
   

  	
  Temporary Certificates

  	
   

  	
  36

  
	
  Section 6.7.

  	
   

  	
  Cancellation

  	
   

  	
  36

  
	
  Section 6.8.

  	
   

  	
  Rights of Holders; Waivers of Past
  Defaults

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  DISSOLUTION AND TERMINATION OF TRUST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Dissolution and Termination of
  Trust

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  TRANSFER OF INTERESTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  General

  	
   

  	
  39

  
	
  Section 8.2.

  	
   

  	
  Transfer Procedures and
  Restrictions

  	
   

  	
  41

  
	
  Section 8.3.

  	
   

  	
  Deemed Security Holders

  	
   

  	
  44

  
	
  Section 8.4.

  	
   

  	
  Transfer of Initial Securities

  	
   

  	
  44

  
	
  Section 8.5.

  	
   

  	
  Exchange of Capital Securities by
  Sponsor or its Affiliates

  	
   

  	
  45

  
	
  Section 8.6. 

  	
   

  	
  Obligation
  of the Trust to Eliminate a DTC Deliver Order Chill in Certain Circumstances

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
  TRUSTEES OR OTHERS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Liability

  	
   

  	
  47

  
	
  Section 9.2.

  	
   

  	
  Exculpation

  	
   

  	
  47

  
	
  Section 9.3.

  	
   

  	
  Fiduciary Duty

  	
   

  	
  47

  
	
  Section 9.4.

  	
   

  	
  Indemnification

  	
   

  	
  48

  
	
  Section 9.5.

  	
   

  	
  Outside Businesses

  	
   

  	
  51

  
	
  Section 9.6.

  	
   

  	
  Compensation; Fee

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  ACCOUNTING

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Fiscal Year

  	
   

  	
  52

  
	
  Section 10.2.

  	
   

  	
  Certain Accounting Matters

  	
   

  	
  52

  

 

ii

 

	
  Section 10.3.

  	
   

  	
  Banking

  	
   

  	
  53

  
	
  Section 10.4.

  	
   

  	
  Withholding

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
  AMENDMENTS AND MEETINGS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
   

  	
  Amendments

  	
   

  	
  54

  
	
  Section 11.2.

  	
   

  	
  Meetings of the Holders of the
  Securities; Action by Written Consent

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE
  TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  Representations and Warranties of
  Institutional Trustee

  	
   

  	
  57

  
	
  Section 12.2.

  	
   

  	
  Representations and Warranties of
  Delaware Trustee

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Notices

  	
   

  	
  59

  
	
  Section 13.2.

  	
   

  	
  Governing Law

  	
   

  	
  60

  
	
  Section 13.3.

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  60

  
	
  Section 13.4.

  	
   

  	
  Intention of the Parties

  	
   

  	
  61

  
	
  Section 13.5.

  	
   

  	
  Headings

  	
   

  	
  61

  
	
  Section 13.6.

  	
   

  	
  Successors and Assigns

  	
   

  	
  61

  
	
  Section 13.7.

  	
   

  	
  Partial Enforceability

  	
   

  	
  61

  
	
  Section 13.8.

  	
   

  	
  Counterparts

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEXES AND EXHIBITS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEX I

  	
   

  	
  Terms of Capital
  Securities and Common Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A-1

  	
   

  	
  Form of Capital
  Security Certificate

  	
   

  	
   

  
	
  EXHIBIT A-2

  	
   

  	
  Form of Common
  Security Certificate

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  Form of
  Administrator’s Certificate of the Trust

  	
   

  	
   

  
	
  EXHIBIT C

  	
   

  	
  Form of Transferee
  Certificate to be Executed by Accredited Investors

  	
   

  	
   

  
	
  EXHIBIT D

  	
   

  	
  Form of Transferor
  Certificate to be Executed for QIBs

  	
   

  	
   

  
	
  EXHIBIT E

  	
   

  	
  Form of Transferee
  Certificate to be Executed by Non-U.S. Persons

  	
   

  	
   

  
								

 

iii

 

AMENDED
AND RESTATED DECLARATION OF TRUST

 

OF

 

TIDELANDS STATUTORY TRUST II

 

June 20, 2008

 

AMENDED AND RESTATED DECLARATION OF TRUST (as amended or supplemented
from time to time in accordance with the terms hereof, this “Declaration”),
dated and effective as of June 20, 2008,
by the Trustees (as defined herein), the Administrators (as defined herein),
the Sponsor (as defined herein) and the holders from time to time of undivided
beneficial interests in the assets of the Trust (as defined herein) to be issued
pursuant to this Declaration.

 

WHEREAS, certain of the Trustees and the Sponsor established Tidelands Statutory Trust II (the “Trust”), a
statutory trust under the Statutory Trust Act (as defined herein), pursuant to
a Declaration of Trust, dated as of June 13, 2008 (the “Original
Declaration”), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on June 13, 2008, for the sole purpose of issuing
and selling the Securities (as defined herein) representing undivided beneficial
interests in the assets of the Trust, investing the proceeds thereof in the
Debentures (as defined herein) of the Debenture Issuer (as defined herein) and
engaging in those activities necessary, advisable or incidental thereto;

 

WHEREAS, as of the date hereof, no interests in the assets of the Trust
have been issued; and

 

WHEREAS, all of the Trustees, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration.

 

NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
and that all assets contributed to the Trust will be held in trust for the
benefit of the holders, from time to time, of the Securities, subject to the
provisions of this Declaration, and, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties, intending to be legally bound
hereby, amend and restate in its entirety the Original Declaration and agree as
follows:

 

ARTICLE I

 

INTERPRETATION AND
DEFINITIONS

 

Section 1.1.  Definitions.  Unless the context otherwise requires:

 

(a)           capitalized terms used in this
Declaration but not defined in the preamble above or elsewhere herein have the
respective meanings assigned to them in this Section 1.1 or, if not
defined in this Section 1.1 or elsewhere herein, in the Indenture;

 

 

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

 

(c)           all references to “the Declaration”
or “this Declaration” are to this Declaration and each Annex and Exhibit hereto,
as modified, supplemented or amended from time to time;

 

(d)           all references in this Declaration to
Articles and Sections and Annexes and Exhibits are to Articles and Sections of
and Annexes and Exhibits to this Declaration unless otherwise specified;

 

(e)           a term defined in the Trust Indenture
Act (as defined herein) has the same meaning when used in this Declaration
unless otherwise defined in this Declaration or unless the context otherwise
requires; and

 

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

 

“Additional Amounts” has the meaning set forth in Section 3.06 of
the Indenture.

 

“Administrative Action” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Administrators” means each of Robert E. Coffee, Jr., Alan W.
Jackson and Thomas H. Lyles, solely
in such Person’s capacity as Administrator of the Trust continued hereunder and
not in such Person’s individual capacity, or such Administrator’s successor in
interest in such capacity, or any successor appointed as herein provided.

 

“Affiliate” has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.

 

“Applicable Depositary Procedures” means, with respect to any transfer
or transaction involving a Book-Entry Capital Security, the rules and
procedures of the Depositary for such Book-Entry Capital Security, in each case
to the extent applicable to such transaction and as in effect from time to
time.

 

“Authorized Officer” of a Person means any Person that is authorized to
bind such Person.

 

“Bankruptcy Event” means, with respect to any Person:

 

(a)           a court having
jurisdiction in the premises enters a decree or order for relief in respect of
such Person 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
such Person or for any substantial part of its property, or orders the
winding-up or liquidation of its affairs, and such decree, appointment or order
remains unstayed and in effect for a period of 90 consecutive days; or

 

(b)           such Person
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an

 

 

2

 

order for relief in an involuntary case under any such
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of such Person or of any substantial part of its property, or makes
any general assignment for the benefit of creditors, or fails generally to pay
its debts as they become due.

 

“Beneficial Owner” means each Person who is the beneficial owner of
Book-Entry Capital Securities as reflected in the records of the Depositary or,
if a Depositary Participant is not the beneficial owner, then the beneficial
owner as reflected in the records of the applicable Depositary Participant.

 

“Book-Entry Capital Security” means a Capital Security the ownership
and transfers of which shall be reflected and made, as applicable, through book
entries by the Depositary.

 

“Business Day” means any day other than Saturday, Sunday or any other
day on which banking institutions in Wilmington, Delaware, The City of New York
or Charleston, South Carolina are
permitted or required by law or executive order to close.

 

“Calculation Agent” has the meaning set forth in Section 1.01 of
the Indenture.

 

“Capital Securities” has the meaning set forth in Section 6.1(a).

 

“Capital Securities Subscription Agreement” means the subscription
agreement relating to the offer and sale of the Capital Securities.

 

“Capital Security Certificate” means a definitive Certificate
registered in the name of the Holder representing a Capital Security
substantially in the form of Exhibit A-1.

 

“Capital Treatment Event” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Certificate” means any certificate evidencing Securities.

 

“Certificate of Trust” means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended and restated from time to time.

 

“Closing Date” has the meaning set forth in the Capital Securities
Subscription Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.

 

“Commission” means the United States Securities and Exchange
Commission.

 

“Common Securities” has the meaning set forth in Section 6.1(a).

 

“Common Security Certificate” means a definitive Certificate registered
in the name of the Holder representing a Common Security substantially in the
form of Exhibit A-2.

 

3

 

“Company Indemnified Person” means (a) any Administrator, (b) any
Affiliate of any Administrator, (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator or
(d) any officer, employee or agent of the Trust or its Affiliates.

 

“Corporate Trust Office” means the office of the Institutional 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 execution of this Declaration shall be Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate Capital Markets.

 

“Coupon Rate” has the meaning set forth in paragraph 2(a) of Annex
I.

 

“Covered Person” means (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of the Trust or
the Trust’s Affiliates or (b) any Holder of Securities.

 

“Debenture Issuer” means Tidelands
Bancshares, Inc., a bank holding company incorporated in South Carolina, in its capacity as issuer of
the Debentures under the Indenture, and any permitted successor under the
Indenture.

 

“Debenture Trustee” means Wilmington
Trust Company, a Delaware banking corporation, not in its individual
capacity but solely as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.

 

“Debentures” means the Fixed/Floating Rate Junior Subordinated Debt
Securities due 2038 to be issued by the
Debenture Issuer under the Indenture.

 

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

 

“Deferred Interest” means any interest on the Debentures that would
have been overdue and unpaid for more than one Distribution Payment Date but
for the imposition of an Extension Period, and the interest that shall accrue
(to the extent that the payment of such interest is legally enforceable) on
such interest at the Coupon Rate applicable during such Extension Period,
compounded quarterly from the date on which such Deferred Interest would
otherwise have been due and payable until paid or made available for payment.

 

“Definitive Capital Securities” means any Capital Securities in
definitive form issued by the Trust.

 

“Delaware Trustee” has the meaning set forth in Section 4.2.

 

“Depositary” means an organization registered as a clearing agency
under the Exchange Act that is designated as Depositary by the Sponsor.  DTC will be the initial Depositary.

 

4

 

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

 

“Direct Action” has the meaning set forth in Section 2.8(e).

 

“Distribution” means a distribution payable to Holders of Securities in
accordance with Section 5.1.

 

“Distribution Payment Date” has the meaning set forth in paragraph 2(e) of
Annex I.

 

“Distribution Period” has the meaning set forth in paragraph 2(a) of
Annex I.

 

“DTC” means The Depository Trust Company or any successor thereto.

 

“Event of Default” means the occurrence of an Indenture Event of
Default.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.

 

“Extension Period” has the meaning set forth in paragraph 2(e) of
Annex I.

 

“Federal Reserve” has the meaning set forth in paragraph 3 of
Annex I.

 

“Fiduciary Indemnified Person” shall mean each of the Institutional
Trustee (including in its individual capacity), the Delaware Trustee (including
in its individual capacity), any Affiliate of the Institutional Trustee or the
Delaware Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or the Delaware Trustee.

 

“Fiscal Year” has the meaning set forth in Section 10.1.

 

“Global Capital Security” means a global Certificate evidencing
ownership of Book-Entry Capital Securities.

 

“Guarantee” means the Guarantee Agreement, dated as of the Closing Date, of the Sponsor (the “Guarantor”)
in respect of the Capital Securities.

 

“Holder” means a Person in whose name a Certificate representing a
Security is registered on the Securities Register maintained by or on behalf of
the Registrar, such Person being a beneficial owner within the meaning of the
Statutory Trust Act.

 

“Indemnified Person” means a Company Indemnified Person or a Fiduciary
Indemnified Person.

 

“Indenture” means the Indenture, dated as of the Closing Date, between the Debenture Issuer and the Debenture
Trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued.

 

5

 

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

 

“Institutional Trustee” means the Trustee meeting the eligibility
requirements set forth in Section 4.3.

 

“Investment Company” means an investment company as defined in the
Investment Company Act.

 

“Investment Company Act” means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.

 

“Investment Company Event” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Legal Action” has the meaning set forth in Section 2.8(e).

 

“LIBOR” means the London Interbank Offered Rate for three-month U.S.
Dollar deposits in Europe as determined by the Calculation Agent according to
paragraph 2(b) of Annex I.

 

“LIBOR Banking Day” has the meaning set forth in paragraph 2(b)(1) of
Annex I.

 

“LIBOR Business Day” has the meaning set forth in paragraph 2(b)(1) of
Annex I.

 

“LIBOR Determination Date” has the meaning set
forth in paragraph 2(b)(1) of Annex I.

 

“Liquidation” has the meaning set forth in paragraph 3 of Annex I.

 

“Liquidation Distribution” has the meaning set forth in paragraph 3 of
Annex I.

 

“Majority in liquidation amount of the Securities” means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the amount that
would be paid upon the redemption, liquidation or otherwise on the date upon
which the voting percentages are determined, plus unpaid Distributions accrued
thereon to such date) of all outstanding Securities of the relevant class.

 

“Maturity Date” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Maturity Redemption Price” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Officers’ Certificate” means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person or, in the case of
a natural Person, such Person.  Any

 

6

 

Officers’ Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:

 

(a)           a statement that
each Authorized Officer or Person, as the case may be, signing the Officers’
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
Authorized Officer or Person, as the case may be, in rendering the Officers’
Certificate;

 

(c)           a statement that
each Authorized Officer or Person, as the case may be, has made such
examination or investigation as, in his or her opinion, is necessary to enable
such Authorized Officer or Person, as the case may be, 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 Authorized Officer or Person, as the case may
be, such condition or covenant has been complied with.

 

“Optional Redemption Date” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Optional Redemption Price” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Paying Agent” has the meaning set forth in Section 6.2.

 

“Payment Amount” has the meaning set forth in Section 5.1.

 

“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.

 

“PORTAL” has the meaning set forth in Section 2.6(a)(i).

 

“Property Account” has the meaning set forth in Section 2.8(c).

 

“Pro Rata” has the meaning set forth in paragraph 8 of Annex I.

 

“Purchaser” has the meaning set forth in the Capital Securities
Subscription Agreement.

 

“QIB” means a “qualified institutional buyer” as defined under Rule 144A.

 

“Quorum” means a majority of the Administrators or, if there are only
two Administrators, both of them.

 

7

 

“Redemption/Distribution Notice” has the meaning set forth in paragraph
4(e) of Annex I.

 

“Reference Banks” has the meaning set forth in paragraph 2(b)(2) of
Annex I.

 

“Registrar” has the meaning set forth in Section 6.2.

 

“Regulation S Global Capital Security” means a Global Capital Security
evidencing ownership of Book-Entry Capital Securities initially issued to non-”U.S.
Persons” in “offshore transactions” under, and within the meaning of,
Regulation S under the Securities Act.

 

“Relevant Trustee” has the meaning set forth in Section 4.5(a).

 

“Resale Restriction Termination Date” means, with respect to any
Capital Security, the date which is the later of (i) one year (or such
shorter period of time as permitted by Rule 144(b)(1) under the
Securities Act) after the later of (y) the date of original issuance of
such Capital Security and (z) the last date on which the Trust or any
Affiliate of the Trust was the Holder of such Capital Security (or any
predecessor thereto) and (ii) such later date, if any, as may be required
by any subsequent change in applicable law.

 

“Responsible Officer” means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee with
direct responsibility for the administration of this Declaration, including any
vice-president, any assistant vice-president, any secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or other officer of
the Corporate Trust Office of the Institutional 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.

 

“Restricted Securities Legend” has the meaning set forth in Section 8.2(c).

 

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

 

“Rule 144A Global Capital Security” means a Global Capital
Security evidencing ownership of Book-Entry Capital Securities initially issued
to QIBs.

 

“Rule 3a-5” means Rule 3a-5 under the Investment Company Act.

 

“Rule 3a-7” means Rule 3a-7 under the Investment Company Act.

 

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

 

“Securities Act” means the Securities Act of 1933, as amended from time
to time, or any successor legislation.

 

“Securities Register” has the meaning set forth in Section 6.2(a).

 

“Special Event” has the meaning set forth in paragraph 4(a) of
Annex I.

 

8

 

“Special Redemption Date” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Special Redemption Price” has the meaning set forth in paragraph 4(a) of
Annex I.

 

“Sponsor” means Tidelands Bancshares, Inc.,
a bank holding company that is incorporated in South
Carolina, or any permitted successor of the Debenture Issuer under the
Indenture, in its capacity as sponsor of the Trust.

 

“Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code § 3801 et seq., as it may be amended from time to time, or
any successor legislation.

 

“Successor Delaware Trustee” has the meaning set forth in Section 4.5(e).

 

“Successor Entity” has the meaning set forth in Section 2.15(b).

 

“Successor Institutional Trustee” has the meaning set forth in Section 4.5(b).

 

“Successor Securities” has the meaning set forth in Section 2.15(b).

 

“Super Majority” has the meaning set forth in paragraph 5(b) of
Annex I.

 

“Tax Event” has the meaning set forth in paragraph 4(a) of Annex
I.

 

“Telerate Page 3750” has the meaning set forth in paragraph 2(b)(1) of
Annex I.

 

“10% in liquidation amount of the Securities” means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
10% or more of the aggregate liquidation amount (including the stated amount
that would be paid upon the redemption, liquidation or otherwise on the date
upon which the voting percentages are determined, plus unpaid Distributions
accrued thereon to such date) of all outstanding Securities of the relevant
class.

 

“Transfer Agent” has the meaning set forth in Section 6.2.

 

“Treasury Regulations” means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

 

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

 

“Trust Property” means (a) the Debentures, (b) any cash on
deposit in, or owing to, the Property Account and (c) all proceeds and
rights in respect of the foregoing and any other

 

9

 

property and assets for the time being held or deemed
to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.

 

“Trustee” or “Trustees” means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

 

“U.S. Person” means a United States Person as defined in Section 7701(a)(30)
of the Code.

 

ARTICLE II

ORGANIZATION

 

Section 2.1.  Name. 
The Trust is named “Tidelands Statutory
Trust II,” as such name may be modified from time to time by the
Administrators following written notice to the Institutional Trustee and the
Holders of the Securities.  The Trust’s
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrators.

 

Section 2.2.  Office.  The address of the principal office of the
Trust, which shall be in a state of the United States or the District of
Columbia, is 875 Lowcountry Blvd., Mount
Pleasant, South Carolina 29464. 
On ten Business Days’ written notice to the Institutional Trustee and
the Holders of the Securities, the Administrators may designate another
principal office, which shall be in a state of the United States or the
District of Columbia.

 

Section 2.3.  Purpose.  The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided
beneficial interests in the assets of the Trust, (b) to invest the gross
proceeds from such sale in the Debentures and (c) except as otherwise
limited herein, to engage in only those other activities deemed necessary,
advisable or incidental thereto by the Institutional Trustee, including,
without limitation, those activities specified in this Declaration.  The Trust shall not borrow money, issue debt
or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.

 

Section 2.4.  Authority.  Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust.  An action taken by a Trustee on behalf of the
Trust and in accordance with such Trustee’s powers shall constitute the act of
and serve to bind the Trust.  In dealing
with the Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust.  Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.  The Administrators shall
have only those ministerial duties set forth herein with respect to accomplishing
the purposes of the Trust and are not intended to be trustees or fiduciaries
with respect to the Trust or the Holders. 
The Institutional Trustee shall have the right, but shall not be
obligated except as provided in Section 2.6, to perform those duties
assigned to the Administrators.

 

10

 

Section 2.5.  Title to Property of the Trust.  Except as provided in Section 2.6(g) and
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust.  The
Holders shall not have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the Trust.

 

Section 2.6.  Powers and Duties of the Trustees and the
Administrators.

 

(a)           The Trustees and the Administrators shall
conduct the affairs of the Trust in accordance with the terms of this
Declaration.  Subject to the limitations
set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Administrators and, at the
direction of the Administrators, the Trustees, shall have the authority to
enter into all transactions and agreements determined by the Administrators to
be appropriate in exercising the authority, express or implied, otherwise
granted to the Trustees or the Administrators, as the case may be, under this
Declaration, and to perform all acts in furtherance thereof, including without
limitation, the following:

 

(i)            Each Administrator shall have the power,
duty and authority, and is hereby authorized, to act on behalf of the Trust
with respect to the following matters:

 

(A)                              the issuance and sale of the Securities;

 

(B)                                to cause the Trust to enter into, and to
execute, deliver and perform on behalf of the Trust, such agreements as may be
necessary or desirable in connection with the purposes and function of the
Trust, including agreements with the Paying Agent, a subscription agreement for
Debentures between the Trust and the Sponsor, a subscription agreement for
Capital Securities between the Trust and the Purchaser and a subscription
agreement for Common Securities between the Trust and the Sponsor;

 

(C)                                ensuring compliance with the Securities Act
and applicable securities or blue sky laws of states and other jurisdictions;

 

(D)                               if and at such time determined solely by
the Sponsor at the request of the Holders, assisting in the designation of the
Capital Securities for trading in the Private Offering, Resales and Trading
through the Automatic Linkages (“PORTAL”) system if available;

 

(E)                                 the sending of notices (other than
notices of default) and other information regarding the Securities and the
Debentures to the Holders in accordance with this Declaration, including notice
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Indenture;

 

11

 

(F)           the appointment of a Paying Agent,
Transfer Agent and Registrar in accordance with this Declaration;

 

(G)           execution and delivery of the
Securities in accordance with this Declaration;

 

(H)          execution and delivery of closing
certificates pursuant to the Capital Securities Subscription Agreement and the
application for a taxpayer identification number;

 

(I)            unless otherwise determined by the
Holders of a Majority in liquidation amount of the Securities or as otherwise
required by the Statutory Trust Act, to execute on behalf of the Trust (either
acting alone or together with any or all of the Administrators) any documents
that the Administrators have the power to execute pursuant to this Declaration;

 

(J)            the taking of any action as the
Sponsor or an Administrator may from time to time determine is necessary,
advisable or incidental to the foregoing to give effect to the terms of this
Declaration for the benefit of the Holders (without consideration of the effect
of any such action on any particular Holder);

 

(K)          to establish a record date with
respect to all actions to be taken hereunder that require a record date be
established, including Distributions, voting rights, redemptions and exchanges,
and to issue relevant notices to the Holders of Capital Securities and Holders
of Common Securities as to such actions and applicable record dates;

 

(L)           to duly prepare and file on behalf of
the Trust all applicable tax returns and tax information reports that are
required to be filed with respect to the Trust;

 

(M)         to negotiate the terms of, and the
execution and delivery of, the Capital Securities Subscription Agreement and
any other related agreements providing for the sale of the Capital Securities
or the resale thereof by the Purchaser;

 

(N)          to employ or otherwise engage
employees, agents (who may be designated as officers with titles), managers,
contractors, advisors, attorneys and consultants and pay reasonable
compensation for such services;

 

(O)          to incur expenses that are necessary,
advisable or incidental to carry out any of the purposes of the Trust;

 

(P)           to give the certificate,
substantially in the form of Exhibit B attached hereto, required by §
314(a)(4) of the Trust Indenture Act to the

 

12

 

Institutional Trustee,
which certificate may be executed by an Administrator; and

 

(Q)          to take all action that may be
necessary or appropriate for the preservation and the continuation of the Trust’s
valid existence, rights, franchises and privileges as a statutory trust under
the laws of each jurisdiction (other than the State of Delaware) in which such
existence is necessary to protect the limited liability of the Holders of the
Capital Securities or to enable the Trust to effect the purposes for which the
Trust was created.

