Document:

AGREEMENT AND PLAN OF MERGER

         THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of December
12, 2001, between Amexdrug Corporation, a California corporation ("Amex CA") and
Amexdrug Corporation, a Nevada corporation ("Amex NV").

WITNESSETH

         WHEREAS, the Board of Directors of Amex CA have deemed it to be in the
best interest of Amex CA to change its domicile from the state of California to
the state of Nevada; and

         WHEREAS, Amex CA has authorized an capitalization of 10,000,000 shares
of common stock, $.001 par value ("Amex CA Common Stock") of which, 1,049,398
were issued and outstanding as of December 11, 2001; and

         WHEREAS, Amex NV has an authorized capitalization of 50,000,000 shares
of common stock, $.001 par value ("Amex NV Common Stock") of which, 100 shares
were issued and outstanding as of December 11, 2001; and

         WHEREAS, the Board of Directors of Amex CA and Amex NV, deem it
advisable for Amex CA to merge with and into Amex NV in accordance with the
provisions of the California Corporations Code and the Nevada Revised Statutes.

         NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, Amex CA and Amex NV
agree that Amex CA shall merge with and into and Amex NV. Amex NV shall be the
corporation surviving the Merger and the terms and conditions of the Merger, the
mode of carrying it into effect and the manner and basis of converting shares in
Merger shall be as follows:

                                    ARTICLE I

                                   The Merger

         (a) Subject to and in accordance with the provisions of this Agreement,
Articles of Merger shall be executed by Amex CA and Amex NV and filed in the
Offices of the Secretary of States of the State of California and the State of
Nevada as provided in Section 1108 of the California Corporations Code and
Section 92A.200 of the Nevada Revised Statutes, respectively.

         (b) The Merger shall become effective at the time ("Effective Time") of
filing of the Certificate of Merger with the Secretary of State of Nevada in
accordance with Section 92A.240 of the Nevada Revised Statutes.

         (c) At the Effective Time, Amex CA shall be merged with and into Amex
NV.  Amex NV shall be designated as the surviving corporation and shall continue
its corporate existence

<PAGE>

under the laws of the State of Nevada and the separate existence of Amex CA
shall cease (Amex CA and Amex NV are referred to herein as the "Constituent
Corporations" and Amex NV, the corporation designated as the surviving
corporation, is referred to herein as the "Surviving Corporation").

         (d) Prior to and after the Effective Time, Amex CA and Amex NV,
respectively shall take all such action as may be necessary or appropriate in
order (i) to effect the Merger, and (ii) thereafter carry out the purposes of
this Agreement to vest in the Surviving Corporation all the rights, privileges,
immunities and franchises, as of a public or a private nature, of each
Constituent Corporation; and all property, real, personal and mixed, and all
debts and all choses in action, and all and every other interest of or belonging
to or due to, each Constituent Corporation, and the officers and Directors of
each Constituent Corporation as of the Effective Time shall take all such
action.

                                   ARTICLE II

                          Terms of Conversion of Shares

         Shares of Amex CA Common Stock may be converted to shares of Amex NV
Common stock on a one share for one share basis.

                                   ARTICLE III

                      Articles of Incorporation and By-Laws

         (a) From and after the Effective Time, the Articles of Incorporation of
Amex NV as in effect immediately prior to the Effective Time shall be and
continue to be the Articles or Incorporation of the Surviving Corporation until
amended.

                                   ARTICLE IV

                             Directors and Officers

         The persons who are Directors and officers of Amex NV immediately prior
to the Effective Time shall continue as the Directors and officers,
respectively, of the Surviving Corporation and shall continue to hold office as
provided in the By-Laws of the Surviving Corporation. If, at or following the
Effective Time, a vacancy shall exist in the Board of Directors or in the
position of any officer of the Surviving Corporation, such vacancy may be filled
in the manner provided in the By-Laws of the Surviving Corporation.

                                        2

<PAGE>

                                    ARTICLE V

                               Stock Certificates

         Following the Effective Time, each holder of an outstanding certificate
or certificates theretofore representing shares of Amex CA Common Stock may, but
shall not be required to, surrender the same to Amex NV for cancellation and
exchange or transfer, and each such holder or transferee thereof will be
entitled to receive a certificate of certificates representing the same number
of shares of Amex NV Common Stock as the number of shares of Amex CA Common
Stock previously represented by the stock certificate or certificates
surrendered. Until so surrendered for cancellation and exchange or transfer,
each outstanding certificate which, prior to the Effective Time, represented
shares of Amex CA Common Stock shall be deemed and treated for all corporate
purpose to represent the ownership of the same number of the shares of Amex NV
as though such surrender for cancellation and exchange or transfer thereof had
taken place. The stock transfer books for Amex CA Common Stock shall be deemed
to be closed at the Effective Time, and no transfer of shares of Amex CA Common
Stock outstanding immediately prior to the Effective Time shall thereafter be
made on such books. Following the Effective Time, the holders of certificates
representing Amex CA outstanding immediately before the Effective Time shall
cease to have any rights with respect to stock of the Surviving Corporation and
their sole rights shall be with respect to the Amex NV Common Stock into which
their shares of Amex CA Common Stock shall have been converted in the Merger.

                                   ARTICLE VI

                            Conditions to the Merger

         Consummation of the Merger is subject to the satisfaction of the
following conditions:

         (a) The Merger shall have received such approval of the Board of
Directors and shareholders of each Constituent Corporation entitled to vote
thereon as is required by the California Corporations Code, the Nevada Revised
Statutes and the Articles of Incorporation of each Constituent Corporation.

         (b) The Amex CA and Amex NV shall have fulfilled all statutory
requirements for the valid consummation of the Merger.

         (c) Amex CA and Amex NV shall have furnished corporate resolutions
and/or other documentary evidence satisfactory to counsel for each that this
Agreement has properly been submitted to and received approval from the Board of
Directors of each party as required by applicable law.

                                   ARTICLE VII

                        Amendment, Waiver and Termination

                                        3

<PAGE>

         (a) Amex CA and Amex NV by mutual consent of their respective Boards of
Directors may amend, modify or supplement this Agreement or waive any condition
set forth in Article VI hereof in such manner as may be agreed upon by them in
writing, at any time before or after approval of this Agreement by the
shareholders of Amex CA, but not after the time that the Articles of Merger are
filled with the Nevada Secretary of State ("Filing Time"); provided, however,
that no such amendment, modification, supplement or waiver shall, in the sole
judgment of the Board of Directors of Amex CA, materially adversely affect the
rights of the shareholders of Amex CA.