 

(ii)           As among the Trustees and the
Administrators, the Institutional Trustee shall have the power, duty and
authority, and is hereby authorized, to act on behalf of the Trust with respect
to the following matters:

 

(A)          the establishment of the Property
Account;

 

(B)           the receipt of the Debentures;

 

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

 

(D)          the distribution through the Paying
Agent of amounts owed to the Holders in respect of the Securities;

 

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

 

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

 

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

 

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

 

(I)            after any Event of Default (of which
the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
(provided, that such Event of Default is not by or with respect to the
Institutional Trustee), the taking of any action that the Institutional Trustee
may from time to time determine is necessary, advisable or incidental for the
foregoing to give effect to the terms of this Declaration and protect and
conserve the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular Holder);

 

13

 

(J)            to take all action that may be
necessary or appropriate for the preservation and the continuation of the Trust’s
valid existence, rights, franchises and privileges as a statutory trust under
the laws of the State of Delaware to protect the limited liability of the
Holders of the Capital Securities or to enable the Trust to effect the purposes
for which the Trust was created; and

 

(K)          to undertake any actions set forth in
§ 317(a) of the Trust Indenture Act.

 

(iii)          The Institutional Trustee shall have the
power and authority, and is hereby authorized, to act on behalf of the Trust
with respect to any of the duties, liabilities, powers or the authority of the
Administrators set forth in Section 2.6(a)(i)(E) and (F) herein
but shall not have a duty to do any such act unless specifically requested to
do so in writing by the Sponsor, and shall then be fully protected in acting
pursuant to such written request; and in the event of a conflict between the
action of the Administrators and the action of the Institutional Trustee, the
action of the Institutional Trustee shall prevail.

 

(b)           So long as this Declaration remains in
effect, the Trust (or the Trustees or Administrators acting on behalf of the
Trust) shall not undertake any business, activities or transaction except as
expressly provided herein or contemplated hereby.  In particular, neither the Trustees nor the
Administrators may cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Declaration, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Holders, except as
expressly provided herein, (iii) take any action that would cause (or in
the case of the Institutional Trustee, to the actual knowledge of a Responsible
Officer would cause) the Trust to fail or cease to qualify as a grantor trust
for United States federal income tax purposes, (iv) incur any indebtedness
for borrowed money or issue any other debt or (v) take or consent to any
action that would result in the placement of a lien on any of the Trust
Property.  The Institutional Trustee
shall, at the sole cost and expense of the Trust subject to reimbursement under
Section 9.6(a), defend all claims and demands of all Persons at any time
claiming any lien on any of the Trust Property adverse to the interest of the
Trust or the Holders in their capacity as Holders.

 

(c)           In connection with the issuance and sale
of the Capital Securities, the Sponsor shall have the right and responsibility
to assist the Trust with respect to, or effect on behalf of the Trust, the
following (and any actions taken by the Sponsor in furtherance of the following
prior to the date of this Declaration are hereby ratified and confirmed in all
respects):

 

(i)            the taking of any action necessary
to obtain an exemption from the Securities Act;

 

(ii)           the determination of the
jurisdictions in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and the determination of any and all
such acts, other than actions which must be taken by or on behalf of the Trust,
and the advisement of and direction to the Trustees of

 

14

 

actions they must take on
behalf of the Trust, and the preparation for execution and filing of any
documents to be executed and filed by the Trust or on behalf of the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such jurisdictions in connection with the sale of the Capital Securities;
and

 

(iii)          the taking of any other actions
necessary or desirable to carry out any of the foregoing activities.

 

(d)           Notwithstanding anything herein to the
contrary, the Administrators, the Institutional Trustee and the Holders of a
Majority in liquidation amount of the Common Securities are authorized and
directed to conduct the affairs of the Trust and to operate the Trust so that (i) the
Trust will not be deemed to be an Investment Company required to be registered
under the Investment Company Act (in the case of the Institutional Trustee, to
the actual knowledge of a Responsible Officer), and (ii) the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes (in the case of the Institutional Trustee, to the actual knowledge
of a Responsible Officer) and (iii) the Trust will not take any action
inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes (in the case of
the Institutional Trustee, to the actual knowledge of a Responsible
Officer).  In this connection, the
Institutional Trustee, the Administrators and the Holders of a Majority in
liquidation amount of the Common Securities are authorized to take any action,
not inconsistent with applicable laws or this Declaration, as amended from time
to time, that each of the Institutional Trustee, the Administrators and such
Holders determine in their discretion to be necessary or desirable for such
purposes, even if such action adversely affects the interests of the Holders of
the Capital Securities.

 

(e)           All expenses incurred by the
Administrators or the Trustees pursuant to this Section 2.6 shall be
reimbursed by the Sponsor, and the Trustees shall have no obligations with
respect to such expenses.

 

(f)            The assets of the Trust shall consist of
the Trust Property.

 

(g)           Legal title to all Trust Property shall
be vested at all times in the Institutional Trustee (in its capacity as such)
and shall be held and administered by the Institutional Trustee for the benefit
of the Trust in accordance with this Declaration.

 

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

 

Section 2.7.  Prohibition of Actions by the Trust and
the Trustees.

 

The Trust shall not, and the Institutional Trustee and the
Administrators shall not, and the Administrators shall cause the Trust not to,
engage in any activity other than as required

 

15

 

or authorized by this Declaration. In particular, the
Trust shall not, and the Institutional Trustee and the Administrators shall not
cause the Trust to:

 

(a)           invest any proceeds received by the Trust
from holding the Debentures, but shall distribute all such proceeds to Holders
of the Securities pursuant to the terms of this Declaration and of the
Securities;

 

(b)           acquire any assets other than as
expressly provided herein;

 

(c)           possess Trust Property for other than a
Trust purpose;

 

(d)           make any loans or incur any indebtedness
other than loans represented by the Debentures;

 

(e)           possess any power or otherwise act in
such a way as to vary the Trust Property or the terms of the Securities;

 

(f)            issue any securities or other evidences
of beneficial ownership of, or beneficial interest in, the Trust other than the
Securities; or

 

(g)           other than as provided in this
Declaration (including Annex I), (i) direct the time, method and place of
exercising any trust or power conferred upon the Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust shall have
received a written opinion of counsel experienced in such matters to the effect
that such amendment, modification or termination will not cause the Trust to
cease to be classified as a grantor trust for United States federal income tax
purposes.

 

Section 2.8.  Powers and Duties of the Institutional
Trustee.

 

(a)           The legal title to the Debentures shall
be owned by and held of record in the name of the Institutional Trustee in
trust for the benefit of the Trust.  The
right, title and interest of the Institutional Trustee to the Debentures shall
vest automatically in each Person who may hereafter be appointed as
Institutional Trustee in accordance with Section 4.5.  Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.

 

(b)           The Institutional Trustee shall not
transfer its right, title and interest in the Debentures to the Administrators
or to the Delaware Trustee.

 

(c)           The Institutional Trustee shall:

 

(i)            establish and maintain a segregated
non-interest bearing trust account (the “Property Account”) in the United
States (as defined in Treasury Regulations § 301.7701-7), in the name of and
under the exclusive control of the Institutional Trustee, and maintained in the
Institutional Trustee’s trust

 

16

 

department, on behalf of
the Holders of the Securities and, upon the receipt of payments of funds made
in respect of the Debentures held by the Institutional Trustee, deposit such
funds into the Property Account and make payments to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account in
accordance with Section 5.1.  Funds
in the Property Account shall be held uninvested until disbursed in accordance
with this Declaration;

 

(ii)           engage in such ministerial activities
as shall be necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are redeemed
or mature; and

 

(iii)          upon written notice of distribution
issued by the Administrators in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities upon the
occurrence of the circumstances specified therefor under the terms of the
Securities.

 

(d)           The Institutional Trustee shall take all
actions and perform such duties as may be specifically required of the
Institutional Trustee pursuant to the terms of the Securities.

 

(e)           The Institutional Trustee may bring or
defend, pay, collect, compromise, arbitrate, resort to legal action with
respect to, or otherwise adjust claims or demands of or against, the Trust (a “Legal
Action”) which arise out of or in connection with an Event of Default of which
a Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee’s duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or premium, if any, on or
principal of the Debentures on the date such interest, premium, if any, or
principal is otherwise payable (or in the case of redemption, on the date of
redemption), then a Holder of the Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest that is so payable on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital Securities
of such Holder (a “Direct Action”) on or after the respective due date
specified in the Debentures.  In
connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of the Capital
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of the Capital Securities in such Direct Action; provided, however,
that a Holder of the Common Securities may exercise such right of subrogation
only if no Event of Default with respect to the Capital Securities has occurred
and is continuing.

 

(f)            The Institutional Trustee shall continue
to serve as a Trustee until either:

 

(i)            the Trust has been completely
liquidated and the proceeds of the liquidation distributed to the Holders of
the Securities pursuant to the terms of the Securities and this Declaration
(including Annex I); or

 

17

 

(ii)           a Successor Institutional Trustee has
been appointed and has accepted that appointment in accordance with Section 4.5.

 

(g)           The Institutional Trustee shall have the
legal power to exercise all of the rights, powers and privileges of a holder of
the Debentures under the Indenture and, if an Event of Default occurs and is
continuing, the Institutional Trustee may, for the benefit of Holders of the
Securities, enforce its rights as holder of the Debentures subject to the
rights of the Holders pursuant to this Declaration (including Annex I) and the
terms of the Securities.

 

(h)           The Institutional Trustee must exercise
the powers set forth in this Section 2.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 2.3, and
the Institutional Trustee shall not take any action that is inconsistent with
the purposes and functions of the Trust set out in Section 2.3.

 

Section 2.9.  Certain Duties and Responsibilities of the
Trustees and the Administrators.

 

(a)           The Institutional Trustee, before the
occurrence of any Event of Default (of which the Institutional Trustee has
knowledge (as provided in Section 2.10(m) hereof)) and after the
curing of all Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this Declaration and
no implied covenants shall be read into this Declaration against the
Institutional Trustee.  In case an Event
of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)),
has occurred (that has not been cured or waived pursuant to Section 6.7),
the Institutional Trustee shall exercise such of the rights and powers vested
in it by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

 

(b)           The duties and responsibilities of the
Trustees and the Administrators shall be as provided by this Declaration and,
in the case of the Institutional Trustee, by the Trust Indenture Act.  Notwithstanding the foregoing, no provision
of this Declaration shall require any Trustee or Administrator to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such
risk or liability is not reasonably assured to it.  Whether or not therein expressly so provided,
every provision of this Declaration relating to the conduct or affecting the
liability of or affording protection to the Trustees or the Administrators
shall be subject to the provisions of this Article.  Nothing in this Declaration shall be construed
to release a Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct or bad faith.  Nothing in this Declaration shall be
construed to release an Administrator from liability for its own gross negligent
action, its own gross negligent failure to act, or its own willful misconduct
or bad faith.  To the extent that, at law
or in equity, a Trustee or an Administrator has duties (including fiduciary
duties) to the Trust or to the Holders, such Trustee’s or Administrator’s
duties may be restricted or eliminated by provisions in this Declaration,
except that this Declaration may not eliminate the implied contractual covenant
of good faith and fair dealing. A Trustee or Administrator shall not be liable
to the Trust or a Holder or another Person that is party to or otherwise bound
by the

 

18

 

Declaration for breach of fiduciary duty for such
Trustee’s or Administrator’s good faith reliance on the provisions of the
Declaration. The provisions of this Declaration, to the extent that they
restrict or eliminate the liabilities of the Trustees or the Administrators
otherwise existing at law or in equity, are agreed by the Sponsor and the
Holders to replace such other liabilities of the Trustees or the Administrators,
as the case may be, except that no provision of this Declaration may limit or
eliminate liability for any act or omission that constitutes a bad faith
violation of the implied contractual covenant of good faith and fair dealing.

 

(c)           All payments made by the Institutional
Trustee or a Paying Agent in respect of the Securities shall be made only from
the revenue and proceeds from the Trust Property and only to the extent that
there shall be sufficient revenue or proceeds from the Trust Property to enable
the Institutional Trustee or a Paying Agent to make payments in accordance with
the terms hereof.  Each Holder, by its
acceptance of a Security, agrees that it will look solely to the revenue and
proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.  This Section 2.9(c) does not limit
the liability of the Trustees expressly set forth elsewhere in this Declaration
or, in the case of the Institutional Trustee, in the Trust Indenture Act.

 

(d)           No provision of this Declaration shall be
construed to relieve the Institutional Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct or bad faith with respect to matters that are within the authority
of the Institutional Trustee under this Declaration, except that:

 

(i)            the Institutional Trustee shall not
be liable for any error or judgment made in good faith by an Authorized Officer
of the Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;

 

(ii)           the Institutional Trustee shall not
be liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a Majority in
liquidation amount of the Capital Securities or the Common Securities, as
applicable, relating to the time, method and place of conducting any proceeding
for any remedy available to the Institutional Trustee, or exercising any trust
or power conferred upon the Institutional Trustee under this Declaration;

 

(iii)          the Institutional Trustee’s sole duty
with respect to the custody, safe keeping and physical preservation of the
Debentures and the Property Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property for its
own account, subject to the protections and limitations on liability afforded
to the Institutional Trustee under this Declaration and the Trust Indenture
Act;

 

(iv)          the Institutional Trustee shall not be
liable for any interest on any money received by it except as it may otherwise
agree in writing with the

 

19

 

Sponsor; and money held
by the Institutional Trustee need not be segregated from other funds held by it
except in relation to the Property Account maintained by the Institutional
Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and

 

(v)           the Institutional Trustee shall not
be responsible for monitoring the compliance by the Administrators or the Sponsor
with their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Administrators or the Sponsor.

 

Section 2.10.  Certain Rights of Institutional Trustee.  Subject to the provisions of Section 2.9:

 

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

 

(b)           if (i) in performing its duties
under this Declaration, the Institutional Trustee is required to decide between
alternative courses of action, (ii) in construing any of the provisions of
this Declaration, the Institutional Trustee finds the same ambiguous or
inconsistent with any other provisions contained herein, or (iii) the
Institutional Trustee is unsure of the application of any provision of this
Declaration, then, except as to any matter as to which the Holders of Capital
Securities are entitled to vote under the terms of this Declaration, the
Institutional Trustee may deliver a notice to the Sponsor requesting the
Sponsor’s opinion as to the course of action to be taken and the Institutional
Trustee shall take such action, or refrain from taking such action, as the
Institutional Trustee in its sole discretion shall deem advisable and in the
best interests of the Holders, in which event the Institutional Trustee shall have
no liability except for its own negligence, willful misconduct or bad faith;

 

(c)           any direction or act of the Sponsor or
the Administrators contemplated by this Declaration shall be sufficiently
evidenced by an Officers’ Certificate;

 

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

 

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

 

20

 

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

 

(g)           the Institutional Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any of the Holders pursuant to
this Declaration, unless such Holders shall have offered to the Institutional
Trustee security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction; provided, that nothing contained in this Section 2.10(g) shall
be taken to relieve the Institutional Trustee, upon the occurrence of an Event
of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
that has not been cured or waived, of its obligation to exercise the rights and
powers vested in it by this Declaration;

 

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

 

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

 

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

 

(k)           except as otherwise expressly
provided in this Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the provisions of
this Declaration;

 

(l)            when the Institutional Trustee incurs
expenses or renders services in connection with a Bankruptcy Event, such
expenses (including the fees and expenses of its

 

21

 

counsel) and the
compensation for such services are intended to constitute expenses of
administration under any bankruptcy law or law relating to creditors rights
generally;

 

(m)          the Institutional Trustee shall not be
charged with knowledge of an Event of Default unless a Responsible Officer of
the Institutional Trustee has actual knowledge of such event or the
Institutional Trustee receives written notice of such event from any Holder,
except that the Institutional Trustee shall be deemed to have knowledge of any
Event of Default pursuant to Sections 5.01(a), 5.01(b) or 5.01(c) of
the Indenture (other than an Event of Default resulting from the default in the
payment of Additional Amounts if the Institutional Trustee does not have actual
knowledge or written notice that such payment is due and payable);

 

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

 

(o)           no provision of this Declaration
shall be deemed to impose any duty or obligation on the Institutional 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 Institutional 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, and no permissive power or authority
available to the Institutional Trustee shall be construed to be a duty.

 

Section 2.11.  Delaware Trustee.  Notwithstanding any other provision of this
Declaration other than Section 4.2, the Delaware Trustee shall not be
entitled to exercise any powers, and the Delaware Trustee shall not have any of
the duties and responsibilities of any of the Trustees or the Administrators
specified in this Declaration (except as may be required under the Statutory
Trust Act).  Except as set forth in Section 4.2,
the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of § 3807 of the Statutory Trust Act.

 

Section 2.12.  Execution of Documents.  Unless otherwise determined in writing by the
Institutional Trustee, and except as otherwise required by the Statutory Trust
Act, the Institutional Trustee, or any one or more of the Administrators, as
the case may be, is authorized to execute and deliver on behalf of the Trust
any documents, agreements, instruments or certificates that the Trustees or the
Administrators, as the case may be, have the power and authority to execute
pursuant to Section 2.6.

 

Section 2.13.  Not Responsible for Recitals or Issuance
of Securities.  The recitals
contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness.  The Trustees make
no representations as to the value or condition of the Trust Property or any
part thereof.  The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.

 

22

 

Section 2.14.  Duration of Trust.  The Trust, unless dissolved pursuant to the
provisions of Article VII hereof, shall have existence for five (5) years
after the Maturity Date.

 

Section 2.15.  Mergers.  (a)  The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to any corporation or
other Person, except as described in this Section 2.15 and except with
respect to the distribution of Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of
this Declaration or Section 4 of Annex I.

 

(b)           The Trust may, with the consent of the
Administrators (which consent will not be unreasonably withheld) and without
the consent of the Institutional Trustee, the Delaware Trustee or the Holders
of the Capital Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to a trust organized as such under the
laws of any state; provided, that:

 

(i)            if the Trust is not the survivor, such
successor entity (the “Successor Entity”) either:

 

(A)          expressly assumes all of the
obligations of the Trust under the Securities; or

 

(B)           substitutes for the Securities other
securities having substantially the same terms as the Securities (the “Successor
Securities”) so that the Successor Securities rank the same as the Securities
rank with respect to Distributions and payments upon Liquidation, redemption
and otherwise;

 

(ii)           the Sponsor expressly appoints, as the
holder of the Debentures, a trustee of the Successor Entity that possesses the
same powers and duties as the Institutional Trustee;

 

(iii)          the Capital Securities or any Successor
Securities are listed or quoted, or any Successor Securities will be listed or
quoted upon notification of issuance, on any national securities exchange or
with another organization on which the Capital Securities are then listed or
quoted, if any;

 

(iv)          such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the rating on the
Capital Securities or any Successor Securities to be downgraded or withdrawn by
any nationally recognized statistical rating organization, if the Capital
Securities are then rated;

 

(v)           such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the Securities or any
Successor Securities in any material respect (other than with respect to any
dilution of such Holders’ interests in the Successor Entity);

 

23

 

(vi)          such Successor Entity, if any, has a
purpose substantially identical to that of the Trust;

 

(vii)         prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Trust has
received a written opinion of a nationally recognized independent counsel to
the Trust experienced in such matters to the effect that:

 

(A)          such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
or any Successor Securities in any material respect (other than with respect to
any dilution of such Holders’ interests in the Successor Entity);

 

(B)           following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment Company
under the Investment Company Act; and

 

(C)           following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Trust or the
Successor Entity will continue to be classified as a grantor trust for United
States federal income tax purposes;

 

(viii)        the Sponsor guarantees the obligations of
the Successor Entity under the Successor Securities to the same extent provided
by the Indenture, the Guarantee, the Debentures and this Declaration; and

 

(ix)           prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Institutional
Trustee shall have received an Officers’ Certificate of the Administrators and
an opinion of counsel, each to the effect that all conditions precedent of this
paragraph (b) to such transaction have been satisfied.

 

(c)           Notwithstanding Section 2.15(b), the
Trust shall not, except with the consent of Holders of 100% in liquidation
amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other Person or permit any
other Person to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or Successor Entity to be classified as other than
a grantor trust for United States federal income tax purposes.

 

24

 

ARTICLE III

 

SPONSOR

 

Section 3.1. 
Sponsor’s Purchase of Common Securities.  On the Closing Date, the Sponsor will
purchase all of the Common Securities issued by the Trust, in an amount at
least equal to 3% of the capital of the Trust, at the same time as the Capital
Securities are sold.