         (b) Consummation of the Merger may be deferred by the Boards of
Directors of either party or any authorized officer of either party for a
reasonable period of time if said Board or officer determines such deferral
would be in the best interest of its respective corporation or its shareholders.

         (c) This Agreement may be terminated and the Merger and other
transactions herein provided for abandoned at any time prior to the Filing Time,
whether before or after approval of this Agreement by the shareholders of Amex
CA, by action of the Board of Directors of Amex CA, by the shareholders of Amex
NV or by action of the Board of Directors of Amex NV if said Board of Directors
determines for any reason that the consummation of the transactions herein
provided for would for any reason be inadvisable or not in the best interests of
Amex CA, Amex NV or their respective shareholders.

                                  ARTICLE VIII

                                  Miscellaneous

         (a) This Agreement may be executed in counterparts, each of which when
so executed shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.

         (b) This Agreement shall be governed by, and construed in accordance
with the laws of the State of Nevada.

                                        4

<PAGE>

         IN WITNESS WHEREOF, Amex CA and Amex NV pursuant to approval and
authorization duly given by resolutions adopted by their respective Boards of
Directors, have each caused this Agreement and Plan of Merger to be executed by
its President.

                                                    AMEXDRUG CORPORATION,
                                                    a California corporation

                                                    /s/ Jack Amin
                                                    ----------------------------
                                                    Jack Amin, President

                                                    AMEXDRUG CORPORATION,
                                                    a Nevada corporation

                                                    /s/ Jack Amin
                                                    ----------------------------
                                                    Jack Amin, President

                                        5Prepared by MERRILL CORPORATION

 

 

 

 

 

AMENDED AND RESTATED DECLARATION

 

OF TRUST

 

NATIONAL MERCANTILE CAPITAL TRUST I

 

Dated as of July 16, 2001

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	

  ARTICLE I

  
	

  INTERPRETATION AND DEFINITIONS

  
	

   

  
	

  Section 1.1

  	

  Definitions

  
	

   

  	

   

  
	

  ARTICLE

  II

  
	

  ORGANIZATION

  
	

  Section

  2.1

  	

  Name

  
	

   

  	

   

  
	

  Section 2.2

  	

  Office

  
	

   

  	

   

  
	

  Section 2.3

  	

  Purpose

  
	

   

  	

   

  
	

  Section 2.4

  	

  Authority

  
	

   

  	

   

  
	

  Section 2.5

  	

  Title to Property of the Trust

  
	

   

  	

   

  
	

  Section 2.6

  	

  Powers and Duties of the Trustees and the

  Administrators

  
	

   

  	

   

  
	

  Section 2.7

  	

  Prohibition of Actions by the Trust and the

  Trustees

  
	

   

  	

   

  
	

  Section 2.8

  	

  Powers and Duties of the Institutional

  Trustee

  
	

   

  	

   

  
	

  Section 2.9

  	

  Certain Duties and Responsibilities of the

  Trustees and Administrators

  
	

   

  	

   

  
	

  Section 2.10

  	

  Certain Rights of Institutional Trustee

  
	

   

  	

   

  
	

  Section 2.11

  	

  Delaware Trustee

  
	

   

  	

   

  
	

  Section 2.12

  	

  Execution of Documents

  
	

   

  	

   

  
	

  Section 2.13

  	

  Not Responsible for Recitals or Issuance of

  Securities

  
	

   

  	

   

  
	

  Section 2.14

  	

  Duration of Trust

  
	

   

  	

   

  
	

  Section 2.15

  	

  Mergers

  
	

   

  	

   

  
	

  ARTICLE

  III

  
	

  SPONSOR

  
	

   

  	

   

  
	

  Section 3.1

  	

  Sponsor’s Purchase of Common Securities

  
	

   

  	

   

  
	

  Section 3.2

  	

  Responsibilities of the Sponsor

  
	

   

  	

   

  
	

  ARTICLE

  IV

  
	

  TRUSTEES AND ADMINISTRATORS

  
	

   

  
	

  Section 4.1

  	

  Number of Trustees

  
	

   

  	

   

  
	

  Section 4.2

  	

  Delaware Trustee

  
	

   

  	

   

  
	

  Section 4.3

  	

  Institutional

  Trustee; Eligibility

  
	

   

  	

   

  
	

  Section 4.4

  	

  Certain Qualifications of the Delaware

  Trustee Generally

  
	

   

  	

   

  
	

  Section 4.5

  	

  Administrators

  
	

   

  	

   

  
	

  Section 4.6

  	

  Initial Delaware Trustee

  
	

   

  	

   

  
	

  Section 4.7

  	

  Appointment, Removal and Resignation of

  Trustees and Administrators

  
	

   

  	

   

  
	

  Section 4.8

  	

  Vacancies Among Trustees

  
	

   

  	

   

  
	

  Section 4.9

  	

  Effect of Vacancies

  
	

   

  	

   

  
	

  Section 4.10

  	

  Meetings of the Trustees and the

  Administrators

  
	

   

  	

   

  
	

  Section 4.11

  	

  Delegation of Power

  
	

   

  	

   

  
	

  Section 4.12

  	

  Conversion, Consolidation or Succession to

  Business

  
	

   

  	

   

  
	

  ARTICLE

  V

  
	

  DISTRIBUTIONS

  
	

   

  	

   

  
	

  Section 5.1

  	

  Distributions

  
	

   

  	

   

  
	

  ARTICLE

  VI

  
	

  ISSUANCE OF SECURITIES

  
	

   

  
	

  Section 6.1

  	

  General Provisions Regarding Securities

  
	

   

  	

   

  
	

  Section 6.2

  	

  Paying Agent, Transfer Agent and Registrar

  
	

   

  	

   

  
	

  Section 6.3

  	

  Form and Dating

  
	

   

  	

   

  
	

  Section 6.4

  	

  Mutilated, Destroyed, Lost or Stolen

  Certificates

  
	

   

  	

   

  
	

  Section 6.5

  	

  Temporary Securities

  
	

   

  	

   

  
	

  Section 6.6

  	

  Cancellation

  
	

   

  	

   

  
	

  Section 6.7

  	

  Rights of Holders; Waivers of Past Defaults

  
	

   

  	

   

  
	

  ARTICLE

  VII

  
	

  DISSOLUTION AND TERMINATION OF TRUST

  
	

   

  
	

  Section 7.1

  	

  Dissolution and Termination of Trust

  
	

   

  	

   

  
	

  ARTICLE

  VIII

  
	

  TRANSFER OF INTERESTS

  
	

   

  
	

  Section 8.1

  	

  General

  
	

   

  	

   

  
	

  Section 8.2

  	

  Transfer Procedures and Restrictions

  
	

   

  	

   

  
	

  Section 8.3

  	

  Deemed Security Holders

  
	

   

  	

   

  
	

  ARTICLE

  IX

  
	

  LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

  
	

   

  
	

  Section 9.1

  	

  Liability

  
	

   

  	

   

  
	

  Section 9.2

  	

  Exculpation

  
	

   

  	

   

  
	

  Section 9.3

  	

  Fiduciary Duty

  
	

   

  	

   

  
	

  Section 9.4

  	

  Indemnification

  
	

   

  	

   

  
	

  Section 9.5

  	

  Outside Businesses

  
	

   

  	

   

  
	

  Section 9.6

  	

  Compensation; Fee

  
	

   

  	

   

  
	

  ARTICLE

  X

  
	

  ACCOUNTING

  
	

   

  
	

  Section 10.1

  	

  Fiscal Year

  
	

   

  	

   

  
	

  Section 10.2

  	

  Certain Accounting Matters

  
	

   

  	

   

  
	

  Section 10.3

  	

  Banking

  
	

   

  	

   

  
	

  Section 10.4

  	

  Withholding

  
	

   

  	

   

  
	

  ARTICLE

  XI

  
	

  AMENDMENTS AND MEETINGS

  
	

   

  
	

  Section 11.1

  	

  Amendments

  
	

   

  	

   

  
	

  Section 11.2

  	

  Meetings of the Holders of Securities;

  Action by Written Consent

  
	

   

  	

   

  
	

  ARTICLE

  XII

  
	

  REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

  AND DELAWARE TRUSTEE

  
	

   

  	

   

  
	

  Section 12.1

  	

  Representations and Warranties of

  Institutional Trustee

  
	

   

  	

   

  
	

  Section 12.2

  	

  Representations and Warranties of Delaware

  Trustee

  
	

   

  	

   

  
	

  ARTICLE

  XIII

  
	

  MISCELLANEOUS

  
	

   

  
	

  Section 13.1

  	

  Notices

  
	

   

  	

   

  
	

  Section 13.2

  	

  Governing Law

  
	

   

  	

   

  
	

  Section 13.3

  	

  Submission to Jurisdiction

  
	

   

  	

   

  
	

  Section 13.4

  	

  Intention of the Parties

  
	

   

  	

   

  
	

  Section 13.5

  	

  Headings

  
	

   

  	

   

  
	

  Section 13.6

  	

  Successors and Assigns

  
	

   

  	

   

  
	

  Section 13.7

  	

  Partial Enforceability

  
	

   

  	

   

  
	

  Section 13.8

  	

  Counterparts

  

 

 

ANNEXES AND EXHIBITS

	

  ANNEX I

  	

  Terms of Fixed Rate MMCapSSM

  
	

   

  	

   

  
	

  EXHIBIT A- 1

  	

  Form of Capital

  Securities Certificate

  
	

  EXHIBIT A-2

  	

  Form of Common Security

  Certificate

  
	

  EXHIBIT B

  	

  Form of Transferee Certificate to be Executed

  by Transferees Other than QIBs

  
	

  EXHIBIT C

  	

  Form of Transferee Certificate to be Executed

  for QIBs

  

 

 

AMENDED AND RESTATED DECLARATION OF TRUST

OF

NATIONAL MERCANTILE CAPITAL TRUST I

July 16, 200l

AMENDED AND

RESTATED DECLARATION OF TRUST (this “Declaration”) dated and effective as of

July 16, 2001, 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, the Administrators and the Sponsor established National

Mercantile Capital Trust I (the “Trust”), a statutory business trust under the

Business Trust Act (as defined herein) pursuant to a Declaration of Trust dated

as of June 27, 2001 (the “Original Declaration”), and a Certificate of Trust

filed with the Secretary of State of the State of Delaware on June 27, 2001,

for the sole purpose of issuing and selling certain securities representing

undivided beneficial interests in the assets of the Trust and investing the

proceeds thereof in certain debentures of the Debenture Issuer (as defined

herein) in connection with the MMCapSSM Transaction;

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

business trust under the Business Trust Act and that this Declaration

constitutes the governing instrument of such statutory business trust, the

Trustees declare 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

representing undivided beneficial interests in the assets of the Trust issued hereunder,

subject to the provisions of this Declaration.

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 have the respective meanings assigned to them in this Section 1.1

or, if not defined in this Section 1.1, 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 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

Interest” 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 Scott A. Montgomery and David R. Brown, solely in such Person’s

capacity as Administrator of the Trust created and 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 of the Securities Act or any successor rule thereunder.

“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 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 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.

“Business Day” means any day other than Saturday, Sunday or any

other day on which banking institutions in New York City or Los Angeles,

California are permitted or required by any applicable law to close.

 

“Business Trust

Act” means Chapter 3 8 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.

“Capital

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

“Capital

Security Certificate” means a definitive Certificate representing a Capital

Security substantially in the form of Exhibit A-l.

“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 Placement Agreement.

“Code” means

the Internal Revenue Code of 1986, as amended from time to time, or any

successor legislation.

“Commission”

means the 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.

“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.

“Comparable

Treasury Issue” has the meaning set forth in paragraph 4(a) of Annex I.

“Comparable

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

“Corporate Trust Office” means the office of the Institutional

Trustee at which the corporate trust business of the Institutional Trustee

shall, at any particular time, be principally administered, which office shall

at all times be located in the United States and at the date of execution of

this Declaration is located at 101 Barclay Street, Floor 21 West, New York, NY

10286.

“Covered Person” means: (a) any Administrator, officer,

director, shareholder, partner, member, representative, employee or agent of

(i) the Trust or (ii) the Trust’s Affiliates; and (b) any Holder of Securities.

 

“Debenture

Issuer” means National Mercantile Bancorp, a bank holding company

incorporated in California, in its capacity as issuer of the Debentures under

the Indenture.

“Debenture

Trustee” means The Bank of New York, as trustee under the Indenture until a

successor is appointed thereunder, and thereafter means such successor trustee.

“Debentures”

means the 10.25% Junior Subordinated Deferrable Interest Debentures due July

25, 2031 to be issued by the Debenture Issuer under the Indenture.

“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

rate per annum equal to 10.25%, compounded semi-annually 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.

“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(b) of Annex I.

“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(b) of Annex I.

“Federal Reserve”

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

“Fiduciary Indemnified Person” shall mean the Institutional

Trustee, the Delaware Trustee, 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 and the Delaware Trustee.