 

Section 3.2.  Responsibilities of the Sponsor.  In connection with the issue and sale of the
Capital Securities, the Sponsor shall have the exclusive right and
responsibility and sole decision to engage in, or direct the Administrators to
engage in, the following activities:

 

(a)           to determine the jurisdictions in
which to take appropriate action to qualify or register for sale all or part of
the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed and filed by
the Trust, as the Sponsor deems necessary, advisable or incidental thereto in
order to comply with the applicable laws of any such jurisdictions;

 

(b)           to prepare for filing and request the
Administrators to cause the filing by the Trust, as may be appropriate, of an
application to the PORTAL system, for listing or quotation upon notice of
issuance of any Capital Securities, as requested by the Holders of not less
than a Majority in liquidation amount of the Capital Securities; and

 

(c)           to negotiate the terms of and/or
execute and deliver on behalf of the Trust, the Capital Securities Subscription
Agreement and other related agreements providing for the sale of the Capital
Securities or the resale thereof by the Purchaser.

 

ARTICLE IV

 

TRUSTEES AND
ADMINISTRATORS

 

Section 4.1.  Number of Trustees.  The number of Trustees initially shall be
two, and:

 

(a)           at any time before the issuance of
any Securities, the Sponsor may, by written instrument, increase or decrease
the number of Trustees; and

 

(b)           after the issuance of any Securities,
the number of Trustees may be increased or decreased by vote of the Holder of a
Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holder of the Common Securities; provided, however,
that there shall be a Delaware Trustee if required by Section 4.2; and
there shall always be one Trustee who shall be the Institutional Trustee, and
such Trustee may also serve as Delaware Trustee if it meets the applicable
requirements, in which case Section 2.11 shall have no application to such
entity in its capacity as Institutional Trustee.

 

Section 4.2.  Delaware Trustee.  If required by the Statutory Trust Act, one
Trustee (the “Delaware Trustee”) shall be:

 

25

 

(a)           a natural person who is a resident of the
State of Delaware and a U.S. Person at least 21 years of age; or

 

(b)           if not a natural person, an entity which
is organized under the laws of the United States or any state thereof or the
District of Columbia, has its principal place of business in the State of
Delaware, and otherwise meets the requirements of applicable law, including
§3807 of the Statutory Trust Act.

 

The initial Delaware Trustee shall be Wilmington Trust Company.

 

Section 4.3.  Institutional Trustee; Eligibility.

 

(a)           There shall at all times be one Trustee
that shall act as Institutional Trustee which shall:

 

(i)            not be an Affiliate of the Sponsor;

 

(ii)           not offer or provide credit or credit
enhancement to the Trust; and

 

(iii)          be a banking corporation or national
association organized and doing business under the laws of the United States of
America or any state thereof or of the District of Columbia and authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least fifty million U.S. dollars ($50,000,000), and subject
to supervision or examination by federal, state or District of Columbia
authority.  If such corporation or
national association publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 4.3(a)(iii), the
combined capital and surplus of such corporation or national association shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.

 

(b)           If at any time the Institutional Trustee
shall cease to be eligible to so act under Section 4.3(a), the
Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 4.5.

 

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

 

(d)           The initial Institutional Trustee shall
be Wilmington Trust Company.

 

Section 4.4.  Administrators.  Each Administrator shall be a U.S.
Person.  There shall at all times be at
least one Administrator.  Except where a
requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power

 

26

 

of the Administrators may be exercised by, or with the
consent of, any one such Administrator acting alone.

 

Section 4.5.  Appointment, Removal and Resignation of
the Trustees and the Administrators.

 

(a)           No resignation or removal of any
Trustee (the “Relevant Trustee”) and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of this Section.

 

(b)           Subject to Section 4.5(a), a
Relevant Trustee may resign at any time by giving written notice thereof to the
Holders of the Securities and by appointing a successor Relevant Trustee.  Upon the resignation of the Institutional
Trustee, the Institutional Trustee shall appoint a successor by requesting from
at least three Persons meeting the eligibility requirements their expenses and
charges to serve as the successor Institutional Trustee on a form provided by
the Administrators, and selecting the Person who agrees to the lowest expense
and charges (the “Successor Institutional Trustee”).  If the instrument of acceptance by the
successor Relevant Trustee required by this Section shall not have been
delivered to the Relevant Trustee within 60 days after the giving of such
notice of resignation or delivery of the instrument of removal, the Relevant
Trustee may petition, at the expense of the Trust, any federal, state or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee.  Such court
may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Relevant Trustee.  The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section.

 

(c)           Unless an Event of Default shall have
occurred and be continuing, any Trustee may be removed at any time by an act of
the Holders of a Majority in liquidation amount of the Common Securities.  If any Trustee shall be so removed, the
Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee, and such successor
Relevant Trustee shall comply with the applicable requirements of this
Section.  If an Event of Default shall
have occurred and be continuing, the Institutional Trustee or the Delaware
Trustee, or both of them, may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Relevant Trustee (in its individual capacity and on behalf of the Trust).  If any Trustee shall be so removed, the
Holders of Capital Securities, by act of the Holders of a Majority in
liquidation amount of the Capital Securities then outstanding delivered to the
Relevant Trustee, shall promptly appoint a successor Relevant Trustee or
Trustees, and such successor Relevant Trustee shall comply with the applicable
requirements of this Section.  If no
successor Relevant Trustee shall have been so appointed by the Holders of a
Majority in liquidation amount of the Capital Securities and accepted
appointment in the manner required by this Section within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who
has been a Holder of the Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any federal, state or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee.  Such court
may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a successor Relevant Trustee or Trustees.

 

27

 

(d)           The Institutional Trustee shall give
notice of each resignation and each removal of a Trustee and each appointment
of a successor Trustee to all Holders and to the Sponsor.  Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust Office if it
is the Institutional Trustee.

 

(e)           Notwithstanding the foregoing or any
other provision of this Declaration, in the event a Delaware Trustee who is a
natural person dies or is adjudged by a court to have become incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the Institutional Trustee following the procedures in this Section (with
the successor being a Person who satisfies the eligibility requirement for a
Delaware Trustee set forth in this Declaration) (the “Successor Delaware
Trustee”).

 

(f)            In case of the appointment hereunder
of a successor Relevant Trustee, the retiring Relevant Trustee and each
successor Relevant Trustee with respect to the Securities shall execute and
deliver an amendment hereto wherein each successor Relevant Trustee shall
accept such appointment and which (a) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in,
each successor Relevant Trustee all the rights, powers, trusts and duties of
the retiring Relevant Trustee with respect to the Securities and the Trust and (b) shall
add to or change any of the provisions of this Declaration as shall be
necessary to provide for or facilitate the administration of the Trust by more
than one Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Trust or any successor Relevant
Trustee, such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant Trustee all Trust Property, all proceeds thereof and
money held by such retiring Relevant Trustee hereunder with respect to the
Securities and the Trust subject to the payment of all unpaid fees, expenses
and indemnities of such retiring Relevant Trustee.

 

(g)           No Institutional Trustee or Delaware
Trustee shall be liable for the acts or omissions to act of any Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.

 

(h)           The Holders of the Capital Securities
will have no right to vote to appoint, remove or replace the Administrators,
which voting rights are vested exclusively in the Holders of the Common
Securities.

 

(i)            Any Successor Delaware Trustee shall
file an amendment to the Certificate of Trust with the Secretary of State of
the State of Delaware identifying the name and principal place of business of
such Delaware Trustee in the State of Delaware.

 

Section 4.6.  Vacancies Among Trustees.  If a Trustee ceases to hold office for any
reason and the number of Trustees is not reduced pursuant to Section 4.1,
or if the number of Trustees is increased pursuant to Section 4.1, a
vacancy shall occur.  A resolution
certifying the existence of such vacancy by the Trustees or, if there are more
than two, a majority of the

 

28

 

Trustees shall be conclusive evidence of the existence
of such vacancy.  The vacancy shall be
filled with a Trustee appointed in accordance with Section 4.5.

 

Section 4.7.  Effect of Vacancies.  The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to dissolve, terminate or annul the Trust
or terminate this Declaration.  Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled
by the appointment of a Trustee in accordance with Section 4.5, the
Institutional Trustee shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration.

 

Section 4.8.  Meetings of the Trustees and the
Administrators.  Meetings of the
Trustees or the Administrators shall be held from time to time upon the call of
any Trustee or Administrator, as applicable. 
Regular meetings of the Trustees and the Administrators, respectively,
may be in person in the United States or by telephone, at a place (if
applicable) and time fixed by resolution of the Trustees or the Administrators,
as applicable.  Notice of any in-person
meetings of the Trustees or the Administrators shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting.  Notice of any telephonic meetings of the
Trustees or the Administrators or any committee thereof shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting.  Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting.  The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or
an Administrator, as the case may be, attends a meeting for the express purpose
of objecting to the transaction of any activity on the ground that the meeting
has not been lawfully called or convened. 
A Trustee of an Administrator may waive notice of the meeting after it
has occurred.  Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the Administrators
present (whether in person or by telephone) and eligible to vote with respect
to such matter; provided, that, in the case of the Administrators, a
Quorum is present, or without a meeting by the unanimous written consent of the
Trustees or the Administrators, as the case may be.  Meetings of the Trustees and the
Administrators together shall be held from time to time upon the call of any
Trustee or Administrator.

 

Section 4.9.  Delegation of Power.  (a)  Any Trustee or any Administrator,
as the case may be, may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 that is a U.S. Person
his or her power for the purpose of executing any documents, instruments or
other writings contemplated in Section 2.6.

 

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

 

29

 

Section 4.10.  Merger,
Conversion, Consolidation or Succession to Business.  Any Person into which the Institutional
Trustee or the Delaware Trustee, as the case may be, may be merged or converted
or with which either may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided such Person shall be
otherwise qualified and eligible under this Article and, provided, further,
that such Person shall file an amendment to the Certificate of Trust with the
Secretary of State of the State of Delaware as contemplated in Section 4.5(i).

 

ARTICLE V

 

DISTRIBUTIONS

 

Section 5.1.  Distributions.  Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder’s Securities.  Distributions shall be made on the Capital
Securities and the Common Securities in accordance with the preferences set
forth in their respective terms.  If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Amounts or Deferred Interest) or premium, if any, on and/or
principal of the Debentures held by the Institutional Trustee (the amount of
any such payment being a “Payment Amount”), the Institutional Trustee shall and
is directed, to the extent funds are available in the Property Account for that
purpose, to make a Distribution of the Payment Amount to Holders.  For the avoidance of doubt, funds in the
Property Account shall not be distributed to Holders to the extent of any taxes
payable by the Trust, in the case of withholding taxes, as determined by the
Institutional Trustee or any Paying Agent and, in the case of taxes other than
withholding taxes, as determined by the Administrators in a written notice to
the Institutional Trustee.

 

ARTICLE VI

 

ISSUANCE OF SECURITIES

 

Section 6.1.  General
Provisions Regarding Securities.

 

(a)             The
Administrators shall on behalf of the Trust issue one series of capital
securities, evidenced by a certificate substantially in the form of Exhibit A-1,
representing undivided beneficial interests in the assets of the Trust and
having such terms as are set forth in Annex I (the “Capital Securities”), and
one series of common securities, evidenced by a certificate substantially in
the form of Exhibit A-2, representing undivided beneficial interests in
the assets of the Trust and having such terms as are set forth in Annex I (the “Common
Securities”).  The Trust shall issue no
securities or other interests in the assets of the Trust other than the Capital
Securities and the Common Securities. 
The Capital Securities rank pari passu with,
and payment thereon shall be made Pro Rata with, the Common Securities except
that, where an Event of Default has occurred and is continuing, the rights of
Holders of the Common

 

30

 

Securities
to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Capital Securities.

 

(b)             The
Certificates shall be signed on behalf of the Trust by one or more
Administrators.  Such signature shall be
the facsimile or manual signature of any Administrator.  In case any Administrator of the Trust who
shall have signed any of the Securities shall cease to be such Administrator
before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Administrator.  Any Certificate may be signed on behalf of
the Trust by such person who, at the actual date of execution of such
Certificate, shall be an Administrator of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such an
Administrator.  A Capital Security shall
not be valid until the Certificate evidencing it is authenticated by the manual
or facsimile signature of an Authorized Officer of the Institutional
Trustee.  Such signature shall be
conclusive evidence that the Certificate evidencing such Capital Security has
been authenticated under this Declaration. 
Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate one or more Certificates evidencing
the Capital Securities for original issue. 
The Institutional Trustee may appoint an authenticating agent that is a
U.S. Person acceptable to the Sponsor to authenticate Certificates evidencing
Capital Securities.  A Common Security
need not be so authenticated and shall be valid upon execution by one or more
Administrators.

 

(c)             Capital
Securities initially issued by the Trust to Persons other than QIBs
or non-”U.S. Persons” in “offshore transactions” under, and within the meaning
of, Regulation S under the Securities Act shall be issued in the form of one or
more Definitive Capital Securities Certificates. The Capital
Securities initially issued to QIBs or non-”U.S. Persons” in “offshore
transactions” under, and within the meaning of, Regulation S under the
Securities Act shall be issued either (i) in
the form of one  or more Global
Capital Securities Certificates or (ii) if indicated in writing
by the Purchaser to the Sponsor on or prior to the Closing Date, in the form of  one or more Definitive Capital Securities
Certificates.  Global Capital Security
Certificates shall be, except as provided in Section 6.4,
registered in the name of the Depositary or its nominee and deposited with the
Depositary or, if not so deposited, held by the Institutional Trustee as a
custodian for the Depositary, for credit by the Depositary to the respective
accounts of the Depositary Participants (or such other accounts as they may
direct). The Trust, as issuer and the Institutional Trustee, as
custodian, are hereby authorized to execute, deliver and perform any letter of
representations and other similar agreements or writings in connection with
Capital Securities issued in the form of Global Capital Securities.

 

(d)             The
consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute
a loan to the Trust.

 

(e)             Upon
issuance of the Securities as provided in this Declaration, the Securities so
issued shall be deemed to be validly issued, fully paid and non-assessable, and
each Holder thereof shall be entitled to the benefits provided by this
Declaration.

 

31

 

(f)              Every
Person, by virtue of having become a Holder in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration and the Guarantee.

 

Section 6.2.  Paying
Agent, Transfer Agent, Calculation Agent and Registrar.

 

(a)             The
Trust shall maintain in Wilmington, Delaware (i) an office or agency where
the Securities may be presented for payment (the “Paying Agent”) and (ii) an
office or agency where Securities may be presented for registration of transfer
or exchange (the “Transfer Agent”).  The
Trust shall keep or cause to be kept at such office or agency a register (the “Securities
Register”) for the purpose of registering Securities and transfers and
exchanges of Securities, such Securities Register to be held by a registrar
(the “Registrar”).  The Administrators
may appoint the Paying Agent, the Registrar and the Transfer Agent, and may
appoint one or more additional Paying Agents, one or more co-Registrars, or one
or more co-Transfer Agents in such other locations as it shall determine.  The term “Paying Agent” includes any
additional Paying Agent, the term “Registrar” includes any additional Registrar
or co-Registrar and the term “Transfer Agent” includes any additional Transfer
Agent or co-Transfer Agent.  The
Administrators may change any Paying Agent, Transfer Agent or Registrar at any
time without prior notice to any Holder. 
The Administrators shall notify the Institutional Trustee of the name
and address of any Paying Agent, Transfer Agent and Registrar not a party to
this Declaration.  The Administrators
hereby initially appoint the Institutional Trustee to act as Paying Agent,
Transfer Agent and Registrar for the Capital Securities and the Common
Securities at its Corporate Trust Office. 
The Institutional Trustee or any of its Affiliates in the United States
may act as Paying Agent, Transfer Agent or Registrar.

 

(b)             The
Trust shall also appoint a Calculation Agent, which shall determine the Coupon
Rate in accordance with the terms of the Securities.  The Trust initially appoints the
Institutional Trustee as Calculation Agent.

 

Section 6.3.  Form and
Dating.

 

(a)             The
Capital Securities shall be evidenced by one or more Certificates, and the
Institutional Trustee’s certificate of authentication thereon shall be,
substantially in the form of Exhibit A-1, and the Common Securities shall
be evidenced by one or more Certificates substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration.  Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof.  Certificates
evidencing Securities may have letters, numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided, that any such notation, legend or endorsement is in a form
acceptable to the Sponsor).  The Trust at
the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1
to the Institutional Trustee in writing. 
Each Capital Security Certificate shall be dated the date of its
authentication.  The terms and provisions
of the Securities set forth in Annex I and the forms of Certificates set forth
in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Institutional Trustee, the Delaware Trustee, the
Administrators and the Sponsor, by their execution and delivery of

 

32

 

this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.  Capital Securities will be
issued only in blocks having an aggregate liquidation amount of not less than
$100,000.

 

(b)             The
Capital Securities are being offered and sold by the Trust initially pursuant
to the Capital Securities Subscription Agreement in the form of a Global
Capital Security or one or more Definitive Capital Securities, in accordance
with Section 6.1(c), and will be registered in the name of the Holder
thereof, without coupons and with the Restricted Securities Legend.

 

Section 6.4. 
Book-Entry Capital Securities.

 

(a)             Book-Entry
Capital Securities and Definitive Capital Securities may be exchanged or
transferred, in whole or in part, for one another only if such exchange or
transfer complies with such procedures as are substantially consistent with
this Section 6.4 and Article VIII. In addition, if (i) the
Depositary advises the Administrators and the Institutional Trustee in writing
that the Depositary is no longer willing or able to properly discharge its
responsibilities with respect to the Global Capital Security, and no qualified
successor is appointed by the Administrators within ninety (90) days of receipt
of such notice, (ii) the Depositary ceases to be a clearing agency
registered under the Exchange Act and the Administrators fail to appoint a
qualified successor within ninety (90) days of obtaining knowledge of such
event or (iii) an Indenture Event of Default has occurred and is
continuing, a Global Capital Security may be exchanged, in whole or in part,
for Definitive Capital Securities registered in the names of the Beneficial
Owners of the Book-Entry Capital Securities evidenced thereby. Upon the
occurrence of any event specified in clause (i), (ii) or (iii) above,
the Administrators shall notify the Depositary and instruct the Depositary to
notify all Beneficial Owners and the Institutional Trustee of the occurrence of
such event and of the availability of Definitive Capital Securities
Certificates to Beneficial Owners. Upon the issuance of Definitive Capital
Securities Certificates, the Administrators and the Institutional Trustee shall
recognize the Persons in whose names the Definitive Capital Securities
Certificates are registered in the Securities Register as the Holders of the Capital
Securities evidenced thereby for all purposes under this Declaration and the
Capital Securities.

 

(b)             If
any Global Capital Security is to be exchanged or transferred for Definitive
Capital Securities Certificates or canceled in part, or if any Definitive
Capital Securities Certificate is to be exchanged in whole or in part for any
Global Capital Security, then (i) such Global Capital Security shall be so
surrendered for exchange, transfer or cancellation as provided in this Section 6.4
and Article VIII and (ii) the aggregate liquidation amount
represented by such Global Capital Security shall be reduced or increased,
subject to Section 8.2(d), by an amount equal to the liquidation amount
represented by that portion of the Global Capital Security to be so exchanged,
transferred  or canceled, or equal to the
liquidation amount represented by such Definitive Capital Securities
Certificates to be so exchanged for any Global Capital Security, as the case
may be, by means of an appropriate adjustment made on the records of the
Registrar, whereupon the Institutional Trustee, in accordance with the
Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment to the Administrators or the Registrar of
any Global Capital Security or Securities by the

 

33

 

Depositary,
accompanied by registration instructions, the Administrators, or any one of
them, shall execute and the Institutional Trustee shall authenticate and
deliver  Definitive Capital Securities
Certificates issuable in exchange for such Global Capital Securities (or any
portion thereof) in accordance with the instructions of the Depositary.  The Registrar, Administrators and the
Institutional Trustee may conclusively rely on, and shall be fully protected in
relying on, such instructions.

 

(c)             Every
Definitive Capital Securities Certificate executed and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global Capital
Security or any portion thereof shall be executed and delivered in the form of,
and shall be, a Global Capital Security, unless such Definitive Capital
Securities Certificate is registered in the name of a Person other than the
Depositary for such Global Capital Security or a nominee thereof.

 

(d)             Rule 144A
Global Capital Security to Regulation S Global Capital Security. Prior to
the Resale Restriction Termination Date, if a Beneficial Owner of Book-Entry
Capital Securities evidenced by a Rule 144A Global Capital Security
deposited with the Depositary wishes at any time to exchange its interest in
such Rule 144A Global Capital Security for an interest in a Regulation S
Global Capital Security, or to transfer its interest in such  Rule 144A Global Capital Security to a
person who wishes to take delivery thereof in the form of an interest in
such  Regulation S Global Capital
Security, such Beneficial Owner may, subject to the Applicable Depositary Procedures
and to the requirements set forth in the following sentence, exchange or cause
the exchange or transfer or cause the transfer of such interest for an
equivalent beneficial interest in such Regulation S Global Capital Security.  Upon receipt by the Registrar at its office
in Wilmington, Delaware of (1) instructions given in accordance with the
Applicable Depositary Procedures by a Depositary Participant directing the
Registrar to credit or cause to be credited a beneficial interest in the  Regulation S Global Capital Security in an
amount equal to the beneficial interest in the Rule 144A Global Capital
Security to be exchanged or transferred, (2) a written order from such
Depositary Participant given in accordance with the Applicable Depositary
Procedures containing information regarding the Depositary Participant’s
account and, in the case of a transfer pursuant to and in accordance with
Regulation S, the Euroclear or Clearstream Luxembourg account to be credited
with such increase and (3) a certificate substantially in the form of Exhibit E
hereto given by such Beneficial  Owner,
the Registrar shall instruct the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of the Rule 144A Global Capital Security by the aggregate
liquidation amount of the beneficial interest in such Rule 144A Global
Capital Security to be so exchanged or transferred and the Registrar shall
instruct the Depositary, its nominee, or the custodian for the Depositary, as
the case may be, concurrently with such reduction, to increase or reflect on
its records an increase of the liquidation amount of such  Regulation S Global Capital Security by the
aggregate liquidation amount of the beneficial interest in such Rule 144A
Global Capital Security to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such
instructions a beneficial interest in such 
Regulation S Global Capital Security equal to the reduction in the
liquidation amount of such Rule 144A Global Capital Security.