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

“Guarantee” means the guarantee agreement to be dated as of July

16, 2001, of the Sponsor in respect of the Capital Securities.

“Holder”

means a Person in whose name a Certificate representing a Security is

registered, such Person being a beneficial owner within the meaning of the

Business Trust Act.

“Indemnified

Person” means a Company Indemnified Person or a Fiduciary Indemnified

Person.

“Indenture”

means the Indenture dated as of July 16, 2001, among the Debenture Issuer and

the Debenture Trustee, and any indenture supplemental thereto pursuant to which

the Debentures are to be issued.

“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.

“Interest”

means any interest due on the Debentures, including any Deferred Interest and

Defaulted Interest (as each such term is defined in the Indenture).

“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). “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

Holder(s) 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 stated amount that would be paid on redemption, liquidation or otherwise,

plus accrued and unpaid Distributions to the date upon which the voting

percentages are determined) of all outstanding Securities of the relevant class.

 

“Officers’ Certificates” means, with respect to any Person, a

certificate signed by two Authorized Officers of such Person. Any Officers’

Certificate delivered with respect to compliance with a condition or covenant

provided for it in this Declaration shall include:

(a)          a statement that each

officer 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 officer in rendering the Officers’

Certificate;

(c)          a statement that each such officer has made such examination or

investigation as,

in such officer’s opinion, is necessary to enable such officer to express an

informed opinion as to whether or not such covenant or condition has been

complied with; and

(d)          a statement as to whether, in the opinion of each such officer, such

condition or covenant has been complied with.

“Paying Agent”

has the meaning specified 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.

“Placement

Agreement” means the Placement Agreement relating to the offering and sale

of Capital Securities.

“PORTAL” has

the meaning set forth in Section 2.6(a)(i).

“Primary

Treasury Dealer” has the meaning set forth in paragraph 4(a) of Annex 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. “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.

“Quotation Agent”

has the meaning set forth in paragraph 4(a) of Annex I.

“Redemption/Distribution Notice” has the meaning set forth in

paragraph 4(e) of Annex I.

“Redemption Price” has

the meaning set forth in paragraph 4(a) of Annex I.

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

“Reference Treasury Dealer” has the meaning set forth in

paragraph 4(a) of Annex I.

 

“Reference

Treasury Dealer Quotations” has the meaning set forth in paragraph 4(a) of

Annex I.

“Relevant

Trustee” has the meaning set forth in Section 4.7(a).

“Remaining Life”

has the meaning set forth in paragraph 4(a) of Annex I.

“Responsible

Officer” means, with respect to the Institutional Trustee, any officer

within the Corporate Trust Office of the Institutional Trustee, including any

vice-president, any assistant vice-president, 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 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.

“Sponsor”

means National Mercantile Bancorp, a bank holding company that is a U.S. Person

incorporated in California, or any successor entity in a merger, consolidation

or amalgamation that is a U.S. Person, in its capacity as sponsor of the Trust.

“Successor

Delaware Trustee” has the meaning set forth in Section 4.7(a). 

“Successor

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

“Successor

Institutional Trustee” has the meaning set forth in Section 4.7(a). 

“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 1.

“10% in liquidation amount of the Securities” means Holder(s) 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 on redemption, liquidation or otherwise, plus accrued and

unpaid Distributions to the date upon which the voting percentages are

determined) of all outstanding Securities of the relevant class.

“Transfer Agent” has the meaning set

forth in Section 6.2.

 

“Treasury Rate” has the meaning set forth in paragraph 4(a) of

Annex I.

 

“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.

“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.

“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 property and assets for the time being held or deemed to be held by the

Institutional Trustee pursuant to the trusts of this Declaration.

“U.S. Person”

means a United States Person as defined a Section 7701(a)(30) of the Code.

ARTICLE II

ORGANIZATION

 

Section 2.1            Name. The Trust is named “National Mercantile Capital Trust I,” as such

name may be modified from time to time by the Administrators following written

notice to 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 c/o National

Mercantile Bancorp, 1840 Century Park East, Los Angeles, California 90067. On

ten Business Days written notice to 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 to acquire

the Debentures and (c) except as otherwise limited herein, to engage in only

those other activities incidental thereto that are deemed necessary or

advisable 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 its 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.

Section 2.5            Title to Property of the Trust. Except as provided in 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 Trustees and the Administrators

shall have the authority to enter into all transactions and agreements determined

by the Trustees to be appropriate in exercising the authority, express or

implied, otherwise granted to the Trustees 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 and authority 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;

(C)           ensuring compliance with the Securities Act, applicable state

securities or blue sky laws;

(D)           if and at such time determined 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;

(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;

 

(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

Placement Agreement and the application for a taxpayer identification number;

(I)            unless otherwise determined by the Institutional Trustee or the Holders

of a Majority in liquidation amount of the Securities or as otherwise required

by the Business 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 incidental to the foregoing as the

Institutional Trustee may from time to time determine is necessary or advisable

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; and

(L)           to duly prepare and file all applicable tax returns and tax information

reports that are required to be filed with respect to the Trust on behalf of

the Trust.

(ii)           As among the Trustees and the

Administrators, the Institutional Trustee shall have the power, duty and

authority to act on behalf of the Trust with respect to the following matters:

(A)          the establishment of the 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 (provided that such Event of Default is not

by or with respect to the Institutional Trustee) the taking of any action

incidental to the foregoing as the Institutional Trustee may from time to time

determine is necessary or advisable 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); and

(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 business trust under the laws of the

State of Delaware and of each other jurisdiction 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.

(iii)          The Institutional Trustee shall have

the power and authority 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 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, 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 States 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 the Trustees of actions they must take on behalf of the Trust,

and the preparation for execution and filing of any documents to be executed

and filed by the Trust or on behalf of the Trust, as the Sponsor deems

necessary or advisable in order to comply with the applicable laws of any such

States in connection with the sale of the Capital Securities;

(iii)          the negotiation of the terms of, and

the execution and delivery of, the Placement Agreement providing for the sale

of the Capital Securities; and

(iv)          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, and (ii) the Trust will not fail to be classified as a grantor

trust for United States federal income tax purposes 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 this connection, the Institutional Trustee and the Holders of a

Majority in liquidation amount of the Common Securities are authorized to take

any action, not inconsistent with applicable laws, the Original Declaration or

this Declaration, as amended from time to time, that each of the Institutional

Trustee 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 and neither the Administrators nor the Holders 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.

(a)           The Trust shall not, and the Institutional Trustee and the

Administrators shall not, cause the Trust to engage in any activity other than

as required or authorized by this Declaration. 

In particular, the Trust shall not and the Institutional Trustee, and

the Administrators shall not, cause the Trust to:

(i)            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;

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

(iii)          possess Trust Property for other than

a Trust purpose;

(iv)          make any loans or incur any indebtedness other than loans represented

by the Debentures;

(v)           possess any power or otherwise act in

such a way as to vary the Trust Property or the terms of the Securities;

(vi)          issue any securities or other evidences of beneficial ownership of, or

beneficial interest in, the Trust other than the Securities; or

(vii)         other than as

provided in this Declaration (including Annex I), (A) direct the time, method and place of exercising any trust or power conferred

upon the Debenture Trustee with respect to the Debentures, (B) waive any past

default that is waivable under the

Indenture, (C) exercise any right to rescind or annul any declaration that the

principal of all the Debentures shall be due and payable, or (D) 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 an opinion

of counsel experienced in such matters to the effect that such modification

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 4.7. 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 section 301.7701-7), in the name of and under the exclusive control

of the Institutional Trustee, and maintained in the Institutional Trustee’s

trust 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 certain

circumstances pursuant to 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 arises 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 principal on the Debentures on the date such interest or principal

is otherwise payable (or in the case of redemption, on the redemption date),

then a Holder of the Capital Securities may directly institute a proceeding for

enforcement of payment to such Holder of the principal of or interest 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 Capital

Securities may exercise such right of subrogation only so long as an 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

(ii)           a Successor Institutional Trustee has

been appointed and has accepted that appointment in accordance with Section

4.7.

(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.

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 Administrators.

(a)           The Institutional Trustee, before the occurrence of any Event of

Default 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 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 the Trustees or Administrators to

expend or risk their own funds or otherwise incur any financial liability in

the performance of any of their duties hereunder, or in the exercise of any of

their rights or powers, if they shall have reasonable grounds for believing

that repayment of such funds or adequate indemnity 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 Administrators shall be subject to the provisions of this Article. Nothing

in this Declaration shall be construed to release an Administrator or Trustee

from liability for its own negligent action, its own negligent failure to act,

or its own willful misconduct. To the extent that, at law or in equity, a

Trustee or an Administrator has duties and liabilities relating to the Trust or

to the Holders, such Trustee or Administrator shall not be liable to the Trust

or to any Holder for such Trustee’s or Administrator’s good faith reliance on

the provisions of this Declaration. The provisions of this Declaration, to the

extent that they restrict the duties and liabilities of the Administrators or

the Trustees otherwise existing at law or in equity, are agreed by the Sponsor

and the Holders to replace such other duties and liabilities of the

Administrators or the Trustees.

(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 with respect to matters that are within

the authority of the Institutional Trustee under this Declaration for its own

negligent action, its own negligent failure to act, or its own willful

misconduct, 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

not less than 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 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, 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 or willful misconduct;

(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 as to factual matters 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;

(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 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 tit;

(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 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 obtains actual knowledge of such event or

the Institutional Trustee receives written notice of such event from any

Holder;

(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. 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,

nor shall the Delaware Trustee have any of the duties and responsibilities of

any of the Trustees or the Administrators described in this Declaration (except

as may be required under the Business 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 0 3807 of the Business Trust Act.

Section 2.12           Execution of

Documents. Unless otherwise

determined in writing by the Institutional Trustee, and except as otherwise

required by the Business Trust Act, the Institutional Trustee, or any one or

more of the Administrators, as the case may be, is authorized to execute on

behalf of the Trust any documents 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

property of the Trust or any part thereof. The Trustees

make no representations as to the validity or sufficiency of this Declaration,

the Debentures or the Securities.

 

Section 2.14           Duration

of Trust. The Trust, unless

dissolved pursuant to the provisions of Article VII hereof, shall have

existence for thirty-five (35) years from the Closing 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(b) and (c) and except with respect to the

distribution of Debentures to Holders of Securities pursuant to Section

7.l(a)(iv) of the Declaration or Section 4 of Annex I.

(b)           The Trust may, with

the consent of the Institutional Trustee (which consent will not be

unreasonably withheld) and without the consent of the Delaware Trustee or the

Holders of the Capital Securities, consolidate, amalgamate, merge with or into,

or be replaced by 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 (excluding any securities substituted for the Common

Securities) are listed, or any Successor Securities will be listed 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 or replacement does not cause

the Capital Securities (including any Successor Securities) to be downgraded by

any nationally recognized statistical rating organization, if the Capital

Securities are then rated;

(v)           such merger, consolidation, amalgamation or replacement does not

adversely affect the rights, preferences and privileges of the Holders of the

Securities (including any Successor Securities) in any material respect (other

than with respect to any dilution of such Holders’ interests in the Successor

Entity as a result of such merger, consolidation, amalgamation or replacement);

(vi)          such Successor Entity has a purpose substantially identical to that of

the Trust;

(vii)         prior to such merger, consolidation,

amalgamation or replacement, 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 or replacement does not

adversely affect the rights, preferences and privileges of the Holders of the

Securities (including any Successor Securities) in any material respect (other

than with respect to any dilution of the Holders’ interest in the Successor

Entity);

(B)           following such merger, consolidation, amalgamation or replacement,

neither the Trust nor the Successor Entity will be required to register as an

Investment Company; and

(C)           following such merger, consolidation, amalgamation or replacement, 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 such Successor Entity under the Successor Securities at least to the extent

provided by the Guarantee, the Debentures and this Declaration; and

(ix)           prior to such merger, consolidation,

amalgamation or replacement, 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 any other Person

or permit any other Person to consolidate, amalgamate, merge with or into, or

replace it if such consolidation, amalgamation, merger or replacement would

cause the Trust or Successor Entity to be classified as other than a grantor

trust for United States federal income tax purposes.

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 to engage in, or direct the Administrators to engage

in, the following activities:

 

(a)           to determine the States in which to take appropriate action to qualify

or register for sale of 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

or advisable in order to comply with the applicable laws of any such States;

(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,

if required; and

(c)           to negotiate the terms of and/or execute on behalf of the Trust, the

Placement Agreement and other related agreements providing for the sale of the

Capital Securities.

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

Business Trust Act, one Trustee (the “Delaware Trustee”) shall be:

(a)           a natural person who

is a resident of the State of Delaware; 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 Business Trust Act.

Section 4.3             Institutional Trustee; Eligibility.

(a) There shall at all times be one Trustee which 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 organized and doing business under the laws of the United States of

America or any State thereof or of the District of Columbia and authorized

under such laws to exercise corporate trust powers, having a combined capital

and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to

supervision or examination by Federal, State or District of Columbia authority.