 

(e)             Regulation
S Global Capital Security to Rule 144A Global Capital Security.  Prior to the Resale Restriction Termination
Date, if a Beneficial Owner of Book-Entry Capital Securities evidenced by a
Regulation S Global Capital Security which is

 

34

 

deposited
with the Depositary wishes at any time to exchange its interest in such
Regulation S Global Capital Security for an interest in a Rule 144A Global
Capital Security, or to transfer its interest in such Regulation S Global
Capital Security to a person who wishes to take delivery thereof in the form of
an interest in such Rule 144A Global Capital Security, such Beneficial
Owner may, subject to the rules and procedures of Euroclear or Clearstream
Luxembourg and the Applicable Depositary Procedures, as the case may be, and to
the requirements set forth in the following sentence, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in such Rule 144A Global Capital Security.  Upon receipt by the Registrar at its office
in Wilmington, Delaware of (1) instructions from Euroclear or Clearstream
Luxembourg or the Depositary, as the case may be, directing the Registrar to
credit or cause to be credited a beneficial interest in the Rule 144A
Global Capital Security equal to the beneficial interest in the  Regulation S Global Capital Security to be
exchanged or transferred, such instructions to contain information regarding
the Depositary Participant’s account with the Depositary to be credited with
such increase, and (2) a certificate substantially in the form of Exhibit D
hereto given by such Beneficial  Owner,
the Registrar shall instruct the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of such  Regulation S Global
Capital Security by the aggregate liquidation amount of the beneficial interest
in such Regulation S Global Capital Security to be exchanged or transferred,
and the Registrar shall instruct the Depositary, its nominee, or the custodian
for the Depositary, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the liquidation amount of
such Rule 144A Global Capital Security to be so exchanged or transferred,
and to credit or cause to be credited to the account of the person specified in
such instructions a beneficial interest in such Rule 144A Global Capital
Security equal to the reduction in the liquidation amount of such  Regulation S Global Capital Security.

 

(f)              The
Depositary or its nominee, as registered owner of a Global Capital Security,
shall be the Holder of such Global Capital Security for all purposes under this
Declaration and the Global Capital Security, and Beneficial Owners with respect
to a Global Capital Security shall hold such interests pursuant to the
Applicable Depositary Procedures.  The
Registrar, the Administrators and the Institutional Trustee shall be entitled
to deal with the Depositary for all purposes of this Declaration relating to
the Global Capital Securities as the sole Holder of the Book-Entry Capital
Securities represented thereby and shall have no obligations to the Beneficial
Owners thereof.  None of the
Administrators, the Institutional Trustee nor the Registrar shall have any
liability in respect of any transfers effected by the Depositary.

 

(g)             The
rights of the Beneficial Owners of the Book-Entry Capital Securities shall be
exercised only through the Depositary and shall be limited to those established
by law, the Applicable Depositary Procedures and agreements between such
Beneficial Owners and the Depositary and/or its Depositary Participants;
provided, solely for the purpose of determining whether the Holders of the
requisite amount of Capital Securities have voted on any matter provided for in
this Declaration, to the extent that Capital Securities are represented by a
Global Capital Security, the Administrators and the Institutional Trustee may
conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Institutional Trustee by the
Depositary setting forth the Beneficial Owners’ votes or assigning the right to
vote on any matter to any other Persons either in whole or in part.  To the extent that

 

35

 

Capital
Securities are represented by a Global Capital Security, subject to this Section 6.4,
the initial Depositary will make book-entry transfers among the Depositary
Participants and receive and transmit payments on the Capital Securities that
are represented by a Global Capital Security to such Depositary Participants,
and none of the Sponsor, the Administrators or the Institutional Trustee shall
have any responsibility or obligation with respect thereto.

 

(h)             To
the extent that a notice or other communication to the Holders is required
under this Declaration, for so long as Capital Securities are represented by a
Global Capital Security, the Administrator and the Institutional Trustee shall
give all such notices and communications to the Depositary, and shall have no
obligations to the Beneficial Owners.

 

Section 6.5.  Mutilated,
Destroyed, Lost or Stolen Certificates. 
If (a) any mutilated Certificate should be surrendered to the
Registrar, or if the Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) the related
Holder shall deliver to the Registrar, the Administrators and the Institutional
Trustee such security or indemnity as may be reasonably required by them to
keep each of them harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, an Administrator
on behalf of the Trust shall execute (and in the case of a Capital Security
Certificate, the Institutional Trustee shall authenticate) and deliver to such
Holder, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination.  In connection with the issuance of any new
Certificate under this Section, the Registrar or the Administrators may require
such Holder to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.  Any Certificate executed and delivered
pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.

 

Section 6.6.  Temporary
Certificates.  Until definitive
Certificates are ready for delivery, the Administrators may prepare and execute
on behalf of the Trust and, in the case of Capital Security Certificates, the
Institutional Trustee shall authenticate, temporary Certificates.  Temporary Certificates shall be substantially
in the form of definitive Certificates but may have variations that the Administrators
consider appropriate for temporary Certificates.  Without unreasonable delay, the
Administrators shall prepare and execute on behalf of the Trust and, in the
case of the Capital Security Certificates, the Institutional Trustee shall
authenticate definitive Certificates in exchange for temporary Certificates.

 

Section 6.7.  Cancellation.  The Administrators at any time may deliver
Certificates evidencing Securities to the Institutional Trustee for
cancellation.  The Registrar shall
forward to the Institutional Trustee any Certificates evidencing Securities
surrendered to it for registration of transfer, exchange, redemption or
payment.  The Institutional Trustee shall
promptly cancel all Certificates surrendered for registration of transfer,
exchange,  payment, replacement or
cancellation and shall dispose of such canceled Certificates as the
Administrators direct.  The
Administrators may not issue new Certificates to replace Certificates
evidencing Securities that have been paid or, except for Certificates
surrendered for purposes of the transfer or exchange of the Securities
evidenced thereby, that have been delivered to the Institutional Trustee for
cancellation.

 

36

 

Section 6.8.  Rights of
Holders; Waivers of Past Defaults.

 

(a)             The
legal title to the Trust Property is vested exclusively in the Institutional
Trustee (in its capacity as such) in accordance with Section 2.5, and the
Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Trust conferred by their Securities
and they shall have no right to call for any partition or division of property,
profits or rights of the Trust except as described below.  The Securities shall be personal property
giving only the rights specifically set forth therein and in this
Declaration.  The Securities shall have
no, and the issuance of the Securities shall not be subject to, preemptive or
other similar rights and when issued and delivered to Holders against payment
of the purchase price therefor, the Securities will be fully paid and
nonassessable by the Trust.

 

(b)             For
so long as any Capital Securities remain outstanding, if, upon an Indenture
Event of Default pursuant to Sections 5.01(b), (e), (f), (g), (h) or (i) of
the Indenture, the Debenture Trustee fails or the holders of not less than 25%
in principal amount of the outstanding Debentures fail to declare the principal
of all of the Debentures to be immediately due and payable, the Holders of not
less than a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in
writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.

 

(c)             At
any time after the acceleration of maturity of the Debentures has been made and
before a judgment or decree for payment of the money due has been obtained by
the Debenture Trustee as provided in the Indenture, if the Institutional
Trustee, subject to the provisions hereof, fails to annul any such acceleration
and waive such default, the Holders of a Majority in liquidation amount of the
Capital Securities, by written notice to the Institutional Trustee, the Sponsor
and the Debenture Trustee, may rescind and annul such acceleration and its
consequences if:

 

(i)            the Sponsor has paid
or deposited with the Debenture Trustee a sum sufficient to pay

 

(A)          all overdue installments
of interest on all of the Debentures;

 

(B)           any accrued Deferred
Interest on all of the Debentures;

 

(C)           all payments on any
Debentures that have become due otherwise than by such acceleration and
interest and Deferred Interest thereon at the rate borne by the Debentures; and

 

(D)          all sums paid or
advanced by the Debenture Trustee under the Indenture and the reasonable
compensation, documented expenses, disbursements and advances of the Debenture
Trustee and the Institutional Trustee, their agents and counsel; and

 

(ii)           all Events of Default
with respect to the Debentures, other than the non-payment of the principal of
or premium, if any, on the Debentures that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.07 of the
Indenture.

 

37

 

(d)             The
Holders of a Majority in liquidation amount of the Capital Securities may, on
behalf of the Holders of all the Capital Securities, waive any past Default or
Event of Default, except a Default or Event of Default arising from the
non-payment of principal of or premium, if any, or interest on the Debentures
(unless such Default or Event of Default has been cured and a sum sufficient to
pay all matured installments of interest, premium and principal due otherwise
than by acceleration has been deposited with the Debenture Trustee) or a
Default or Event of Default in respect of a covenant or provision that under
the Indenture cannot be modified or amended without the consent of the holder
of each outstanding Debenture.  No such
rescission shall affect any subsequent default or impair any right consequent
thereon.

 

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

 

(f)              Except
as otherwise provided in this Section, the Holders of a Majority in liquidation
amount of the Capital Securities may, on behalf of the Holders of all the
Capital Securities, waive any past Default or Event of Default and its
consequences.  Upon such waiver,  any such Default or Event of Default shall
cease to exist, and any Default or Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.

 

ARTICLE VII

 

DISSOLUTION AND
TERMINATION OF TRUST

 

Section 7.1.  Dissolution
and Termination of Trust.  (a)  The Trust shall dissolve on the
first to occur of :

 

(i)            unless earlier
dissolved, on June 30, 2043, the
expiration of the term of the Trust;

 

38

 

(ii)           a Bankruptcy Event with
respect to the Sponsor, the Trust or the Debenture Issuer;

 

(iii)          other than in connection
with a merger, consolidation or similar transaction not prohibited by the
Indenture, this Declaration or the Guarantee, as the case may be, the filing of
a certificate of dissolution or its equivalent with respect to the Sponsor or
upon the revocation of the charter of the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof;

 

(iv)          the distribution of all
of the Debentures to the Holders of the Securities, upon exercise of the right
of the Holders of all of the outstanding Common Securities to dissolve the
Trust as provided in Annex I hereto;

 

(v)           the entry of a decree
of judicial dissolution of any Holder of the Common Securities, the Sponsor,
the Trust or the Debenture Issuer;

 

(vi)          when all of the
Securities are then subject to redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in accordance with the
terms of the Securities; or

 

(vii)         before the issuance of
any Securities, with the consent of all of the Trustees and the Sponsor.

 

(b)             As
soon as is practicable after the occurrence of an event referred to in Section 7.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by
applicable law, including §3808 of the Statutory Trust Act, and subject to the
terms set forth in Annex I, the Institutional Trustee shall terminate the Trust
by filing a certificate of cancellation with the Secretary of State of the
State of Delaware.

 

(c)             The
provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.

 

ARTICLE VIII

 

TRANSFER OF INTERESTS

 

Section 8.1.  General.  (a)       Subject to Sections 6.4, 8.1(c) and 8.5,
when a Holder of Capital Securities delivers to the Registrar in accordance
with this Declaration a request to register a transfer of such Holder’s Capital
Securities or to exchange them for an equal aggregate liquidation amount of
Capital Securities represented by different Certificates or as otherwise
provided herein, the Registrar shall register the transfer or make the exchange
when the requirements provided for herein for such transfer or exchange are
met.  To facilitate registrations of
transfers and exchanges, the Trust shall execute and the Institutional Trustee
shall authenticate Capital Security Certificates at the Registrar’s request.

 

(b)             Upon
issuance of the Common Securities, the Sponsor shall acquire and retain
beneficial and record ownership of the Common Securities and, for so long as
the Securities remain outstanding, the Sponsor shall maintain 100% ownership of
the Common

 

39

 

Securities;
provided, however, that any permitted successor of the Debenture Issuer under
the Indenture may succeed to the Sponsor’s ownership of the Common Securities.

 

(c)             Capital
Securities may only be transferred, in whole or in part, in accordance with the
terms and conditions set forth in this Declaration and in the terms of the
Capital Securities.  To the fullest
extent permitted by applicable law, any transfer or purported transfer of any
Capital Security not made in accordance with this Declaration shall be null and
void and will be deemed to be of no legal effect whatsoever and any such
purported transferee shall be deemed not to be the Holder of such Capital
Securities for any purpose, including, but not limited to, the receipt of Distributions
on such Capital Securities, and such transferee shall be deemed to have no
interest whatsoever in such Capital Securities.

 

(d)             The
Registrar shall provide in the Securities Register for the registration of
Securities and the registration of transfers and exchanges of Securities, which
will be effected without charge but only upon payment (with such indemnity as
the Registrar may reasonably require) in respect of any tax or other
governmental charges that may be imposed in relation to it.

 

With respect to Capital
Securities that are not Book-Entry Capital Securities, upon its receipt of the
documents required under this Section 8.1(d) for registration of
transfer of any Securities, the Registrar shall register in the Securities
Register, in the name of the designated transferee or transferees, the
Securities being transferred and thereupon, for all purposes of this
Declaration, such transfer shall be effective and such transferee or
transferees shall be, and such transferor shall no longer be, the Holder of the
transferred Securities.  Upon the
registration of transfer of a Security pursuant to the terms of this
Declaration in the name of the new Holder thereof, such Security shall
constitute the same Security as the Security so transferred and shall be
entitled to the same benefits under this Declaration as the Security so
transferred.  The Registrar shall, and is
authorized to, record and register in the Securities Register the transfer of a
Security upon the Registrar’s receipt of originals or copies (which may be by
facsimile or other form of electronic transmission) of (i) a written
instrument of transfer in form reasonably satisfactory to the Registrar duly
executed by the Holder or such Holder’s attorney duly authorized in writing,
and (ii) if such Security is being transferred or exchanged prior to the
Resale Restriction Termination Date other than in accordance with Section 8.4
or Section 8.5, a certificate substantially in the form set forth as Exhibit C,
D or E, as applicable, hereto, executed by the transferor or transferee, as
applicable; thereupon, the Registrar is authorized to confirm in writing to the
transferee and, if requested, to the transferor of such Security that such
transfer has been registered in the Securities Register and that such
transferee is the Holder of such Security. 
The Definitive Capital Securities Certificate so transferred, duly
endorsed by the transferor, shall be surrendered to the Registrar at the time
the transfer conditions specified in the immediately preceding sentence are
satisfied or within five (5) Business Days after the Registrar has
registered the transfer of such Security on the Securities Register, and
promptly after such surrender, an Administrator on behalf of the Trust shall
execute and the Institutional Trustee shall, and is authorized to, authenticate
a Certificate in the name of the transferee or, if the transferee is a QIB
desiring a beneficial interest in a Global Capital Security, in the name of the
Depositary or its nominee, as applicable, as the new Holder of the Security
evidenced thereby.  Until the Definitive
Capital Securities Certificate evidencing the Security so transferred is
surrendered to the Registrar, such Security may not be transferred by such new
Holder.

 

40

 

Each Definitive Capital Securities Certificate
surrendered in connection with a registration of transfer or exchange shall be
canceled by the Institutional Trustee pursuant to Section 6.7.  A transferee of a Security shall be entitled
to the rights and subject to the obligations of a Holder hereunder upon the
registration of such transfer in the Securities Register.  Each such transferee shall be deemed to have
agreed to be bound by this Declaration.

 

(e)             Neither
the Trust nor the Registrar shall be required (i) to issue Certificates
representing Securities or register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
any selection of Securities for redemption and ending at the close of business
on the earliest date on which the relevant notice of redemption is deemed to
have been given to all Holders of the Securities to be redeemed, or (ii) to
register the transfer or exchange of any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.

 

Section 8.2.  Transfer
Procedures and Restrictions.

 

(a)             Prior
to the Resale Restriction Termination Date, Certificates evidencing Capital
Securities shall bear the Restricted Securities Legend.  The Restricted Securities Legend on any
Certificate evidencing outstanding Capital Securities shall not be removed
unless there is delivered to the Trust such satisfactory evidence, which may
include an opinion of counsel, as may be reasonably required by the Trust, that
neither the Restricted Securities Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of the Securities Act or that such Securities are not “restricted”
within the meaning of Rule 144 under the Securities Act.  Upon provision of such satisfactory evidence,
the Institutional Trustee, at the written direction of the Trust, shall
authenticate and deliver Capital Securities Certificates that do not bear the
Restricted Securities Legend (other than the first two and last paragraphs of
the legend specified in Section 8.2(c)) in exchange for the Capital
Securities Certificates bearing the Restricted Securities Legend.

 

(b)             Prior
to the Resale Restriction Termination Date, without the written consent of the
Sponsor, Capital Securities that are not Book-Entry Capital Securities may only
be transferred:  (i) to a QIB if the
instrument of transfer is accompanied by a certificate of the transferor
substantially in the form set forth as Exhibit D hereto; (ii) to an “accredited
investor” within the meaning of Rule 501(a) (1), (2), (3), (7) or
(8) under the Securities Act if the instrument of transfer is accompanied
by a certificate of the transferee substantially in the form set forth as Exhibit C
hereto; or (iii)  to a non-”U.S. Person” in an “offshore transaction”
under, and within the meaning of, Regulation S under the Securities Act if the
instrument of transfer is accompanied by a certificate of the transferee substantially
in the form set forth as Exhibit E hereto. 
Each certificate furnished pursuant to this Section 8.2(b) may
be an original or a copy (which may be furnished by facsimile or other form of
electronic transmission).

 

(c)             The
Capital Securities may not be transferred prior to the Resale Restriction
Termination Date except in compliance with restrictions on transfer set forth
in the legend set forth below (the “Restricted Securities Legend”), and except
as otherwise contemplated in Section 8.2(a), prior to the Resale
Restriction Termination Date, each Certificate evidencing outstanding Capital
Securities shall bear the Restricted Securities Legend:

 

41

 

THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A  NOMINEE OF DTC.  THIS SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER
OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF
DTC) MAY BE REGISTERED EXCEPT IN THE CIRCUMSTANCES SPECIFIED IN THE
DECLARATION.

 

UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE TRUST OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
LAWS.  NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE
HEREOF AND (Z) THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF
THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO)
AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE DEBENTURE ISSUER OR
THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”),
TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER,”
AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”

 

42

 

WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2),
(3), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO
NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE DEBENTURE ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A
COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”),
OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY
PLAN’S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY
PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS
PURCHASE AND HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH
RESPECT TO SUCH PURCHASE OR HOLDING.  ANY
PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF OR
THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT IS NOT AN EMPLOYEE
BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN
TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON
ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF

 

43

 

THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF
THIS SECURITY WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND
RESTATED DECLARATION OF TRUST 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 OR ANY INTEREST OR PARTICIPATION
HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR
ANY INTEREST OR PARTICIPATION HEREIN.

 

(d)           Capital Securities may
only be transferred in minimum blocks of $100,000 aggregate liquidation amount
(100 Capital Securities) and multiples of $1,000 in excess thereof.  Any attempted transfer of Capital Securities
in a block having an aggregate 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 a Holder of such Capital Securities for any purpose, including, but
not limited to, the receipt of Distributions on such Capital Securities, and
such purported transferee shall be deemed to have no interest whatsoever in
such Capital Securities.

 

Section 8.3.  Deemed Security Holders.  The Trust, the Administrators, the Trustees,
the Paying Agent, the Transfer Agent or the Registrar may treat the Person in
whose name any Security shall be registered on the Securities Register of the
Trust as the sole Holder and owner of such Security for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Security on the part of any other Person, whether or not the Trust, the
Administrators, the Trustees, the Paying Agent, the Transfer Agent or the
Registrar shall have actual or other notice thereof.

 

Section 8.4.  Transfer of Initial Securities.  With respect to Capital Securities that are
not Book-Entry Capital Securities, and notwithstanding the foregoing provisions
of this Article VIII or any other provision of this Declaration (including
all Annexes and Exhibits hereto) to the contrary, any or all of the Capital
Securities initially issued to the Purchaser (the “Initial Securities”) may be
transferred by the Purchaser to any transferee selected by it  that meets the parameters specified below
and, upon delivery to the Registrar, of originals or copies (which may be by
facsimile or other form of electronic transmission) of a written instrument of
transfer in form reasonably satisfactory to the Registrar duly executed by the
Purchaser or the

 

44

 

Purchaser’s attorney duly authorized in writing (it
being understood that no signature guarantee shall be required), then the
Registrar shall, and is authorized to, record and register on the Securities
Register the transfer of such Initial Securities to such transferee; thereupon,
the Registrar is authorized to confirm in writing to the transferee and, if
requested, to the transferor of such Initial Securities that such transfer has
been registered in the Securities Register and that such transferee is the
Holder of such Initial Securities; provided, however, that the
Purchaser of the Initial Securities, by its acceptance thereof, agrees that it
may not transfer any Initial Securities prior to the Resale Restriction
Termination Date to any transferee that is not a QIB, an “accredited investor”
within the meaning of Rule 501(a)(1), (2), (3), (7) or (8) under
the Securities Act or a non-”U.S. Person” in an “offshore transaction” under,
and within the meaning of, Regulation S under the Securities Act.  The Definitive Capital Securities Certificate
evidencing the Initial Securities to be transferred, duly endorsed by the
Purchaser, shall be surrendered to the Registrar at the time the transfer
conditions specified in the immediately preceding sentence are satisfied or
within five (5) Business Days after the Registrar has registered the
transfer of such Initial Securities in the Securities Register, and promptly
after such surrender, an Administrator on behalf of the Trust shall execute
and, in the case of a Capital Security Certificate, the Institutional Trustee
shall, and is authorized to, authenticate a Certificate in the name of the
transferee or, if the transferee is a QIB desiring a beneficial interest in a
Global Capital Security, in the name of the Depositary or its nominee, as
applicable, as the new Holder of the Initial Securities evidenced thereby.  Until the Definitive Capital Securities
Certificate evidencing the Initial Securities so transferred is surrendered to
the Registrar, such Initial Securities may not be transferred by such new Holder.  No other conditions, restrictions or other
provisions of this Declaration or any other document shall apply to a transfer
of Initial Securities by the Purchaser.

 

Section 8.5.  Exchange of Capital Securities by Sponsor
or its Affiliates

 

(a)           If
at any time the Sponsor or any of its Affiliates is the Beneficial Owner or
Holder of any Capital Securities, the Sponsor shall deliver or cause to be
delivered to the Institutional Trustee or its designee all the Capital
Securities owned by it or such Affiliate, as the case may be, as soon as
practicable after such Capital Securities are acquired but in no event later
than three (3) Business Days after the Capital Securities are acquired
and, subject to compliance with Section 2.05 of the Indenture, receive, in
exchange therefor, Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of such Capital Securities.  The Institutional Trustee shall designate the
date of such exchange (which shall be a date no later than ten (10) Business
Days after the Capital Securities are delivered to the Institutional Trustee or
its designee) and notify the Sponsor and the applicable Affiliate of the
Sponsor, if any, of such date. After the exchange, such Capital Securities will
be canceled and will no longer be deemed to be outstanding and all rights of
the Sponsor or such Affiliate, as applicable, with respect to such Capital
Securities will cease.

 

(b)           In
the case of an exchange described in Section 8.5(a), the Institutional
Trustee on behalf of the Trust will, on the date designated by the
Institutional Trustee for such exchange, exchange Debentures having a principal
amount equal to a proportional amount of the aggregate liquidation amount of
the outstanding Common Securities, based on the ratio of the aggregate
liquidation amount of the Capital Securities exchanged pursuant to Section 8.5(a) divided
by the aggregate liquidation amount of the Capital Securities outstanding
immediately prior to such

 

45

 

exchange, for such proportional amount of Common
Securities held by the Sponsor (which contemporaneously shall be canceled and
no longer be deemed to be outstanding); provided, that the Sponsor delivers or
causes to be delivered to the Institutional Trustee or its designee the
required amount of Common Securities to be exchanged by 10:00 A.M. New
York time, on the date on which such exchange is to occur.

 

Section 8.6.  Obligation of the Trust to Eliminate a DTC
Deliver Order Chill In Certain Circumstances.  In the event that:

 

(a)           the DTC is the
Depositary of a Global Capital Security representing Book-Entry Capital
Securities eligible for transfer pursuant to Regulation S under the Securities
Act; and

 

(b)           in respect of such
Book-Entry Capital Securities, the Trust has issued an order (the “Deliver
Order Chill”) to DTC not to effect book-entry deliveries (except deliveries via
DTC’s Deposit/Withdrawal at Custodian DWAC system in DTC’s Depositary
Participant accounts maintained by banks that act as depositaries for
Clearstream Banking société anonyme and Euroclear) until a specified date (the “Deliver
Order Chill Termination Date”); and

 

(c)           prior to the Deliver
Order Chill Termination Date, a Beneficial Owner of, the authorized
representative of such Beneficial Owner, or any Depositary Participant of DTC
in respect of, such Book-Entry Capital Securities gives the Trust or the
Registrar written notice of its intention to transfer any of such Book-Entry
Capital Securities pursuant to Rule 144A under the Securities Act and
otherwise in compliance with the terms of this Declaration;

 

then,
upon receipt of such written notice by the Trust or the Registrar, as the case
may be, the Trust, or the Registrar at the written direction of an
Administrator on behalf of the Trust, shall send DTC a notice requesting that
the Deliver Order Chill be eliminated as of a date no later than 2 Business
Days after DTC receives such notice from the Trust, or from the Registrar at
the written direction of an Administrator on behalf of the Trust.

 

Such notice shall be sent to DTC by secure means (e.g. legible
telecopy, registered or certified mail, overnight delivery) in a timely manner
designed to assure that such notice is in DTC’s possession no later than the
close of business two Business Days prior to the date specified for elimination
of the Delivery Order Chill. Subject to the then applicable rules and
procedures of the DTC, such notice shall (i) if sent by telecopy, be sent
to (212) 344-1531 or (212) 855-3728 and (ii) if delivered by hand or sent
by mail or overnight delivery, such notice shall be sent to: Manager,
Eligibility Section, Underwriting Department, The Depository Trust Company, 55
Water Street, 25th
Floor, New York, NY 10041-0099; provided that in the case of (i) the Trust
shall confirm DTC’s receipt of such telecopy by telephoning DTC’s Underwriting
Department at (212) 855-3731.

 

46

 

ARTICLE IX

 

LIMITATION OF
LIABILITY OF

HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

 

Section 9.1.  Liability.  (a)  Except as expressly set forth in
this Declaration, the Guarantee and the terms of the Securities, the Sponsor
shall not be:

 

(i)            personally liable for
the return of any portion of the capital contributions (or any return thereon)
of the Holders of the Securities which shall be made solely from assets of the
Trust; and

 

(ii)           required to pay to the
Trust or to any Holder of the Securities any deficit upon dissolution of the
Trust or otherwise.

 

(b)           The Holder of the
Common Securities shall be liable for all of the debts and obligations of the
Trust (other than with respect to the Securities) to the extent not satisfied
out of the Trust’s assets.

 

(c)           Pursuant to § 3803(a) of
the Statutory Trust Act, the Holders of the Securities shall be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware, except as otherwise specifically set forth herein.

 

Section 9.2.  Exculpation.  (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust 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 on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person (other than an
Administrator) shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person’s negligence, willful misconduct or bad faith
with respect to such acts or omissions and except that an Administrator shall
be liable for any such loss, damage or claim incurred by reason of such
Administrator’s gross negligence, willful misconduct or bad faith 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 Trust
and upon such information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person reasonably believes
are within such other Person’s professional or expert competence and, if
selected by such Indemnified Person, has been selected by such Indemnified
Person with reasonable care by or on behalf of the Trust, 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
Securities might properly be paid.

 

Section 9.3.  Fiduciary Duty.  (a)       To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration.  The provisions of this
Declaration, to the extent that they restrict

 

47

 

the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of the Indemnified Person.

 

(b)           Whenever in this
Declaration an Indemnified Person is permitted or required to make a decision:

 

(i)            in its “discretion” or
under a grant of similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to any interest
of or factors affecting the Trust or any other Person; or

 

(ii)           in its “good faith” or
under another express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.

 

Section 9.4.  Indemnification.  (a)

 

(i)            The Sponsor shall
indemnify, to the fullest extent permitted by law, any Indemnified Person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Trust) by reason of the fact that such Person is or was an Indemnified Person
against expenses (including attorneys’ fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such Person in
connection with such action, suit or proceeding if such Person acted in good
faith and in a manner such Person reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful.  The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person did not act in good faith and in a manner which such
Person reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such conduct was unlawful.

 

(ii)           The Sponsor shall
indemnify, to the fullest extent permitted by law, any Indemnified Person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that such Person is or was an
Indemnified Person against expenses (including attorneys’ fees and expenses)
actually and reasonably incurred by such Person in connection with the defense
or settlement of such action or suit if such Person acted in good faith and in
a manner such Person reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be made in

 

48

 

respect of any claim,
issue or matter as to which such Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such Person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.

 

(iii)          To the extent that an
Indemnified Person shall be successful on the merits or otherwise (including
dismissal of an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 9.4(a), or in defense
of any claim, issue or matter therein, such Person shall be indemnified, to the
fullest extent permitted by law, against expenses (including attorneys’ fees
and expenses) actually and reasonably incurred by such Person in connection
therewith.

 

(iv)          Any indemnification of
an Administrator under paragraphs (i) and (ii) of this Section 9.4(a) (unless
ordered by a court) shall be made by the Sponsor only as authorized in the
specific case upon a determination that indemnification of the Indemnified
Person is proper in the circumstances because such Person has met the
applicable standard of conduct set forth in paragraphs (i) and (ii).  Such determination shall be made (A) by
the Administrators by a majority vote of a Quorum consisting of such
Administrators who were not parties to such action, suit or proceeding, (B) if
such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion, or (C) by the Common Security Holder of the Trust.

 

(v)           To the fullest extent
permitted by law, expenses (including attorneys’ fees and expenses) incurred by
an Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 9.4(a) shall be paid by the Sponsor in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Indemnified Person to repay
such amount if it shall ultimately be determined that such Person is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4(a).  Notwithstanding the foregoing, no advance
shall be made by the Sponsor if a determination is reasonably and promptly made
(1) in the case of a Company Indemnified Person (A) by the
Administrators by a majority vote of a Quorum of disinterested Administrators, (B) if
such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion or (C) by the Common Security Holder of the Trust, that,
based upon the facts known to the Administrators, counsel or the Common
Security Holder at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Person either believed to be
opposed to or did not believe to be in the best interests of the Trust, or,
with respect to any criminal proceeding, that such Indemnified Person believed
or had reasonable

 

49

 

cause to believe such
conduct was unlawful, or (2) in the case of a Fiduciary Indemnified
Person, by independent legal counsel in a written opinion that, based upon the
facts known to the counsel at the time such determination is made, such
Indemnified Person acted in bad faith or in a manner that such Indemnified
Person either believed to be opposed to or did not believe to be in the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe such conduct was
unlawful.  In no event shall any advance
be made (i) to a Company Indemnified Person in instances where the
Administrators, independent legal counsel or the Common Security Holder
reasonably determine that such Person deliberately breached such Person’s duty
to the Trust or its Common or Capital Security Holders or (ii) to a
Fiduciary Indemnified Person in instances where independent legal counsel
promptly and reasonably determines in a written opinion that such Person
deliberately breached such Person’s duty to the Trust or its Common or Capital
Security Holders.

 

(b)           The Sponsor shall
indemnify, to the fullest extent permitted by applicable law, each Indemnified
Person from and against any and all loss, damage, liability, tax (other than
taxes based on the income of such Indemnified Person), penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified Person
arising out of or in connection with or by reason of the creation,
administration or termination of the Trust, or any act or omission of such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage, liability, tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence, willful misconduct or bad faith with respect to
such acts or omissions.

 

(c)           The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
paragraphs of this Section shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may
be entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Capital Security Holders of the Trust or otherwise,
both as to action in such Person’s official capacity and as to action in
another capacity while holding such office. 
All rights to indemnification under this Section shall be deemed to
be provided by a contract between the Sponsor and each Indemnified Person who
serves in such capacity at any time while this Section is in effect.  Any repeal or modification of this Section shall
not affect any rights or obligations then existing.

 

(d)           The Sponsor or the
Trust may purchase and maintain insurance on behalf of any Person who is or was
an Indemnified Person against any liability asserted against such Person and
incurred by such Person in any such capacity, or arising out of such Person’s
status as such, whether or not the Sponsor would have the power to indemnify
such Person against such liability under the provisions of this Section.

 

(e)           For purposes of this
Section, references to “the Trust” shall include, in addition to the resulting
or surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any Person who is
or was a

 

50

 

director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section with respect to the resulting or surviving entity as such
Person would have with respect to such constituent entity if its separate existence
had continued.

 

(f)            The indemnification
and advancement of expenses provided by, or granted pursuant to, this Section shall,
unless otherwise provided when authorized or ratified, continue as to a Person
who has ceased to be an Indemnified Person and shall inure to the benefit of
the heirs, executors and administrators of such a Person.

 

(g)           The provisions of this Section shall
survive the termination of this Declaration or the earlier resignation or
removal of the Institutional Trustee. 
The obligations of the Sponsor under this Section to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional indebtedness
hereunder.  Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property
and funds held or collected by the Trustees as such, except funds held in trust
for the benefit of the Holders of particular Capital Securities, provided,
that the Sponsor is the Holder of the Common Securities.

 

Section 9.5.  Outside Businesses.  Any Covered Person, the Sponsor, the Delaware
Trustee and the Institutional Trustee (subject to Section 4.3(c)) may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of Securities shall have
no rights by virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed
wrongful or improper.  None of any
Covered Person, the Sponsor, the Delaware Trustee or the Institutional Trustee
shall be obligated to present any particular investment or other opportunity to
the Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity.  Any Covered Person, the Delaware Trustee and
the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.

 

Section 9.6.  Compensation; Fee.  (a)  The Sponsor agrees:

 

(i)            to pay to the Trustees
from time to time such compensation for all services rendered by them hereunder
as the parties shall agree in writing 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

 

(ii)           except as otherwise
expressly provided herein, to reimburse each of the Trustees upon request for
all reasonable, documented expenses,

 

51

 

disbursements and
advances incurred or made by such Person in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of such Person’s agents and counsel), except any such expense,
disbursement or advance attributable to such Person’s negligence, willful
misconduct or bad faith.

 

(b)           The provisions of this Section shall
survive the dissolution of the Trust and the termination of this Declaration
and the removal or resignation of any Trustee.

 

ARTICLE X

 

ACCOUNTING

 

Section 10.1.  Fiscal Year.  The fiscal year (the “Fiscal Year”) of the
Trust shall be the calendar year, or such other year as is required by the
Code.

 

Section 10.2.  Certain Accounting Matters.

 

(a)           At all times during the
existence of the Trust, the Administrators shall keep, or cause to be kept, at
the principal office of the Trust in the United States, as defined for purposes
of Treasury Regulations § 301.7701-7, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust.  The books of account shall
be maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied.

 

(b)           The Sponsor shall cause
the Administrators to deliver, by hardcopy or electronic transmission, (i) to
the Purchaser and each Holder or beneficial owner of Securities each Report on Form 10-K
and Form 10-Q, if any, prepared by the Sponsor and filed with the
Commission in accordance with the Exchange Act, within 10 Business Days after
the filing thereof or (ii)  if the Sponsor is (a) not then subject to
Section 13 or 15(d) of the Exchange Act (a “Private Entity”) or (b) exempt
from reporting pursuant to Rule 12g3-2(b) thereunder, the information
required by Rule 144A(d)(4) under the Securities Act.  Notwithstanding the foregoing, so long as a
Holder or beneficial owner of the Capital Securities is the Purchaser or an
entity that holds a pool of trust preferred securities and/or debt securities
as collateral for its securities or a trustee thereof, and the Sponsor is (i) a
Private Entity that, on the date of original issuance of the Capital
Securities, is required to provide audited consolidated financial statements to
its primary regulatory authority, (ii) a Private Entity that, on the date
of original issuance of the Capital Securities, is not required to provide
audited consolidated financial statements to its primary regulatory authority,
but subsequently becomes subject to the audited consolidated financial
statement reporting requirements of that regulatory authority or (iii) subject
to Section 13 or 15(d) of the Exchange Act on the date of original
issuance of the Capital Securities or becomes so subject after the date hereof
but subsequently becomes a Private Entity, then, within 90 days after the end
of each fiscal year, beginning with the fiscal year in which the Capital
Securities were originally issued if the Sponsor was then subject to (x) Section 13
or 15(d) of the Exchange Act or (y) audited consolidated financial
statement reporting requirements of its primary regulatory authority or,
otherwise, the earliest fiscal year in which the Sponsor becomes subject to (1) Section 13
or 15(d) of the Exchange Act or (2) the

 

52

 

audited consolidated
financial statement reporting requirements of its primary regulatory authority,
the Sponsor shall deliver, by hardcopy or electronic transmission, to the
Purchaser and each Holder or beneficial owner of Securities, unless otherwise
provided pursuant to the preceding sentence, (A) a copy of the Sponsor’s
audited consolidated financial statements (including balance sheet and income
statement) covering the related annual period and (B) the report of the
independent accountants with respect to such financial statements.  In addition to the foregoing, the Sponsor
shall deliver to the Purchaser and each Holder or beneficial owner of
Securities within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year and the statements of income or loss
for the Fiscal Year then ended, that are prepared at the principal office of
the Trust in the United States, as defined for purposes of Treasury Regulations
§ 301.7701-7.

 

(c)           The Administrators
shall cause to be duly prepared and delivered to each of the Holders of
Securities Form 1099 or such other annual United States federal income tax
information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations.  Notwithstanding
any right under the Code to deliver any such statement at a later date, the
Administrators shall endeavor to deliver all such statements within 30 days
after the end of each Fiscal Year of the Trust.

 

(d)           The Administrators
shall cause to be duly prepared in the United States, as defined for purposes
of Treasury Regulations § 301.7701-7, and filed an annual United States federal
income tax return on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns required
to be filed by the Administrators on behalf of the Trust with any state or
local taxing authority.

 

(e)           So long as a Holder or
beneficial owner of the Capital Securities is The Park Avenue Bank or an entity
that holds a pool of trust preferred securities and/or debt securities, or the
trustee thereof, the Sponsor shall cause the Administrators to deliver the
Sponsor’s reports on Form FR Y-9C to
such Holder promptly following their filing with the Federal Reserve.

 

(f)            The Company shall
furnish to the Purchaser and each Holder or beneficial owner of Securities, a
duly completed and executed certificate in the form attached hereto as Exhibit F,
including the financial statements referenced in such Exhibit, to the extent
such financial statements are not otherwise provided pursuant to Section 10.2(b) above,
which certificate and financial statements shall be so furnished by the Company
not later than forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Company and not later than ninety
(90) days after the end of each fiscal year of the Company.

 

Section 10.3.  Banking.  The Trust shall maintain one or more bank
accounts in the United States, as defined for purposes of Treasury Regulations
§ 301.7701-7, in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by
the Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account.  The sole signatories

 

53

 

for such accounts (including the Property Account)
shall be designated by the Institutional Trustee.

 

Section 10.4.  Withholding.  The Institutional Trustee or any Paying Agent
and the Administrators shall comply with all withholding requirements under
United States federal, state and local law. 
The Institutional Trustee or any Paying Agent shall request, and each
Holder shall provide to the Institutional Trustee or any Paying Agent, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to the Holder, and any representations and forms as
shall reasonably be requested by the Institutional Trustee or any Paying Agent
to assist it in determining the extent of, and in fulfilling, its withholding
obligations.  The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions.  To the extent that the Institutional Trustee
or any Paying Agent is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Holder, the
amount withheld shall be deemed to be a Distribution to the Holder in the
amount of the withholding.  In the event
of any claimed overwithholding, Holders shall be limited to an action against
the applicable jurisdiction.  If the
amount required to be withheld was not withheld from actual Distributions made,
the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.

 

ARTICLE XI

 

AMENDMENTS AND
MEETINGS

 

Section 11.1.  Amendments.  (a)  Except as otherwise provided in
this Declaration or by any applicable terms of the Securities, this Declaration
may only be amended by a written instrument approved and executed by

 

(i)            the Institutional
Trustee,

 

(ii)           if the amendment
affects the rights, powers, duties, obligations or immunities of the Delaware
Trustee, the Delaware Trustee,

 

(iii)          if the amendment affects
the rights, powers, duties, obligations or immunities of the Administrators,
the Administrators, and

 

(iv)          the Holders of a
Majority in liquidation amount of the Common Securities.

 

(b)           Notwithstanding any
other provision of this Article XI, no amendment shall be made, and any
such purported amendment shall be void and ineffective:

 

(i)            unless the
Institutional Trustee shall have first received

 

(A)          an Officers’ Certificate
from each of the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities); and

 

54

 

(B)           an opinion of counsel
(who may be counsel to the Sponsor or the Trust) reasonably satisfactory to the Institutional Trustee that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities) and that all conditions precedent to
the execution and delivery of such amendment have been satisfied; or

 

(ii)           if the result of such
amendment would be to

 

(A)          cause the Trust to cease
to be classified for purposes of United States federal income taxation as a
grantor trust;

 

(B)           reduce or otherwise
adversely affect the powers of the Institutional Trustee in contravention of
the Trust Indenture Act;

 

(C)           cause the Trust to be
deemed to be an Investment Company required to be registered under the
Investment Company Act; or

 

(D)          cause the Debenture
Issuer to be unable to treat an amount equal to the liquidation amount of the
Capital Securities as “Tier 1 Capital” (or its equivalent) for purposes of the
capital adequacy guidelines of the Federal Reserve (or any successor regulatory
authority with jurisdiction over bank holding companies).

 

(c)             Except
as provided in Section 11.1(d), (e) or (g), no amendment shall be
made, and any such purported amendment shall be void and ineffective, unless
the Holders of a Majority in liquidation amount of the Capital Securities shall
have consented to such amendment.

 

(d)             In
addition to and notwithstanding any other provision in this Declaration,
without the consent of each affected Holder, this Declaration may not be
amended to (i) change the amount or timing of any Distribution on the
Securities or any redemption or liquidation provisions applicable to the
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any
Distributions or other amounts on or after their due date.

 

(e)             Sections
9.1(b) and 9.1(c) and this Section shall not be amended without
the consent of all of the Holders of the Securities.

 

(f)              The
rights of the Holders of the Capital Securities and Common Securities, as
applicable, under Article IV to increase or decrease the number of, and
appoint and remove, Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Capital Securities or Common
Securities, as applicable.

 

(g)             This
Declaration may be amended by the Institutional Trustee and the Holder of the
Common Securities without the consent of the Holders of the Capital Securities
to:

 

55

 

(i)            cure any ambiguity;

 

(ii)           correct or supplement
any provision in this Declaration that may be defective or inconsistent with
any other provision of this Declaration;

 

(iii)          add to the covenants,
restrictions or obligations of the Sponsor; or

 

(iv)          modify, eliminate or add
to any provision of this Declaration to such extent as may be necessary or
desirable, including, without limitation, to ensure that the Trust will be
classified for United States federal income tax purposes at all times as a
grantor trust and will not be required to register as an Investment Company
under the Investment Company Act (including without limitation to conform to
any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under
the Investment Company Act or written change in interpretation or application
thereof by any legislative body, court, government agency or regulatory
authority);

 

provided,
however, that no such amendment contemplated in clause (i), (ii), (iii) or
(iv) shall adversely affect the powers, preferences, rights or interests
of Holders of Capital Securities.

 

Section 11.2.  Meetings
of the Holders of the Securities; Action by Written Consent.

 

(a)             Meetings
of the Holders of the Capital Securities or the Common Securities may be called
at any time by the Administrators (or as provided in the terms of such
Securities) to consider and act on any matter on which Holders of such
Securities are entitled to act under the terms of this Declaration, the terms
of such Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any.  The Administrators shall call a meeting of
the Holders of such Securities if directed to do so by the Holders of not less
than 10% in liquidation amount of such Securities.  Such direction shall be given by delivering
to the Administrators one or more notices in a writing stating that the signing
Holders of such Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called.  Any Holders of Securities calling a meeting
shall specify in writing the Certificates held by the Holders of the Securities
exercising the right to call a meeting and only those Securities represented by
such Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.

 

(b)             Except
to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of the Securities:

 

(i)            Notice of any such
meeting shall be given to all the Holders of the Securities having a right to
vote thereat at least 7 days and not more than 60 days before the date of such
meeting.  Whenever a vote, consent or
approval of the Holders of the Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any, such vote, consent or
approval may be given at a meeting of

 

56

 

the Holders of the
Securities.  Any action that may be taken
at a meeting of the Holders of the Securities may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the Holders
of the Securities owning not less than the minimum liquidation amount of
Securities that would be necessary to authorize or take such action at a
meeting at which all Holders of the Securities having a right to vote thereon
were present and voting.  Prompt notice
of the taking of action without a meeting shall be given to the Holders of the
Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the Holders of
the Securities for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrators.

 

(ii)           Each Holder of a
Security may authorize any Person to act for it by proxy on all matters in
which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting.  No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of the Securities
executing it.  Except as otherwise
provided herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation. 
Each meeting of the Holders of the Securities shall be conducted by the
Administrators or by such other Person that the Administrators may designate.