If such corporation publishes reports of condition at least annually, pursuant

to law or to the requirements of the 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 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 4.7(a).

(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 The Bank of New York.

Section 4.4             Certain

Qualifications of the Delaware Trustee Generally. The Delaware Trustee shall be a U.S. Person and either a natural

person who is at least 21 years of age or a legal entity that shall act through

one or more Authorized Officers.

Section 4.5             Administrators. Each Administrator shall be a U.S. Person. The initial Administrators

shall be Scott A. Montgomery and David R. Brown. 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 of the Administrators may be

exercised by, or with the consent of, any one such Administrator.

Section 4.6             Initial

Delaware Trustee. The initial Delaware

Trustee shall be The Bank of New York (Delaware).

Section 4.7             Appointment,

Removal and Resignation of Trustees and 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 4.7.

 

Subject to the immediately preceding paragraph,

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, its 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 Section 4.7 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 4.7.

Unless an Event of Default shall have occurred

and be continuing, any Trustee may be removed at any time by an act of the

Holder 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 then

outstanding delivered to the Relevant Trustee, shall promptly appoint a

successor Relevant Trustee or Trustees, and such successor Trustee shall comply

with the applicable requirements of this Section 4.7. 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 Trustee shall comply

with the applicable requirements of this Section 4.7. 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 4.7, 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.

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 in the manner provided in Section 4.7(b) and

shall give notice 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.

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 4.7 (with the

successor being a Person who satisfies the eligibility requirement for a

Delaware Trustee set forth in this Declaration) (the “Successor Delaware Trustee”).

 

(b)           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.

(c)           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.

(d)           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.

(e)           Any successor Delaware Trustee shall file an amendment to the Certificate of Trust

with the Delaware Secretary of State identifying the name and principal place

of business of such Delaware Trustee in the State of Delaware.

Section 4.8             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

Trustees shall be conclusive evidence of the existence of such vacancy. The

vacancy shall be filled with a Trustee appointed in accordance with Section

4.7.

Section 4.9             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 4.7, 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 4.10           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. 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 a

Quorum is present, or without a meeting by the unanimous written consent of the

Trustees or the Administrators. Meetings of the Trustees and the Administrators

together shall be held from the time to time upon the call of any Trustee or

Administrator.

Section 4.11           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 contemplated in Section 2.6; and

(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 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.

Section 4.12           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,

provided such Person shall be otherwise qualified and eligible under this

Article, provided, further, that such Person shall file an amendment to the

Certificate of Trust with the Delaware Secretary of State as contemplated in

Section 4.7(e) without the execution or filing of any paper or any further act

on the part of any of the parties hereto.

 

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 Interest or

Deferred Interest) and/or principal on 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 (a

“Distribution”) of the Payment Amount to Holders.

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 substantially in the form of Exhibit A-l representing

undivided beneficial interests in the assets of the Trust having such terms as

are set forth in Annex I (the “Capital Securities”) and one series of common

securities representing undivided beneficial interests in the assets of the

Trust 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 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 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; and any Certificate may be signed on

behalf of the Trust by such person who, at the actual date of execution of such

Security, 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 authenticated by the

manual signature of an Authorized Officer of the Institutional Trustee. Such

signature shall be conclusive evidence that the Capital Security has been authenticated

under this Declaration. Upon written order of

the Trust signed by one Administrator, the Institutional Trustee shall

authenticate the Capital Securities for original issue. The Institutional

Trustee may appoint an authenticating agent that is a U.S. Person acceptable to

the Trust to authenticate the Capital Securities. A Common Security need not be

so authenticated.

 

(c)           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.

(d)           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.

(e)           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 and Registrar. The Trust shall maintain in New York, New York, an office or agency

where the Securities may be presented for payment (the “Paying Agent”), and 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 for the purpose of registering Securities and

transfers and exchanges of Securities, such 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 or 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. 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. The Institutional Trustee or any of its Affiliates in the

United States may act as Paying Agent, Transfer Agent or Registrar.

Section 6.3             Form

and Dating. The Capital

Securities and the Institutional Trustee’s certificate of authentication

thereon shall be substantially in the form of Exhibit A-l, and the Common

Securities shall be 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. The 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-l to the Institutional Trustee in writing. Each Capital Security shall be

dated the date of its authentication. The terms and provisions of the

Securities set forth in Annex I and the forms of Securities set forth in

Exhibits A-l 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 this Declaration, expressly

agree to such terms and provisions and to be bound thereby. Capital Securities

will be issued only in blocks having a stated liquidation amount of not less

than $1,000.

The Capital Securities are being offered and

sold by the Trust pursuant to the Placement Agreement in definitive form,

registered in the name of the Holder thereof, without coupons with the

Restricted Securities Legend.

Section 6.4             Mutilated,

Destroyed, Lost or Stolen Certificates. If:

(a)           any mutilated

Certificates 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)           there shall be

delivered to the Registrar, the Administrators and the Institutional Trustee

such security or indemnity as may be 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, 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 6.4, the Registrar or the Administrators may

require the payment of a sum sufficient to cover any tax or other governmental

charge that may be imposed in connection therewith. Any duplicate Certificate

issued 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 6.5             Temporary

Securities. Until definitive

Securities are ready for delivery, the Administrators may prepare and, in the

case of the Capital Securities, the Institutional Trustee shall authenticate,

temporary Securities. Temporary Securities shall be substantially in form of

definitive Securities but may have variations that the Administrators consider

appropriate for temporary Securities. Without unreasonable delay, the

Administrators shall prepare and, in the case of the Capital Securities, the

Institutional Trustee shall authenticate definitive Securities in exchange for

temporary Securities.

Section 6.6             Cancellation. The Administrators at any time may deliver Securities to the

Institutional Trustee for cancellation. The Registrar shall forward to the

Institutional Trustee any Securities surrendered to it for registration of

transfer, redemption or payment. The Institutional Trustee shall promptly

cancel all Securities surrendered for registration of transfer, payment,

replacement or cancellation and shall dispose of such canceled Securities as

the Administrators direct. The Administrators may not issue new Securities to

replace Securities that have been paid or that have been delivered to the

Institutional Trustee for cancellation.

 

Section 6.7             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 preemptive or similar rights and when issued and

delivered to Holders against payment of the purchase price therefore 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,

the Debenture Trustee fails or the holders of not less than 25% in principal

amount of the outstanding Debentures fail to declare the principal of all of

the Debentures to be immediately due and payable, the Holders of at least 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.