 

(iii)          Unless the Statutory
Trust Act, this Declaration, the terms of the Securities, the Trust Indenture
Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or admitted for trading, if any, otherwise provides,
the Administrators, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including notice of
the time, place or purpose of any meeting at which any matter is to be voted on
by any Holders of the Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the exercise
of any such right to vote; provided, however, that each meeting
shall be conducted in the United States (as that term is defined in Treasury
Regulations § 301.7701-7).

 

ARTICLE XII

 

REPRESENTATIONS OF
INSTITUTIONAL TRUSTEE

AND DELAWARE TRUSTEE

 

Section 12.1.  Representations
and Warranties of Institutional Trustee. 
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and

 

57

 

warrants to the
Trust and the Sponsor at the time of the Successor Institutional Trustee’s acceptance
of its appointment as Institutional Trustee, that:

 

(a)             the
Institutional Trustee is a banking corporation or national association with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of Delaware or the United States of America, respectively,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;

 

(b)             the
Institutional Trustee has a combined capital and surplus of at least fifty
million U.S. dollars ($50,000,000);

 

(c)             the
Institutional Trustee is not an Affiliate of the Sponsor, nor does the
Institutional Trustee offer or provide credit or credit enhancement to the
Trust;

 

(d)             the
execution, delivery and performance by the Institutional Trustee of this
Declaration has been duly authorized by all necessary action on the part of the
Institutional Trustee, and this Declaration has been duly executed and
delivered by the Institutional Trustee, and under Delaware law (excluding any
securities laws) constitutes a legal, valid and binding obligation of the
Institutional Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors’ rights generally and to general
principles of equity and the discretion of the court (regardless of whether
considered in a proceeding in equity or at law);

 

(e)             the
execution, delivery and performance of this Declaration by the Institutional
Trustee does not conflict with or constitute a breach of the charter or by-laws
of the Institutional Trustee; and

 

(f)              no
consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority governing the trust powers of the
Institutional Trustee is required for the execution, delivery or performance by
the Institutional Trustee of this Declaration.

 

Section 12.2.  Representations
and Warranties of Delaware Trustee. 
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee’s acceptance of its
appointment as Delaware Trustee that:

 

(a)             if
it is not a natural person, the Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware;

 

(b)             if
it is not a natural person, the execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee, and this Declaration has
been duly executed and delivered by the Delaware Trustee, and under Delaware
law (excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and

 

58

 

other
similar laws affecting creditors’ rights generally and to general principles of
equity and the discretion of the court (regardless of whether considered in a
proceeding in equity or at law);

 

(c)             if
it is not a natural person, the execution, delivery and performance of this
Declaration by the Delaware Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Delaware Trustee;

 

(d)             it
has trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;

 

(e)             no
consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority governing the trust powers of the Delaware
Trustee is required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and

 

(f)              the
Delaware Trustee is a natural person who is a resident of the State of Delaware
or, if not a natural person, it is an entity which has its principal place of
business in the State of Delaware and, in either case, a Person that satisfies
for the Trust the requirements of §3807 of the Statutory Trust Act.

 

ARTICLE XIII

MISCELLANEOUS

 

Section 13.1.  Notices.  All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:

 

(a)             if
given to the Trust, in care of the Administrators at the Trust’s mailing
address set forth below (or such other address as the Trust may give notice of
to the Holders of the Securities): Tidelands
Statutory Trust II, c/o Tidelands
Bancshares, Inc., 875 Lowcountry Blvd., Mount Pleasant, South Carolina
29464, Attention: Alan W. Jackson, Telecopy:
(843) 388-8433, Telephone: (843) 388-8081;

 

(b)             if
given to the Delaware Trustee, at the mailing address set forth below (or such
other address as the Delaware Trustee may give notice of to the Holders of the
Securities): Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001, Attention:
Corporate Capital Markets, Telecopy: 302-636-4140, Telephone: 302-651-1000;

 

(c)             if
given to the Institutional Trustee, at the Institutional Trustee’s mailing
address set forth below (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities): Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate
Capital Markets, Telecopy: 302-636-4140, Telephone:
302-651-1000;

 

(d)             if
given to the Holder of the Common Securities, at the mailing address of the
Sponsor set forth below (or such other address as the Holder of the Common
Securities may

 

59

 

give
notice of to the Trust): Tidelands Bancshares, Inc.,
875 Lowcountry Blvd., Mount Pleasant, South Carolina 29464, Attention: Alan W. Jackson, Telephone: (843) 388-8433, Telecopy: (843) 388-8081; or

 

(e)             if
given to any other Holder, at the address set forth on the books and records of
the Trust.

 

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 13.2.  Governing
Law.  This Declaration and the rights
and obligations of the parties hereunder shall be governed by and interpreted
in accordance with the law of the State of Delaware and all rights, obligations
and remedies shall be governed by such laws without regard to the principles of
conflict of laws of the State of Delaware or any other jurisdiction that would
call for the application of the law of any jurisdiction other than the State of
Delaware.

 

Section 13.3.  Submission
to Jurisdiction.

 

(a)             Each
of the parties hereto agrees that any suit, action or proceeding arising out of
or based upon this Declaration, or the transactions contemplated hereby, may be
instituted in any of the courts of the State of New York and the United States
District Courts, in each case located in the Borough of Manhattan, City and
State of New York, and further agrees to submit to the jurisdiction of any
competent court in the place of its corporate domicile in respect of actions
brought against it as a defendant.  In
addition, each such party irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of such suit, action or proceeding brought in any such court and
irrevocably waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum and irrevocably
waives any right to which it may be entitled on account of its place of corporate
domicile.  Each such party hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or relating to this Declaration or the transactions contemplated
hereby.  Each such party agrees that
final judgment in any proceedings brought in such a court shall be conclusive
and binding upon it and may be enforced in any court to the jurisdiction of
which it is subject by a suit upon such judgment.

 

(b)             Each
of the Sponsor, the Trustees, the Administrators and the Holder of the Common
Securities irrevocably consents to the service of process on it in any such
suit, action or proceeding by the mailing thereof by registered or certified
mail, postage prepaid, to it at its address given in or pursuant to Section 13.1
hereof.

 

(c)             To
the extent permitted by law, nothing herein contained shall preclude any party
from effecting service of process in any lawful manner or from bringing any
suit, action or proceeding in respect of this Declaration in any other state,
country or place.

 

60

 

Section 13.4.  Intention
of the Parties.  It is the intention
of the parties hereto that the Trust be classified for United States federal
income tax purposes as a grantor trust. 
The provisions of this Declaration shall be interpreted to further this
intention of the parties.

 

Section 13.5.  Headings.  Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.

 

Section 13.6.  Successors
and Assigns.  Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and
agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether or not
so expressed.

 

Section 13.7.  Partial
Enforceability.  If any provision of
this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.

 

Section 13.8.  Counterparts.  This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators 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.

 

61

 

IN
WITNESS WHEREOF, the undersigned have caused this Declaration to be duly
executed as of the day and year first above written.

 

 

	
   

  	
   

  	
  WILMINGTON
  TRUST COMPANY,

  
	
   

  	
   

  	
  as
  Delaware Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s W. Thomas Morris, II

  
	
   

  	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON
  TRUST COMPANY,

  
	
   

  	
   

  	
  as Institutional Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s W. Thomas Morris, II

  
	
   

  	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TIDELANDS
  BANCSHARES, INC.

  
	
   

  	
   

  	
  as
  Sponsor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Name: Robert E.
  Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
  Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
  as
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Alan W.
  Jackson

  
	
   

  	
   

  	
  Alan
  W. Jackson

  
	
   

  	
   

  	
  as
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Thomas
  H. Lyles

  
	
   

  	
   

  	
  Thomas
  H. Lyles

  
	
   

  	
   

  	
  as
  Administrator

  

 

62

 

ANNEX I

 

TERMS OF

CAPITAL SECURITIES AND COMMON SECURITIES

 

Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of June 20, 2008 (as
amended from time to time, the “Declaration”), the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Capital Securities and the Common Securities (collectively, the “Securities”)
are set out below (each capitalized term used but not defined herein has the
meaning set forth in the Declaration):

 

1.             Designation
and Number.

 

(a)           Capital
Securities.  6,000 Capital Securities of Tidelands Statutory Trust II (the “Trust”),
with an aggregate liquidation amount with respect to the assets of the Trust of
Six Million Dollars ($6,000,000) and a liquidation amount with respect to the
assets of the Trust of $1,000 per Capital Security, are hereby designated for
the purposes of identification only as the “MMCapSSM” (the “Capital
Securities”).  The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any stock exchange on which the
Capital Securities are listed, if any.

 

(b)           Common
Securities.  186 Common Securities of the
Trust (the “Common Securities”) will be evidenced by Common Security
Certificates substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice. 
In the absence of an Event of Default, the Common Securities will have
an aggregate liquidation amount with respect to the assets of the Trust of One
Hundred and Eighty-Six Thousand Dollars ($186,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per Common Security.

 

2.             Distributions.  (a)  Distributions on each Security will
be payable at a per annum rate (the “Coupon Rate”) equal to (i) with
respect to any Distribution Period (as defined herein) prior to the
Distribution Period commencing on the Distribution Payment Date (as defined
herein) in June 2013, 9.425%, and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
LIBOR, as determined on the LIBOR Determination Date for such Distribution
Period, plus 5.075%%; provided, however,
that the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with

 

A-I-1

 

respect
to any Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.

 

The term “Distribution Period”, as used herein, means (i) in the
case of the first Distribution Period, the period from, and including, the date
of original issuance of the Securities to, but excluding, the initial
Distribution Payment Date and (ii) thereafter, from, and including, the
first day following the end of the preceding Distribution Period to, but
excluding, the applicable Distribution Payment Date or, in the case of the last
Distribution Period, the related date of redemption.

 

(b)           LIBOR
shall be determined by the Calculation Agent for each Distribution Period
commencing on or after the Distribution Period in June 2013 in accordance
with the following provisions:

 

(1)           On the second LIBOR
Business Day (provided, that on such day commercial banks are open for business
(including dealings in foreign currency deposits) in London (a “LIBOR Banking
Day”), and otherwise the next preceding LIBOR Business Day that is also a LIBOR
Banking Day) prior to the Distribution Payment
Date that commences such Distribution Period (each such day, a “LIBOR
Determination Date”), LIBOR shall equal the rate, as obtained by the
Calculation Agent, for three-month U.S. Dollar deposits in Europe, which
appears on Telerate (as defined in the International Swaps and Derivatives
Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) page 3750
or such other page as may replace such page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date, as reported by Bloomberg
Financial Markets Commodities News or any successor service (“Telerate Page 3750”).  “LIBOR Business Day” means any day that is
not a Saturday, Sunday or other day on which commercial banking institutions in
the City of New York or Wilmington, Delaware are authorized or obligated by law
or executive order to be closed.  If such
rate is superseded on Telerate Page 3750 by a corrected rate before 12:00
noon (London time) on such LIBOR Determination Date, the corrected rate as so
substituted will be LIBOR for such LIBOR Determination Date.

 

(2)           If, on such LIBOR
Determination Date, such rate does not appear on Telerate Page 3750, the
Calculation Agent shall determine the arithmetic mean of the offered quotations
of the Reference Banks (as defined below) to leading banks in the London
interbank market for three-month U.S. Dollar deposits in Europe (in an amount
determined by the Calculation Agent) by reference to requests for quotations as
of approximately 11:00 a.m. (London time) on such LIBOR Determination Date
made by the Calculation Agent to the Reference Banks.  If, on such LIBOR Determination Date, at
least two of the Reference Banks provide such quotations, LIBOR shall equal the
arithmetic mean of such quotations.  If,
on such LIBOR Determination Date, only one or none of the Reference Banks
provide such a quotation, LIBOR shall be deemed to be the

 

A-I-2

 

arithmetic mean of
the offered quotations that at least two leading banks in The City of New York
(as selected by the Calculation Agent) are quoting on such LIBOR Determination
Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m.
(London time) (in an amount determined by the Calculation Agent). As used
herein, “Reference Banks” means four major banks in the London interbank market
selected by the Calculation Agent.

 

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

 

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

 

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

 

(e)           Distributions
on the Securities will be cumulative, will accrue from the date of original
issuance, and will be payable, subject to extension of Distribution Periods as
described herein, quarterly in arrears on March 30,
June 30, September 30 and December 30 of each year, commencing
on September 30, 2008 (although the initial
Distribution for the payment due from the date of original issuance on June 20,
2008 which would otherwise be due on June 30, 2008 shall instead be paid
in arrears with the initial Distribution payment due on September 30,
2008) (each, a “Distribution Payment Date”), and on any earlier date of
redemption, as applicable.  The Debenture
Issuer has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period for up to 20 consecutive
quarterly periods (each such extended interest payment period, together with
all previous and future consecutive extensions thereof, is referred to herein
as an “Extension Period”) at any time and from time to time on the Debentures,
subject to the conditions described below and in the Indenture.  No Extension Period may end on a date other
than a Distribution Payment Date or extend beyond the Maturity Date, any
Optional Redemption Date or the Special Redemption Date, as the case may be
(each such term as defined herein). 
During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest (such accrued interest and
interest thereon referred to herein as “Deferred Interest”) will accrue, at an

 

A-I-3

 

annual rate equal to the Coupon Rate applicable during such Extension
Period, compounded quarterly from the date such Deferred Interest would have
been payable were it not for the Extension Period, to the extent permitted by
applicable law.  At the end of any
Extension Period, the Debenture Issuer shall pay all Deferred Interest then
accrued and unpaid on the Debentures; provided, however, that
during any Extension Period, the Debenture Issuer 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 Debenture Issuer’s capital
stock, (ii) make any payment of principal or premium or interest on or
repay, repurchase or redeem any debt securities of the Debenture Issuer that
rank in all respects pari passu with
or junior in interest to the Debentures or (iii) make any payment under
any guarantees of the Debenture Issuer that rank in all respects pari passu with or junior in interest to the Guarantee
(other than (a) repurchases, redemptions or other acquisitions of shares
of capital stock of the Debenture Issuer (A) in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of one or more employees, officers, directors or consultants, (B) in
connection with a dividend reinvestment or stockholder stock purchase plan or (C) in
connection with the issuance of capital stock of the Debenture Issuer (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 Debenture Issuer’s capital stock (or any capital
stock of a subsidiary of the Debenture Issuer) for any class or series of the
Debenture Issuer’s capital stock or of any class or series of the Debenture
Issuer’s indebtedness for any class or series of the Debenture Issuer’s capital
stock, (c) the purchase of fractional interests in shares of the Debenture
Issuer’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 in interest to such stock).  Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such Extension Period, provided,
that no Extension Period (including all previous and further consecutive
extensions that are part of such Extension Period) shall exceed 20 consecutive
quarterly periods.  Upon the termination
of any Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the
requirements herein and in the Indenture. No interest or Deferred Interest
(except any Additional Amounts that may be due and payable) shall be due and
payable during an Extension Period, except at the end thereof, but Deferred
Interest shall accrue upon each installment of interest that would otherwise
have been due and payable during such Extension Period until such installment
is paid.

 

As a consequence of any Extension Period, Distributions will be
deferred.  Notwithstanding any such
deferral, Distributions will continue to accrue on the Securities, and
Distributions on such accrued Distributions will accrue, at the Coupon Rate
applicable during such Extension Period, compounded quarterly, to the extent
permitted by applicable law.  If
Distributions are deferred, the Distributions due shall be paid on the date
that such Extension Period terminates to Holders of the Securities as they
appear on the books and records of the Trust on the regular record date
immediately preceding the Distribution Payment Date on which

 

A-I-4

 

such Extension Period terminates to the extent that
the Trust has funds legally available for the payment of such Distributions in
the Property Account of the Trust.

 

The Trust’s funds available for Distributions to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.  The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

 

(f)            Distributions
on the Securities on any Distribution Payment Date will be payable to the
Holders thereof as they appear on the books and records of the Registrar on the
relevant regular record dates.  The
relevant “regular record dates” shall be 15 days before the relevant
Distribution Payment Dates. 
Distributions payable on any Securities that are not punctually paid on
any Distribution Payment Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, as the case may be, when due
(taking into account any Extension Period), will cease to be payable to the
Person in whose name such Securities are registered on the original relevant
regular record date, and such defaulted Distributions will instead be payable
to the Person in whose name such Securities are registered on the regular
record date preceding the Distribution Payment Date on which the related
Extension Period terminates or, in the absence of an Extension Period, a
special record date therefor selected by the Administrators.

 

(g)           In
the event that there is any money or other property held by or for the Trust
that is not accounted for hereunder, such property shall be distributed Pro
Rata (as defined herein) among the Holders of the Securities.

 

(h)           If
any Distribution Payment Date on or prior to the Distribution Payment Date in June 2013
falls on a day that is not a Business Day, then Distributions payable on such
date will be paid on the next succeeding Business Day, and no additional
Distributions will accrue in respect of such payment on such next Business
Day.  If any Distribution Payment Date
after the Distribution Payment Date in June 2013, other than any date of
redemption falls on a day that is not a Business Day, then Distributions
payable will be paid on, and such Distribution Payment Date will be moved to,
the next succeeding Business Day, and additional Distributions will accrue for
each day that such payment is delayed as a result thereof.

 

3.             Liquidation
Distribution Upon Dissolution.  In
the event of the voluntary or involuntary liquidation, dissolution, winding-up
or termination of the Trust (each, a “Liquidation”), the Holders of the
Securities will be entitled to receive out of the assets of the Trust legally
available for distribution to Holders of the Securities, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Debenture Issuer), an amount in cash equal to the aggregate of the liquidation
amount of $1,000 per Security plus unpaid Distributions accrued thereon to the
date of payment (collectively, the “Liquidation Distribution”), unless: (i) the
Debentures have been redeemed in full in accordance with the terms thereof and
of the Indenture; or (ii) the Debentures in an aggregate principal amount
equal to the aggregate liquidation amount of such Securities and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Securities, after paying or making reasonable provision
to pay all claims and obligations of the Trust in accordance with Section 3808(e) of
the Statutory Trust Act, shall be distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.

 

A-I-5

 

The Sponsor, as the Holder of all of the Common Securities, has the
right at any time, upon receipt by the Debenture Issuer and the Institutional
Trustee for the benefit of the Trust of (i) an opinion of nationally
recognized tax counsel that Holders will not recognize any gain or loss for
United States Federal income tax purposes as a result of the distribution of
Debentures, to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event, each as defined herein) and (ii) 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) and, after satisfaction of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate liquidation amount thereof.

 

The Trust shall dissolve on the first to occur of (i) June 30, 2043, the expiration of the term
of the Trust, (ii) a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer, (iii) (other than in connection with a
merger, consolidation or similar transaction not prohibited by the Indenture,
this Declaration or the Guarantee, as the case may be) the filing of a
certificate of dissolution or its equivalent with respect to the Sponsor or
upon the revocation of the charter of the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) the
distribution of all of the Debentures to the Holders of the Securities, upon
exercise of the right of the Holders of all of the outstanding Common
Securities to dissolve the Trust as described above, (v) the entry of a
decree of a judicial dissolution of any Holder of the Common Securities, the
Sponsor, the Trust or the Debenture Issuer, (vi) when all of the
Securities are then subject to redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in accordance with the
terms of the Securities or (vii) before the issuance of any Securities,
with the consent of all of the Trustees and the Sponsor.  As soon as practicable after the dissolution
of the Trust and upon completion of the winding up of the Trust, the Trust
shall terminate upon the filing of a certificate of cancellation with the
Secretary of State of the State of Delaware.

 

Notwithstanding the foregoing, if a Liquidation of the Trust occurs as
described in clause (i), (ii), (iii) or (v) in the immediately
preceding paragraph, the Trust shall be liquidated by the Institutional Trustee
of the Trust as expeditiously as such Trustee determines to be practical by
distributing, after satisfaction of liabilities to creditors of the Trust (to
the extent not satisfied by the Debenture Issuer) as provided by applicable
law, to the Holders of the Securities, the Debentures on a Pro Rata basis,
unless such distribution is determined by the Institutional Trustee not to be
practical, in which event such Holders will be entitled to receive on a Pro
Rata basis, out of the assets of the Trust legally available for distribution
to the Holders of the Securities, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by the Debenture Issuer),
an amount in cash equal to the Liquidation Distribution.  A Liquidation of the Trust pursuant to
clause (iv) of the immediately preceding paragraph shall occur if the
Institutional Trustee determines that such Liquidation is practical by
distributing, after satisfaction of liabilities to creditors of the Trust (to
the extent not satisfied by the Debenture Issuer), to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

 

If, upon any Liquidation of the Trust, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate

 

A-I-6

 

Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid to the Holders of the
Securities on a Pro Rata basis, except that if an Event of Default has occurred
and is continuing, then the Capital Securities shall have a preference over the
Common Securities with regard to such amounts.

 

Upon any Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization,
the Debenture Issuer will use its reasonable best efforts to obtain from at
least one such or other rating organization a rating for the Debentures.

 

After the date for any distribution of the Debentures upon any
Liquidation of the Trust, (i) the Securities of the Trust will be deemed
to be no longer outstanding, (ii) any certificates representing the
Capital Securities will be deemed to represent undivided beneficial interests
in such of the Debentures as have an aggregate principal amount equal to the
aggregate liquidation amount of such Capital Securities and bearing accrued and
unpaid interest equal to accrued and unpaid Distributions on such Capital
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissuance (and until such certificates are so
surrendered, no payments shall be made to Holders of Securities in respect of
any payments due and payable under the Debentures) and (iii) all rights of
Holders of Securities shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.

 

4.             Redemption and
Distribution.

 

(a)           The
Debentures will mature on June 30, 2038
(the “Maturity Date”) at an amount in cash equal to 100% of the principal
amount thereof plus unpaid interest accrued thereon to such date (the “Maturity
Redemption Price”).  The
Debentures may be redeemed by the Debenture Issuer, at its option, in whole or
in part, on any Distribution Payment Date on or after June 30, 2013 (each, an “Optional Redemption Date”), at the
Optional Redemption Price, upon not less than 30 nor more than 60 days’ prior
written notice to holders of such Debentures. 
In addition, upon the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, the Debentures may be
redeemed by the Debenture Issuer, at its option, 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, as the case may be (the “Special
Redemption Date”), at the Special Redemption Price, upon not less than 30 nor
more than 60 days’ prior written notice to holders of the Debentures so long as
such Tax Event, Investment Company Event or Capital Treatment Event, as the
case may be, is continuing.  In each
case, the right of the Debenture Issuer to redeem the Debentures prior to
maturity is subject to the Debenture Issuer and the Trust having received prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.

 

“Tax Event” means the receipt by the Debenture Issuer 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

 

A-I-7

 

“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 Debenture Issuer 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 Debentures, 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 Debentures; (ii) if the
Debenture Issuer is organized and existing under the laws of the United States
or any state thereof or the District of Columbia, interest payable by the
Debenture Issuer on the Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Debenture Issuer, 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 or
otherwise required to pay, or required to withhold from Distributions, more
than a de minimis amount of other taxes (including withholding taxes), duties,
assessments or other governmental charges.

 

“Investment Company Event” means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of a change in law or regulation or written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be, considered an Investment Company that is required to be
registered under the Investment Company Act, which change becomes effective on
or after the date of the original issuance of the Debentures.

 

“Capital Treatment Event” means, if the Debenture Issuer is organized
and existing under the laws of the United States or any state thereof or the
District of Columbia, the receipt by the Debenture Issuer 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 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 Debentures, there is more than
an insubstantial risk that the Debenture Issuer will not, within 90 days of the
date of such opinion, be entitled to treat Capital Securities as “Tier 1
Capital” (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), as then in effect and applicable to
the Debenture Issuer; provided, however,
that the inability of the Debenture Issuer to treat all or any portion of the
aggregate Liquidation Amount of the Capital Securities as “Tier 1 Capital”
shall not constitute the basis for a Capital Treatment Event if such inability
results from the Debenture Issuer having preferred stock, minority interests in
consolidated subsidiaries and any other class of security or interest which the
Federal Reserve (or any successor regulatory authority with jurisdiction over
bank holding companies) may now or hereafter accord “Tier 1 Capital” treatment
that, in the aggregate, exceed the amount which may now or hereafter qualify
for treatment as “Tier 1 Capital” under applicable capital adequacy guidelines
of the Federal Reserve (or any successor regulatory authority with jurisdiction
over bank holding companies); provided, further, however, that the
distribution of the Debentures in connection with the

 

A-I-8

 

Liquidation of the Trust by the Debenture Issuer 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.  For the avoidance of doubt, the
inability of the Debenture Issuer to treat all or any portion of the aggregate
Liquidation Amount of the Capital Securities as “Tier 1 Capital” as a result of
the changes effected by the final rule adopted by the Federal Reserve on March 1,
2005 shall not constitute the basis for a Capital Treatment Event.

 

“Optional Redemption Price” means an amount in cash equal to 100% of
the principal amount of the Debentures being redeemed plus unpaid interest
accrued on such Debentures to the related Optional Redemption Date.

 

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

 

“Special Redemption Price” means, with respect to
the redemption of the Debentures following a Special Event, an amount in cash
equal to the percentage of the principal amount of the Debentures that
is specified below for the Special Redemption Date plus, in each case, unpaid
interest accrued thereon to the Special Redemption Date:

 

	
  Special Redemption During the 12-Month

  Period Beginning June 30,

  	
   

  	
  Percentage of Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  104.125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  103.30

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  102.48

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  101.65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
  100.83

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
  100

  	
  %

  

 

(b)           Upon
any repayment of the Debentures at maturity or in whole or in part upon
redemption (other than following the distribution of the Debentures to the
Holders of the Securities), the proceeds from such repayment shall concurrently
be applied to redeem Pro Rata, at a redemption price corresponding to the
applicable Maturity Redemption Price, Optional Redemption Price or Special
Redemption Price for the Debentures, as the case may be, Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid; provided, however, that Holders of such
Securities shall be given not less than 30 nor more than 60 days’ prior written
notice of such redemption (other than a redemption resulting from the maturity
of the Debentures on the Maturity Date).

 

(c)           If
fewer than all the outstanding Securities are to be so redeemed, the Common
Securities and the Capital Securities will be redeemed Pro Rata and the Capital
Securities to be redeemed will be as described in Section 4(e)(ii) below.

 

A-I-9

 

(d)           The
Trust may not redeem fewer than all the outstanding Capital Securities unless
all accrued and unpaid Distributions have been paid on all Capital Securities
for all Distribution Periods terminating on or before the related date of
redemption.

 

(e)           Redemption
or Distribution Procedures.

 

(i)            Written notice of any
redemption of, or written notice of distribution of the Debentures in exchange
for, the Securities (a “Redemption/Distribution Notice”) will be given by the
Trust by mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date of redemption or exchange
thereof which, in the case of a redemption, will be the date of redemption of
the Debentures.  For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of such
Securities.  Each Redemption/Distribution
Notice shall be addressed to the Holders of such Securities at the address of
each such Holder appearing on the books and records of the Registrar.  No defect in the Redemption/Distribution
Notice or in the mailing thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.

 

(ii)           In the event that fewer
than all the outstanding Capital Securities are to be redeemed, the Capital
Securities to be redeemed shall be redeemed Pro Rata from each Holder.

 

(iii)          If the Securities are to
be redeemed and the Trust gives a Redemption/Distribution Notice, which notice
may only be issued if the Debentures are redeemed or repaid as set out in this Section (which
notice will be irrevocable), then, provided, that the Institutional
Trustee has a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the
Depositary for such Book-Entry Capital Securities, the price payable upon
redemption of the Securities, and will give such Depositary irrevocable
instructions and authority to pay the price payable upon redemption of such
Book-Entry Capital Securities to Beneficial Owners of the Capital
Securities.  With respect to Capital
Securities that are not Book-Entry Capital Securities, the Institutional
Trustee will pay the price payable upon redemption of such Securities to the
Holders of such Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the related date of redemption.  If a Redemption/Distribution Notice shall
have been given and funds deposited as required, then immediately prior to the
close of business on the date of such deposit, Distributions will cease to
accrue on the Securities so subject to redemption and all rights of Holders of
such Securities so subject to redemption will cease, except the right of the
Holders of such Securities to receive the applicable price specified in Section 4(a),
but without interest on such price.  If
any date of redemption of the Securities falls on a day that is not a Business
Day, then payment of all amounts payable on such date will be made on the next
succeeding Business Day, and no additional Distributions will accrue in respect
of such payment on such next succeeding Business Day.  If any amount payable

 

A-I-10

 

upon redemption of
the Securities is improperly withheld or refused and not paid either by the
Trust, the Debenture Issuer or the Sponsor as guarantor pursuant to the
Guarantee, Distributions on such Securities will continue to accrue at the
Coupon Rate applicable from the date of redemption to the actual date of
payment, in which case the actual payment date will be considered the date of
redemption for purposes of calculating the price payable upon redemption of the
Securities.   In the event of any
redemption of the Capital Securities issued by the Trust in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15 days
before any selection for redemption of the Capital Securities and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of the Capital
Securities to be so redeemed or (ii) register the transfer of or exchange
any Capital Securities so selected for redemption, in whole or in part, except
for the unredeemed portion of any Capital Securities being redeemed in part.

 

(iv)          Redemption/Distribution
Notices shall be sent by the Administrators on behalf of the Trust (A) in
respect of the Capital Securities, to the Holders thereof, and (B) in
respect of the Common Securities, to the Holder thereof.

 

(v)           Subject to the
foregoing and applicable law (including, without limitation, United States
federal securities laws), the Sponsor or any of its Affiliates may at any time
and from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.

 

5.             Voting
Rights - Capital Securities.  (a) 
Except as provided under Sections 5(b) and 7 and as otherwise required by
law and the Declaration, the Holders of the Capital Securities will have no
voting rights.  The Administrators are
required to call a meeting of the Holders of the Capital Securities if directed
to do so by Holders of not less than 10% in liquidation amount of the Capital
Securities.

 

(b)           Subject
to the requirements of obtaining a tax opinion by the Institutional Trustee in
certain circumstances set forth in the last sentence of this paragraph, the
Holders of a Majority in liquidation amount of the Capital Securities, voting
separately as a class, have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method,
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waiving any past default and its
consequences that are waivable under the Indenture, (iii) exercising any
right to rescind or annul an acceleration of the principal of all the
Debentures or (iv) consenting on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent
or act of the holders of greater than a simple majority in principal amount of
Debentures

(a “Super Majority”) affected thereby, the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of not
less than the proportion in liquidation amount of the Capital Securities
outstanding which the relevant Super Majority represents of the

 

A-I-11

 

aggregate principal amount of the Debentures outstanding.  If the Institutional Trustee fails to enforce
its rights under the Debentures after the Holders of a Majority or Super
Majority, as the case may be, in liquidation amount of such Capital Securities
have so directed the Institutional Trustee, to the fullest extent permitted by
law, a Holder of the Capital Securities may institute a legal proceeding
directly against the Debenture Issuer to enforce the Institutional Trustee’s
rights under the Debentures without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity.  Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or premium, if any, on or
principal of the Debentures on the date such interest, premium, if any, or
principal is payable (or in the case of redemption, the date of redemption),
then a Holder of the Capital Securities may directly institute a proceeding for
enforcement of payment, on or after the respective due dates specified in the
Debentures, to such Holder directly of the principal of or premium, if any, or
interest on the Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder.  The Institutional Trustee shall notify all
Holders of the Capital Securities of any default actually known to the Institutional
Trustee with respect to the Debentures unless (x) such default has been
cured prior to the giving of such notice or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the Holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on any of the Debentures.  Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder.  Except with respect to directing the time,
method and place of conducting a proceeding for a remedy, the Institutional
Trustee shall not take any of the actions described in clause (i), (ii), (iii) or
(iv) above unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a grantor trust for United States federal income tax
purposes.

 

A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. 
Any required approval or direction of Holders of the Capital Securities
may be given at a separate meeting of Holders of the Capital Securities
convened for such purpose, at a meeting of all of the Holders of the Securities
in the Trust or pursuant to written consent.  The Institutional Trustee will cause a notice
of any meeting at which Holders of the Capital Securities are entitled to vote,
or of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of the Capital Securities.  Each such notice will include a statement
setting forth the following information (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents. 
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.

 

Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not entitle the Holder thereof to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Capital Securities were
not outstanding; provided, however, that at any time when all the outstanding
Capital Securities are owned by the Sponsor or any Affiliate of the Sponsor,
such Capital Securities shall

 

A-I-12

 

be treated as outstanding and shall entitle the
Sponsor or such Affiliate to such vote or consent; and provided further that
any Capital Securities owned by the Sponsor or any Affiliate of the Sponsor
that have been pledged in good faith may be treated as outstanding if the
pledgee establishes to the satisfaction of the Administrators the pledgee’s
right so to act with respect to such Capital Securities and that the pledgee is
not the Sponsor or an Affiliate of the Sponsor.

 

In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust.  Under certain circumstances
as more fully described in the Declaration, Holders of Capital Securities have
the right to vote to appoint, remove or replace the Institutional Trustee and
the Delaware Trustee.

 

6.             Voting
Rights - Common Securities.  (a) Except
as provided under Sections 6(b), 6(c) and 7 and as otherwise required by
law and the Declaration, the Common Securities will have no voting rights.

 

(b)           The
Holder of the Common Securities is entitled, in accordance with Article IV
of the Declaration, to vote to appoint, remove or replace any Administrators.

 

(c)           Subject
to Section 6.8 of the Declaration and only after each Event of Default (if
any) with respect to the Capital Securities has been cured, waived or otherwise
eliminated and subject to the requirements of the second to last sentence of
this paragraph, the Holder of the Common Securities, voting separately as a
class, may direct the time, method, and place of conducting any proceeding for
any remedy available to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee under the Declaration, including
(i) directing the time, method, place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waiving
any past default and its consequences that are waivable under the Indenture, or
(iii) exercising any right to rescind or annul an acceleration of the
principal of all the Debentures. 
Notwithstanding this Section 6(c), the Institutional Trustee shall
not revoke any action previously authorized or approved by a vote or consent of
the Holders of the Capital Securities. 
Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall
not take any action described in clause (i), (ii) or (iii) above,
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust on account of such action.  If the Institutional Trustee fails to enforce
its rights under the Declaration, to the fullest extent permitted by law, the
Holder of the Common Securities may institute a legal proceeding directly
against any Person to enforce the Institutional Trustee’s rights under the
Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.

 

Any approval or direction of the Holder of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent.  The
Administrators will cause a notice of any meeting at which the  Holder of the Common Securities is entitled
to vote, or of any matter upon which action by written consent of such

 

A-I-13

 

Holder is to be taken, to be mailed to the Holder of
the Common Securities.  Each such notice
will include a statement setting forth (i) the date of such meeting or the
date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holder is
entitled to vote or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.

 

No vote or consent of the Holder of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.

 

7.             Amendments
to Declaration and Indenture.  In
addition to any requirements under Section 11.1 of the Declaration, if any
proposed amendment to the Declaration provides for, or the Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Securities, whether by way of amendment to
the Declaration or otherwise, or (ii) the Liquidation of the Trust, other
than as described in Section 7.1 of the Declaration, then the Holders of
outstanding Securities, voting together as a single class, will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of a Majority in liquidation
amount of the Securities affected thereby; provided, however, if
any amendment or proposal referred to in clause (i) above would adversely
affect only the Capital Securities or only the Common Securities, then only
Holders of the affected Securities will be entitled to vote on such amendment
or proposal and such amendment or proposal shall not be effective except with
the approval of the Holders of a Majority in liquidation amount of such
Securities.

 

(a)           In
the event the consent of the Institutional Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification, or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under
the Indenture would require a Super Majority, the Institutional Trustee may
only give such consent at the written direction of the Holders of not less than
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.

 

(b)           Notwithstanding
the foregoing, no amendment or modification may be made to the Declaration if
such amendment or modification would (i) cause the Trust to be classified
for purposes of United States federal income taxation as other than a grantor
trust, (ii) reduce or otherwise adversely affect the powers of the
Institutional Trustee or (iii) cause the Trust to be deemed an Investment
Company which is required to be registered under the Investment Company Act.

 

(c)           Notwithstanding
any provision of the Declaration, the right of any Holder of the Capital
Securities to receive payment of Distributions and payments upon redemption,
Liquidation or otherwise, on or after their respective due dates, or to
institute a suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or

 

A-I-14

 

affected without the consent of such Holder.  For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.

 

8.             Pro
Rata.  A reference in these terms of
the Securities to any payment, distribution or treatment as being “Pro Rata”
shall mean pro rata to each Holder of the Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Capital Securities Pro Rata according to the aggregate
liquidation amount of the Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Capital Securities, to each Holder of the Common Securities Pro Rata
according to the aggregate liquidation amount of the Common Securities held by
the relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.

 

9.             Ranking.  The Capital Securities rank pari passu with, and payment thereon shall be made Pro Rata
with, the Common Securities except that, where an Event of Default has occurred
and is continuing, the rights of Holders of the Common Securities to receive
payment of Distributions and payments upon Liquidation, redemption and
otherwise are subordinated to the rights of the Holders of the Capital Securities
with the result that no payment of any Distribution on, or any amount payable
upon the redemption of, any Common Security, and no payment to the Holder of
any Common Security on account of the Liquidation of the Trust, shall be made
unless payment in full in cash of (i) all accrued and unpaid Distributions
on all outstanding Capital Securities for all Distribution Periods terminating
on or prior thereto, (ii) all amounts payable upon Capital Securities then
subject to redemption and (iii) all amounts payable upon Capital
Securities in the event of the Liquidation of the Trust, in each case, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
the amounts specified in clause (i), (ii) and (iii) above that are
then due and payable.

 

10.           Acceptance
of Guarantee and Indenture.  Each
Holder of the Capital Securities and the Common Securities, by the acceptance
of such Securities, agrees to the provisions of the Guarantee and the
Indenture, including the subordination provisions therein.

 

11.           No
Preemptive Rights.  The Holders of
the Securities shall have no, and the issuance of the Securities is not subject
to, preemptive or similar rights to subscribe for any additional securities.

 

12.           Miscellaneous.  These terms constitute a part of the
Declaration.  The Sponsor will provide a
copy of the Declaration, the Guarantee and the Indenture to a Holder without
charge on written request to the Sponsor at its principal place of business.

 

A-I-15

 

EXHIBIT A-1

 

FORM OF CAPITAL
SECURITY CERTIFICATE

 

FORM OF FACE OF SECURITY

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC.  THIS SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER
OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF
DTC) MAY BE REGISTERED EXCEPT IN THE CIRCUMSTANCES SPECIFIED IN THE
DECLARATION.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE
HEREOF AND (Z) THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF
THIS SECURITY OR SUCH

 

(1) Only applicable if this Capital Security is a
Global Capital Security.

 

A-1-1

 

INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO)
AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE DEBENTURE ISSUER OR
THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”),
TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER,”
AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) OR (8) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH
INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES
ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE DEBENTURE
ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE
OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH
PURCHASE OR HOLDING.

 

A-1-2

 

ANY PURCHASER OR HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE,
THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN,
OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.

 

IN CONNECTION WITH ANY TRANSFER,
THE HOLDER OF THIS SECURITY WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED
AND RESTATED DECLARATION OF TRUST 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 OR ANY INTEREST OR PARTICIPATION
HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.

 

A-1-3

 

	
  Certificate Number    P-1

  	
   

  	
  Number of Capital
  Securities 6,000

  

 

CUSIP NO [           ]

 

Certificate
Evidencing Capital Securities

 

of

 

TIDELANDS
STATUTORY TRUST II

 

Capital Securities

 

(liquidation
amount $1,000 per Capital Security)

 

Tidelands Statutory Trust II,
a statutory trust created under the laws of the State of Delaware (the “Trust”),
hereby certifies that Cede & Co. is the registered owner (the “Holder”)
of 6,000 capital securities of the Trust representing undivided beneficial
interests in the assets of the Trust, designated as MMCapSSM
(liquidation amount $1,000 per Capital Security) (the “Capital Securities”).  Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer.  The Capital Securities represented hereby are
issued pursuant to, and the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities shall in
all respects be subject to, the provisions of the Amended and Restated
Declaration of Trust of the Trust, dated as of June 20,
2008, among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust, including the designation of the terms of the
Capital Securities as set forth in Annex I to the Declaration, as the same may
be amended from time to time (the “Declaration”). Capitalized terms used herein
but not defined shall have the meaning given them in the Declaration.  The Holder is entitled to the benefits of the
Guarantee and the Indenture to the extent provided therein.  The Sponsor will provide a copy of the
Declaration, the Guarantee, and the Indenture to the Holder without charge upon
written request to the Sponsor at its principal place of business.

 

The aggregate liquidation amount of the Capital
Securities represented by this Global Capital Security may from time to time be
reduced to reflect transfers or redemptions of all or a portion of such Capital
Securities or cancellations of all or a portion of such Capital Securities, in
each case, and in any such case, by means of notations on the Global
Certificate Transfer Schedule on the last page hereof. Notwithstanding any
provisions of this Global Capital Security to the contrary, transfers or
redemptions of all or a portion of the Capital Securities represented hereby
and cancellations of all or a portion of the Capital Securities represented
hereby, may be effected without the surrendering of this Global Capital
Security, provided the appropriate notations on the Global Certificate Transfer
Schedule are made by the Institutional Trustee or the Depositary at the
direction of the Institutional Trustee, to reflect the appropriate reduction or
increase, as the case may be, in the aggregate liquidation amount of the
Capital Securities evidenced by this Global Capital Security.

 

A-1-4

 

By acceptance of this Certificate, the Holder is bound
by the Declaration and is entitled to the benefits thereunder.

 

By acceptance of this Certificate, the Holder agrees
to treat, for United States federal income tax purposes, the Debentures as
indebtedness and the Capital Securities as evidence of undivided beneficial
ownership in the Debentures.

 

This Certificate and the Capital Securities evidenced
hereby are governed by, and shall be construed in accordance with, the laws of
the State of Delaware, without regard to principles of conflict of laws.

 

This Certificate may contain more than one counterpart
of the signature page and this Certificate may be executed and
authenticated by the affixing of the signature of an Administrator on behalf of
the Trust, and the signature of the Institutional Trustee providing
authentication, 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
the Trust had executed, and the Institutional Trustee had authenticated, a
single signature page.

 

A-1-5

 

IN WITNESS WHEREOF, the
Trust has duly executed this Certificate.

 

	
   

  	
  TIDELANDS
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
				

 

CERTIFICATE OF
AUTHENTICATION

 

This Certificate
represents Capital Securities referred to in the within-mentioned Declaration.

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  not in its individual
  capacity but solely as the

  Institutional Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
				

 

A-1-6

 

FORM OF REVERSE OF SECURITY

 

Distributions on each Capital Security will be payable
at a rate of interest per annum rate (the “Coupon Rate”) equal to (i) with
respect to any Distribution Period (as defined herein) prior to the
Distribution Period commencing on the Distribution Payment Date (as defined
herein) in June 2013, 9.425%, and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
LIBOR, as determined on the LIBOR Determination Date for such Distribution
Period, plus 5.075%%; provided, however,
that the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures, unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with respect to any
Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.

 

Except as otherwise described below, Distributions on
the Capital Securities will be cumulative, will accrue from the date of
original issuance and will be payable quarterly in arrears on March 30, June 30, September 30
and December 30 of each year, commencing on September 30, 2008 (although the initial Distribution for the payment
due from the date of original issuance on June 20, 2008 which would
otherwise be due on June 30, 2008 shall instead be paid in arrears with
the initial Distribution payment due on September 30, 2008) (each,
a “Distribution Payment Date”), and on any earlier date of redemption, subject,
in each case, to the Business Day convention specified in the Declaration.  The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 20 consecutive quarterly periods (each such
extended interest payment period, together with all previous and future
consecutive extensions thereof, is referred to herein as an “Extension Period”)
at any time and from time to time on the Debentures, subject to the conditions
described below and in the Declaration and the Indenture.  No Extension Period may end on a date other
than a Distribution Payment Date or extend beyond the Maturity Date, any
Optional Redemption Date or the Special Redemption Date, as the case may
be.  During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as “Deferred Interest”) will accrue, at an annual rate equal to the Coupon Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  At the end of any Extension Period, the
Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that prior to the termination of
any Extension Period, the Debenture Issuer may further extend such Extension
Period, provided, that no

 

A-1-7

 

Extension Period (including all previous and further
consecutive extensions that are part of such Extension Period) shall exceed 20
consecutive quarterly periods.  Upon the
termination of any Extension Period and upon the payment of all Deferred
Interest, the Debenture Issuer may commence a new Extension Period, subject to
the requirements set forth herein and in the Declaration and the
Indenture.  No interest or Deferred
Interest (except any Additional Amounts that may be due and payable) shall be
due and payable during an Extension Period, except at the end thereof, but
Deferred Interest shall accrue upon each installment of interest that would
otherwise have been due and payable during such Extension Period until such
installment is paid.