At any time after a declaration of

acceleration with respect to the Debentures has been made and before a judgment

or decree for payment of the money due has been obtained by the Debenture

Trustee as provided in the Indenture, if the Institutional Trustee, subject to

the provisions hereof, fails to annul any such declaration and waive such

default, the Holders of at least 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 declaration 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)           the principal of

(and premium, if any, on) any Debentures that have become due otherwise than by

such declaration of 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, 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 nonpayment of

the principal of the Debentures that has become due solely by such

acceleration, have been cured or waived as provided in Section 5.07 of the

Indenture.

 

The Holders of at least 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 in the payment of principal or interest (unless

such default or Event of Default has been cured and a sum sufficient to pay all

matured installments of interest 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.

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 6.7.

(c)           Except as otherwise

provided in paragraphs (a) and (b) of this Section 6.7, the Holders of at least

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 Trust

Agreement, 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 July 25, 2036, 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

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;

(iv)          the entry of a decree of judicial dissolution of any Holder of the

Common Securities, the Sponsor, the Trust or the Debenture Issuer;

(v)           when all of the Securities shall have been called for 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 Section 3808 of the Business 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) Where Capital Securities are presented to the Registrar or a

co-registrar with a request to register a transfer or to exchange them for an

equal number of Capital Securities represented by different certificates, the

Registrar shall register the transfer or make the exchange if its requirements

for such transactions are met. To permit registrations of transfer and

exchanges, the Trust shall issue and the Institutional Trustee shall

authenticate Capital Securities 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

Securities; provided, however, that any permitted successor of the Sponsor

under the Indenture that is a U.S. Person 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 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 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 for the registration of Securities and of transfers of Securities,

which will be effected without charge but only upon payment (with such

indemnity as the Registrar may require) in respect of any tax or other

governmental charges that may be imposed in relation to it. Upon surrender for

registration of transfer of any Securities, the Registrar shall cause one or

more new Securities to be issued in the name of the designated transferee or

transferees. Any Security issued upon any registration of transfer or exchange

pursuant to the terms of this Declaration shall evidence the same Security and

shall be entitled to the same benefits under this Declaration as the Security

surrendered upon such registration of transfer or exchange. Every Security

surrendered for registration of transfer shall be accompanied by a written

instrument of transfer in form similar to Exhibits B and C satisfactory to the

Registrar duly executed by the Holder or such Holder’s attorney duly authorized

in writing. Each Security surrendered for registration of transfer shall be

canceled by the Institutional Trustee pursuant to Section 6.6. A transferee of

a Security shall be entitled to the rights and subject to the obligations of a

Holder hereunder upon the receipt by such transferee of a Security. By

acceptance of a Security, each 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, 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)           General. The Capital Securities shall bear the Restricted Securities Legend,

which shall not be removed unless there is delivered to the Trust such

satisfactory evidence, which may include an opinion of counsel licensed to

practice law in the State of New York, as may be reasonably required by the

Trust, that neither the 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 that do not bear

the legend.

(b)           Transfer and Exchange of Capital Securities. When Capital Securities are presented to the Registrar (x) to

register the transfer of such Capital Securities, or (y) to exchange such

Capital Securities for an equal number of Capital Securities of another number,

the Registrar shall register the transfer or make the exchange as requested if

its reasonable requirements for such transaction are met; provided, however,

that the Capital Securities surrendered for registration of transfer or

exchange shall be duly endorsed or accompanied by a written instrument of

transfer in form reasonably satisfactory to the Trust and the Registrar, duly

executed by the Holder thereof or his attorney duly authorized in writing and (i)

if such Capital Securities are being transferred to a QIB, accompanied by a

certificate of the transferee substantially in the form set forth as Exhibit C

hereto or (ii) if such Capital Securities are being transferred otherwise than

to a QIB, accompanied by a certificate of the transferee substantially in the

form set forth as Exhibit B hereto.

 

(c)           Legend.

Except as permitted by Section 8.2(a), each Capital Security shall bear a

legend (the “Restricted Securities Legend”) in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER

APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR

PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,

ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR

UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION

REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS

ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY

ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER

THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A

“QUALIFIED INSTITUTIONAL BUYER’ AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS

OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM

NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C)

TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (l), (2),

(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY

FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR

INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION

WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D) PURSUANT TO

ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER’S AND THE TRUST’S RIGHT PRIOR

TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE

THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION

SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A

COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE

HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE

HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,

INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I

OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”),

OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),

(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY

REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING “PLAN

ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,

UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE

UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,

95-60, 91-38, 90-l OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND

HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION

4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR

HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE

REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN

EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO

WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING

ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY

USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,

OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION

406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE

STATUTORY OR ADMINISTRATIVE EXEMPTION.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER

WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER

INFORMATION AS MAY BE REQUIRED BY THE 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 FOR

ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON

THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO

INTEREST WHATSOEVER IN THIS SECURITY.

(d)           Minimum Transfers. 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 voided 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 Certificate shall be

registered on the books and records of the Trust as the sole holder of such

Certificate and of the Securities represented by such Certificate 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 Certificate or in the Securities represented by such

Certificate on the part of any 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.

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 Business Trust Act, the Holders of the

Capital 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.

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 shall be liable for any such loss, damage or claim

incurred by reason of such Indemnified Person’s negligence or willful

misconduct with respect to such acts or omissions.

(b)           An Indemnified Person shall be fully

protected in relying in good faith upon the records of the 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 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 full 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 he 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 him in connection with such action, suit or proceeding if he acted

in good faith and in a manner he 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 his 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 he 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 his conduct was unlawful.

(ii)           The Sponsor shall

indemnify, to the full 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 he is or was an Indemnified Person

against expenses (including attorneys’ fees and expenses) actually and

reasonably incurred by him in connection with the defense or settlement of such

action or suit if he acted in good faith and in a manner he 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 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, he shall be indemnified, to the full extent permitted

by law, against expenses (including attorneys’ fees and expenses) actually and

reasonably incurred by him 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 he 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 he 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 (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 did

not believe to be in or not opposed to the best

interests of the Trust, or, with respect to any criminal proceeding, that such

Indemnified Person believed or had reasonable cause to believe his conduct was

unlawful. In no event shall any advance be made in instances where the

Administrators, independent legal counsel or the Common Security Holder

reasonably determine that such Person deliberately breached his 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 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 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 or willful

misconduct 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 9.4 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 his official capacity

and as to action in another capacity while holding such office. All rights to

indemnification under this Section 9.4 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 9.4 is in effect. Any repeal or modification of

this Section 9.4 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 him and incurred by him in any such capacity, or arising out

of his status as such, whether or not the Sponsor would have the power to

indemnify him against such liability under the provisions of this Section 9.4.