 

As a consequence of any Extension Period,
Distributions will be deferred.  If
Distributions are deferred, the Distributions due shall be paid on the date
that the related Extension Period terminates to Holders of the Capital
Securities as they appear on the books and records of the Trust on the regular
record date immediately preceding the Distribution Payment Date on which such
Extension Period terminates to the extent that the Trust has funds legally
available for the payment of such Distributions in the Property Account of the
Trust.

 

The Capital Securities shall be redeemable, and shall
be entitled to the Liquidation Distribution, as provided in the Declaration.

 

A-1-8

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the
undersigned assigns and transfers the Capital Securities evidenced by this
Capital Security Certificate to:

 

 

 

 

(Insert assignee’s social
security or tax identification number)

 

 

 

 

(Insert address and zip
code of assignee),

 

and irrevocably appoints                                                                                                                                             as
agent to transfer the Capital Securities evidenced by this Capital Security
Certificate on the books of the Trust. 
The agent may substitute another to act for it, him or her.

 

	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:(1)

  	
   

  	
   

  
									

 

(1) Signature must be
guaranteed by an “eligible guarantor institution” that is a bank, stockbroker,
savings and loan association or credit union, meeting the requirements of the
Security registrar, which requirements include membership or participation in
the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature
guarantee program” as may be determined by the Security registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.

 

A-1-9

 

Schedule A

 

Global Certificate Transfer
Schedule

 

Changes to Liquidation
Amount of Global Capital Security

 

	
  Date

  	
   

  	
  Liquidation Amount of Capital

  Securities by which this Global

  Capital Security Is to Be

  Reduced or Increased

  	
   

  	
  Remaining Liquidation

  Amount of the Global Capital

  Security (following decrease or

  increase)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Schedule
to be maintained by Institutional Trustee or Depositary in cooperation with
Institutional Trustee, as applicable.

 

A-1-10

 

EXHIBIT A-2

 

FORM OF
COMMON SECURITY CERTIFICATE

 

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

 

EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS
DEFINED BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED.

 

A-2-1

 

	
  Certificate Number    C-1

  	
   

  	
  Number of Common
  Securities 186

  

 

Certificate Evidencing Common Securities

 

of

 

TIDELANDS STATUTORY TRUST II

 

Tidelands Statutory Trust II, a statutory trust
created under the laws of the State of Delaware (the “Trust”), hereby certifies
that Tidelands Bancshares, Inc. is
the registered owner (the “Holder”) of 186 common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (liquidation amount $1,000 per Common Security) (the “Common
Securities”).  The Common Securities
represented hereby are issued pursuant to, and the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust, dated as of June 20, 2008, among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as
Administrators, Wilmington Trust Company,
as Delaware Trustee, Wilmington Trust Company,
as Institutional Trustee, the Holder, as Sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, including
the designation of the terms of the Common Securities as set forth in Annex I
to the Declaration, as the same may be amended from time to time (the “Declaration”).  Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration.  The Sponsor will provide a copy of the
Declaration and the Indenture to the Holder without charge upon written request
to the Sponsor at its principal place of business.

 

As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of the Holder of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of holders of the Capital Securities.

 

By acceptance of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

 

By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.

 

This Certificate and the Common Securities evidenced hereby are
governed by, and shall be construed in accordance with, the laws of the State
of Delaware, without regard to principles of conflict of laws.

 

A-2-2

 

IN WITNESS WHEREOF, the Trust has executed this Certificate this       
day of         , 2008.

 

	
   

  	
  TIDELANDS
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: Administrator

  

 

A-2-3

 

FORM OF
REVERSE OF SECURITY

 

Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at a per
annum rate (the “Coupon Rate”) equal to (i) with respect to any
Distribution Period (as defined herein) prior to the Distribution Period
commencing on the Distribution Payment Date (as defined herein) in June 2013,
9.425%, and (ii) with respect to any Distribution Period commencing on or
after the Distribution Payment Date in June 2013, LIBOR, as determined on
the LIBOR Determination Date for such Distribution Period, plus 5.075%%; provided, however, that
the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures, unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with respect to any
Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.

 

Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 30,
June 30, September 30 and December 30 of each year, commencing
on September 30, 2008 (although the initial
Distribution for the payment due from the date of original issuance on June 20,
2008 which would otherwise be due on June 30, 2008 shall instead be paid
in arrears with the initial Distribution payment due on September 30,
2008) (each, a “Distribution Payment Date”), and on any earlier date of
redemption, subject, in each case, to the Business Day convention specified in
the Declaration.  The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period for up to 20 consecutive
quarterly periods (each such extended interest payment period, together with
all previous and future consecutive extensions thereof, is referred to herein
as an “Extension Period”) at any time and from time to time on the Debentures,
subject to the conditions described below and in the Declaration and the
Indenture.  No Extension Period may end
on a date other than a Distribution Payment Date or extend beyond the Maturity
Date, any Optional Redemption Date or the Special Redemption Date, as the case
may be.  During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as “Deferred Interest”) will accrue, at an annual rate equal to the Coupon Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  At the end of any Extension Period, the Debenture
Issuer shall pay all Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that prior to the termination of
any Extension Period, the Debenture Issuer may further extend such Extension
Period, provided, that no

 

A-2-4

 

Extension Period (including all previous and further consecutive
extensions that are part of such Extension Period) shall exceed 20 consecutive
quarterly periods.  Upon the termination
of any Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the
requirements set forth herein and in the Declaration and the Indenture.  No interest or Deferred Interest (except any
Additional Amounts that may be due and payable) shall be due and payable during
an Extension Period, except at the end thereof, but Deferred Interest shall
accrue upon each installment of interest that would otherwise have been due and
payable during such Extension Period until such installment is paid.

 

As a consequence of any Extension Period, Distributions will be
deferred.  If Distributions are deferred,
the Distributions due shall be paid on the date that the related Extension
Period terminates to Holders of the Securities as they appear on the books and
records of the Trust on the regular record date immediately preceding the
Distribution Payment Date on which such Extension Period terminates to the
extent that the Trust has funds legally available for the payment of such
Distributions in the Property Account of the Trust.

 

The Common Securities shall be redeemable, and shall be entitled to the
Liquidation Distribution, as provided in the Declaration.

 

A-2-5

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and transfers the Common
Securities evidenced by this Common Security Certificate to:

 

 

 

 

(Insert
assignee’s social security or tax identification number)

 

 

 

 

(Insert
address and zip code of assignee),

 

and
irrevocably appoints              as
agent to transfer the Common Securities evidenced by this Common Security
Certificate on the books of the Trust. 
The agent may substitute another to act for him or her.

 

	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:(1)

  	
   

  	
   

  
									

 

(1) Signature must
be guaranteed by an “eligible guarantor institution” that is a bank,
stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

A-2-6

 

EXHIBIT B

 

FORM OF
ADMINISTRATOR’S CERTIFICATE 

OF THE TRUST

 

Pursuant to Section 2.6(a)(i)(P) of
the Amended and Restated Declaration of Trust, dated as of June 20, 2008
(as amended or supplemented from time to time, the “Trust Agreement”), of
Tidelands Statutory Trust II (the “Trust”) among Tidelands Bancshares, Inc.
as Sponsor, Wilmington Trust Company, as Institutional Trustee, Wilmington
Trust Company, as Delaware Trustee, the Administrators named therein, and the
holders from time to time of beneficial interests in the assets of the Trust,
the undersigned (on behalf of the Trust) hereby certifies that he/she is an
Administrator of the Trust and that, to his/her knowledge under the terms of
the Trust Agreement, the Trust has complied (without regard to any period of
grace or requirement of notice provided under the Trust Agreement) with all
conditions and covenants under the Trust Agreement for the year 20    .

 

Capitalized terms used
herein, and not otherwise defined herein, have respective meanings assigned
thereto in the Trust Agreement.

 

IN WITNESS WHEREOF, the
undersigned has executed this Administrator’s Certificate as of                  ,
20      .

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-1

 

EXHIBIT C

 

FORM OF
TRANSFEREE CERTIFICATE

TO BE EXECUTED BY ACCREDITED INVESTORS

 

                   ,
[     ]

 

Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.

Mount
Pleasant, South Carolina 29464

 

 

Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)

 

Ladies
and Gentlemen:

 

In connection with our purchase of the Capital Securities, we confirm
that:

 

1.             We
understand that the Capital Securities of the Trust have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and may
not be offered or sold except as permitted in the following sentence. We agree
on our own behalf and on behalf of any investor account for which we are
purchasing the Capital Securities that, if we decide to offer, sell or
otherwise transfer any such Capital Securities prior to the date which is the
later of (i) one year (or such shorter period of time as permitted by Rule 144(b)(1) under
the Securities Act) after the later of (Y) the date of original issuance
of the Capital Securities and (Z) the last date on which the Trust or any
Affiliate (as defined in Rule 405 under the Securities Act) of the Trust
was the holder of any such Capital Securities (or any predecessor thereto) and (ii) such
later date, if any, as may be required by any subsequent change in applicable
law (the “Resale Restriction Termination Date”), then such offer, sale or other
transfer will be made only (a) to the Company or the Trust, (b) pursuant
to Rule 144A under the Securities Act, to a person we reasonably believe
is a qualified institutional buyer under Rule 144A (a “QIB”), that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (c) pursuant
to an exemption from registration, to an “accredited investor” within the
meaning of subparagraph (a) (1), (2), (3), (7) or (8) of Rule 501
under the Securities Act that is acquiring any such Capital Securities for its own
account or for the account of such an accredited investor for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act, (d) pursuant to
offers and sales to a non-U.S. Person that occur outside the United States
pursuant to Regulation S under the Securities Act, or (e) pursuant to
another available exemption from the registration requirements of the
Securities Act, and in each of the foregoing cases in accordance with any
applicable state securities laws and any requirements of law that govern the
disposition of our property.  If any
resale or other transfer of the Capital Securities is proposed to be made
pursuant to clause (c) above, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Institutional
Trustee as Transfer Agent, which shall provide as

 

C-1

 

applicable, among other things, that the transferee is
an accredited investor within the meaning of subparagraph (a)(1), (2), (3), (7) or
(8) of Rule 501 under the Securities Act that is acquiring such
Capital Securities for investment purposes and not for any distribution in
violation of the Securities Act. We acknowledge on our behalf and on behalf of
any investor account for which we are purchasing Capital Securities that the
Company and the Trust reserve the right prior to any offer, sale or other
transfer pursuant to clause (c) or (e) to require the delivery of any
opinion of counsel, certifications and/or other information satisfactory to Tidelands Bancshares, Inc.  (the “Company”) and the Trust.  We understand that the certificates for any
Capital Securities that we receive prior to the Resale Restriction Termination
Date will bear a legend substantially to the effect of the foregoing.

 

2.             We are
an accredited investor within the meaning of subparagraph (a) (1), (2),
(3), (7) or (8) of Rule 501 under the Securities Act purchasing
for our own account or for the account of such an accredited investor, and we
are acquiring the Capital Securities for investment purposes and not with view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act, and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Capital Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.

 

3.             We are
acquiring the Capital Securities purchased by us for our own account (or for
one or more accounts as to each of which we exercise sole investment discretion
and have authority to make, and do make, the statements contained in this
letter) and not with a view to any distribution of the Capital Securities in
violation of the Securities Act, subject, nevertheless, to the understanding
that the disposition of our property will at all times be and remain within our
control.

 

4.             In the
event that we purchase any Capital Securities, we will acquire such Capital
Securities having an aggregate liquidation amount of not less than $100,000 for
our own account and for each separate account for which we are acting.

 

5.             We
acknowledge that we either (A) are not a fiduciary of a pension,
profit-sharing or other employee benefit plan or arrangement subject to the Employee Retirement Income Security
Act of 1974, as amended, or to Section 4975
of the Internal Revenue Code of 1986, as amended (a “Plan”), or an
entity whose assets include “plan assets” by reason of any Plan’s investment in
the entity and are not purchasing the Capital Securities on behalf of or with “plan
assets” by reason of any Plan’s investment in the entity and are not purchasing
the Capital Securities on behalf of or with “plan assets” of any Plan or (B) are
eligible for the exemptive relief available under one or more of the following
prohibited transaction class exemptions (“PTCEs”) issued by the U.S. Department
of Labor:  PTCE 96-23, 95-60, 91-38, 90-1
or 84-14.

 

6.             We
acknowledge that each Plan, by its purchase of the Capital Securities, will be
deemed to have directed the Trust to invest in the junior subordinated debt
securities of the Company, and to have consented to the appointment of the institutional
trustee of the Trust.

 

7.             We
acknowledge that the Company, the Trust and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations, warranties and

 

C-2

 

agreements and agree that if any of our
acknowledgments, representations, warranties and agreements are no longer
accurate, we shall promptly notify the applicable purchaser. If we are
acquiring any Capital Securities as a fiduciary or agent for one or more investor
accounts, we represent that we have sole discretion with respect to each such
investor account and that we have full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such investor
account.

 

You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.

 

 

	
   

  	
   

  
	
   

  	
  (Name of
  Purchaser)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				

 

 

Upon transfer, the Capital Securities should be registered in the name
of the new beneficial owner as follows.

 

	
  Name:

  	
   

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID Number:

  	
   

  	
   

  
							

 

C-3

 

EXHIBIT D

 

FORM OF
TRANSFEROR CERTIFICATE

TO BE EXECUTED FOR QIBs

 

                 ,
[     ]

 

Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.

Mount
Pleasant, South Carolina 29464

 

Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)

 

Reference is hereby made to the Amended and Restated Declaration of
Trust of Tidelands Statutory Trust II,
dated as of June 20, 2008 (the “Declaration”),
among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as
Administrators, Wilmington Trust Company,
as Delaware Trustee, Wilmington Trust Company,
as Institutional Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust.  Capitalized terms used but not defined herein
shall have the meanings given them in the Declaration.

 

[This letter relates to $[                         ]
aggregate liquidation amount of Capital Securities which are held in the name
of [name of transferor] (the “Transferor”).](2)

 

 

[This letter relates to $[                        ]
aggregate liquidation amount of Capital Securities which are held in the form
of a Regulation S Global Capital Security (CUSIP No.               )
with [Euroclear] [Clearstream Luxembourg] (ISIN #         )
(Common Code              )
through the Depositary by or on behalf of [                      ]
as beneficial owner (the “Transferor”). 
The Transferor has requested an exchange or transfer of its interest in
the Capital Securities for an interest in a Rule 144A Global Capital
Security (CUSIP No.               ).](3)

 

In accordance with Section 8.2(b) of the Declaration, the
Transferor does hereby certify that such Capital Securities are being
transferred in accordance with (i) the transfer restrictions set forth in
the Capital Securities and (ii) Rule 144A under the Securities Act (“Rule 144A”),
to a transferee that the Transferor reasonably believes is purchasing the
Capital Securities for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a “qualified institutional buyer” within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance
with applicable securities laws of any state of the United States or any other
jurisdiction.

 

(2)  Only applicable to transfer of Definitive
Capital Securities.

(3)  Only applicable to transfer of Book-Entry
Capital Securities.

 

D-1

 

You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of
  Transferor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
							

 

D-1

 

EXHIBIT E

 

FORM OF
TRANSFEREE CERTIFICATE

TO BE EXECUTED BY NON-U.S. PERSONS

 

                        ,
[     ]

 

Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.

Mount
Pleasant, South Carolina 29464

 

Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)

 

Reference is hereby made to the Amended and Restated Declaration of
Trust of Tidelands Statutory Trust II,
dated as of June 20, 2008 (the “Declaration”),
among Robert E. Coffee, Jr., Alan W.
Jackson and Thomas H. Lyles, as Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust.  Capitalized terms used but not defined herein
shall have the meanings given them in the Declaration.

 

[This letter relates to $[                     ]
aggregate liquidation amount of Capital Securities which are held in the name
of [name of transferor]](4).

 

[This letter relates to $[                      ]
aggregate liquidation amount of Capital Securities represented by a beneficial
interest in a Rule 144A Global Capital Security (CUSIP No.                 )
held with the Depositary by or on behalf of [                 ]
transferor as beneficial owner (the “Transferor”). The Transferor has requested
an exchange or transfer of its beneficial interests for an interest in a
Regulation S Global Capital Security (CUSIP No.                  )](5)

 

In accordance with Section 8.2(b) of the Declaration, we do
hereby certify that (i) we are not a “U.S. person” (as such term is
defined in Rule 902 under the Securities Act), (ii) we are not
acquiring the Capital Securities for the account or benefit of any U.S. person,
and (iii) the offer and sale of Capital Securities to us constitutes an “offshore
transaction” under Regulation S under the Securities Act.

 

You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.

 

(6)  Only applicable to transfer of Definitive
Capital Securities.

(7)  Only applicable to transfer of Book-Entry
Capital Securities.

 

E-1

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of
  Transferee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
							

 

E-2

 

EXHIBIT F

 

Form of
Officer’s Financial Certificate

 

The undersigned, the
[Chief Financial Officer] [Treasurer] [Executive vice President] hereby
certifies, pursuant to Section 10.2(b) of the Amended and Restated
Trust Agreement, dated as of June 20, 2008, among Tidelands Bancshares, Inc.
(the “Company”), Wilmington Trust Company, as property trustee, Wilmington
Trust Company, as Delaware trustee and the administrators named therein, that,
as of                 ,
20          , the Company had
the following ratios and balances:

 

[BANK] HOLDING COMPANY

 

As of [Quarterly
Financial Dates]

 

	
  Tier 1 Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
  Tangible Common
  Equity as a Percentage of Tangible Assets

  	
   

  	
   

  	
  %

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
   

  	
  %

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
   

  	
  %

  
	
  Return on
  Average Assets (annualized)

  	
   

  	
   

  	
  %

  
	
  Net Interest
  Margin (annualized)

  	
   

  	
   

  	
  %

  
	
  Efficiency Ratio

  	
   

  	
   

  	
  %

  

 

F-1

 

	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
  Double Leverage
  (exclude trust preferred as equity)

  	
   

  	
   

  	
  %

  
	
  Total Assets

  	
   

  	
  $

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  

 

*A table describing the
quarterly report calculation procedures is attached.

 

[FOR FISCAL
YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended                              ,
20               .]

 

[FOR FISCAL
QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter and [six/nine] month period ended                   ,
20         ].

 

The financial statements
fairly present in all material respects, in accordance with U.S. generally
accepted accounting principals (“GAAP”), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in
financial condition as of the date, and for the [             
quarter interim] [annual] period ended               ,
20     , and such financial statements have been
prepared in accordance with GAAP consistently applied throughout the period
involved (except as otherwise noted therein).

 

F-2

 

IN WITNESS WHEREOF, the
undersigned has executed this Officer’s Certificate as of this         
day of                            ,
20           .

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tidelands
  Bancshares, Inc.

  
	
   

  	
   

  	
  875 Lowcountry
  Boulevard

  
	
   

  	
   

  	
  Mt. Pleasant, SC 29464

  
	
   

  	
   

  	
  (843) 388-8433

  

 

F-3

 

Annex 1 to Exhibit F
- Financial Definitions

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier
  1 Risk Weighted Assets

  	
   

  	
  BHCK7206
  Schedule HC-R

  	
   

  	
  Tier
  1 Risk Ratio: core Capital (Tier 1)/Risk-Adjusted Assets

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Double Leverage

  	
   

  	
  (BHCP0365)/(BCHCP3210)
  Schedule PC in the LP

  	
   

  	
  Total
  equity investments in subsidiaries divided by the total equity capital. This
  field is calculated at the parent company level. “Subsidiaries” include bank,
  bank holding company, and non-bank subsidiaries.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+/BHCK2744/(BHCK2122+BHCK2744)
  Schedules HC-C, HC-M & HC-N

  	
   

  	
  Total
  Nonperforming Assets  (NPLs+Foreclosed
  Real Estate+Other Nonaccrual & Repossessed Assets)/Total
  Loans+Foreclosed Real Estate

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tangible
  Common Equity as a Percentage of Tangible Assets

  	
   

  	
  (BHDM3210-BHCK3163)/BHCK2170-BHCK3163)
  Schedule HC

  	
   

  	
  (Equity
  Capital – Goodwill)/(Total Assets – Goodwill)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Reserves to Non-Performing loans

  	
   

  	
  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)
  Schedules HC &
  HC-N & HC-R

  	
   

  	
  Total
  Loan Loss and Allocated Transfer Risk Reserves/Total Nonperforming Loans
  (Nonaccrual + Restructured)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Net Charge-Offs to Loans

  	
   

  	
  (BHCK4635-BHCK4605)/(BHCK3516)
  Schedules HI-B & HC-K

  	
   

  	
  Net
  charge offs for the period as a percentage of average loans.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Return
  on 

  	
   

  	
  (BHCK4340/BHCK3368)

  	
   

  	
  Net
  Income as a

  

 

F-4

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Assets (annualized)

  	
   

  	
   Schedules HI & HC-K

  	
   

  	
  percentage
  of Assets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Interest Margin (annualized)

  	
   

  	
  (BHCK4519/(BHCK3515+BHCK3365+BHCK3516+

  BHCK3401+BHCKB985)  Schedules
  HI Memorandum and HC-K

  	
   

  	
  (Net
  Interest Income Fully Taxable Equivalent, if available/Average Earning
  Assets)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Efficiency
  Ration

  	
   

  	
  (BHCK4093)/(BHCK4519+BHCK4079)
  Schedule HI

  	
   

  	
  (Non-interest
  Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus
  Non-interest Income)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Assets

  	
   

  	
  (BHCKB528+BHCK5369)/(BHCK2170)
  Schedule HC

  	
   

  	
  Total
  Loans & Leases (Net of Unearned Income & Gross of
  Reserve)/Total Assets

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Deposits

  	
   

  	
  (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)
  Schedule HC

  	
   

  	
  Total
  Loans & Leases (Net of Unearned Income & Gross of
  Reserve)/Total Deposits (Includes Domestic and Foreign Deposits)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Assets

  	
   

  	
  (BHCK2170)
  Schedule HC

  	
   

  	
  The
  sum of total assets. Includes cash and balances due from depository
  institutions; securities; federal funds sold and securities purchased under
  agreements to resell; loans and lease financing receivables; trading assets;
  premises and fixed assets; other real

  

 

F-5

 

	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  estate
  owned; investments in unconsolidated subsidiaries and associate companies;
  customer’s liability on acceptances outstanding; intangible assets; and other
  assets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income

  	
   

  	
  (BHCK4300)
  Schedule HI

  	
   

  	
  The
  sum of income (loss) before extraordinary items and other adjustments and
  extraordinary items; and other adjustments, net of income taxes.

  

 

F-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]