(e)           For purposes of this Section 9.4, 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 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 9.4 with respect to the resulting or surviving entity as he 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 9.4 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.

 

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 9.4 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

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. The Sponsor agrees:

(a)           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

(b)           except as otherwise expressly provided herein, to reimburse the

Trustees upon request for all reasonable expenses, disbursements and advances

incurred or made by the Trustees in accordance with any provision of this

Declaration (including the reasonable compensation and the expenses and

disbursements of their respective agents and counsel), except any such expense,

disbursement or advance as may be attributable to its negligence or willful

misconduct.

The provisions of this Section 9.6 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 section 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 Administrators

shall either (i) cause each Form 10K and Form 1OQ prepared by the Sponsor and

filed with the Securities and Exchange Commission in accordance with the

Securities Exchange Act of 1934 to be delivered to each Holder of Securities,

within 90 days after the filing of each Form 10K and within 30 days after the

filing of each Form 1OQ or (ii) cause to be prepared at the principal office of

the Trust in the United States, as defined for purposes of Treasury regulations

section 301.7701-7, and delivered to each of the Holders 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 related statements of income or loss.

(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 section 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 the only Holder of the Capital Securities is MM Community

Funding Ltd, the Administrators will cause the Sponsor’s reports on Form FR Y-9C,

FR Y-9LP and FR Y-6 to be delivered to the Holder promptly following their

filing with the Federal Reserve.

Section 10.3           Banking. The Trust shall maintain one or more bank accounts in the United

States, as defined for purposes of Treasury regulations section 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 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 over-withholding,

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 Administrator, the

Administrator, and

(iv)          the Holder 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 

 

(B)           an opinion of counsel (who may be counsel to the Sponsor or the Trust)

that such amendment is permitted by, and conforms to, the terms of this

Declaration (including the terms of the Securities); 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 Debentures as “Tier 1 Capital” for purposes of the

capital adequacy guidelines of the Federal Reserve.

(c)           Except as provided in

Section 11.1 (d), (e) or (h), 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 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 such payment on or after such date.

(e)           Section 9.1(b) and

9.1(c) and this Section 11.1 shall not be amended without the consent of all of

the Holders of the Securities.

(f)            Article III shall not

be amended without the consent of the Holders of a Majority in liquidation

amount of the Common Securities.

(g)           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.

(h)           This Declaration may

be amended by the Institutional Trustee and the Holder of a Majority in

liquidation amount of the Common Securities without the consent of the Holders

of the Capital Securities to:

(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;

(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) which amendment does not have a material adverse effect

on the right, preferences or privileges of the Holders of Securities;

provided, however, that

no such modification, elimination or addition referred to in clauses (i), (ii),

(iii) or (iv) shall adversely affect the powers, preferences or special rights

of Holders of Capital Securities.

Section 11.2           Meetings

of the Holders of Securities; Action by Written Consent.

(a)           Meetings of the

Holders of any class of Securities may be called at any time by the

Administrators (or as provided in the terms of the Securities) to consider and

act on any matter on which Holders of such class of Securities are entitled to

act under the terms of this Declaration, the terms of the 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 class if directed to do so by the Holders of at least 10% in

liquidation amount of such class of Securities. Such direction shall be given

by delivering to the Administrators one or more calls in a writing stating that

the signing Holders of the Securities wish to call a meeting and indicating the

general or specific purpose for which the meeting is to be called. Any Holders

of the 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 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 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; and

(iii)          unless the Business 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 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 section 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 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 with trust powers,

duly organized, validly

existing and in good standing under the laws of the United States 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 execution,

delivery and performance by the Institutional Trustee of this Declaration has

been duly authorized by all necessary corporate action on the part of the

Institutional Trustee. This Declaration has been duly executed and delivered by

the Institutional Trustee, and it 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 (regardless of whether considered in a proceeding

in equity or at law);

(c)           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

(d)           no consent, approval

or authorization of, or registration with or notice to, any state or federal

banking authority 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. This Declaration has been duly executed and

delivered by the Delaware Trustee, and it 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 other similar laws affecting creditors’ rights

generally and to general principles of equity (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 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 Section 3807 of the

Business 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:

National Mercantile Capital Trust I 

c/o National Mercantile Bancorp 

1840 Century Park East 

Los Angeles, California 90067 

Attention: Scott A. Montgomery 

Telecopy: 3 1 O-20 l-0629

 

(b)           if given to the

Delaware Trustee, at the mailing address set forth below (or such other address

as Delaware Trustee may give notice of to the Holders of the Securities):

The Bank of New York (Delaware) 

White Clay Center, Route 273 

Newark, Delaware 197 11 

Attention: Corporate Trust Administration 

Telecopy: 302-283-8279

 

(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):

The Bank of New York

101 Barclay Street, Floor 21 W 

New York, NY 10286

Attention: Corporate Trust Administration 

Telecopy: 212-815-5915

 

(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 give notice of to the Trust):

 

National Mercantile Bancorp 

1840 Century Park East 

Los Angeles, California 90067 

Attention: Scott A. Montgomery 

Telecopy: 3 1 O-20 l-0629

 

(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. 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 State 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.

Each of the Sponsor and the Holder of the

Common Securities irrevocably consents to the service of process on it in any

such suit, action or proceeding in any such court 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.

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.

 

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.

 

IN WITNESS WHEREOF, the undersigned have caused these presents to be

executed as of the day and year first above written.

	

   

  	

  THE BANK OF NEW

  YORK (DELAWARE)

  
	

   

  	

  as Delaware Trustee

  
	

   

  	

   

  
	

   

  	

  By:

  	

    /s/  James Longshaw

  
	

   

  	

  Name: JAMES LONGSHAW, SVP

  
	

   

  	

  Title:

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THE BANK OF NEW YORK

  
	

   

  	

  as Institutional Trustee

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

    /s/  Mary LaGumina

  
	

   

  	

  Name: Mary

  LaGUMINA

  
	

   

  	

  Title: Vice

  President

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  NATIONAL

  MERCANTILE BANCORP

  
	

   

  	

  as Sponsor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ 

  Scott A. Montgomery

  
	

   

  	

  Name: Scott A.

  Montgomery

  
	

   

  	

  Title: President

  and Chief Executive Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ 

  ILLEGIBLE

  
	

   

  	

  Administrator

  
	

   

  	

   

  
	

   

  	

  By:

  	

    /s/ 

  Scott A. Montgomery

  
	

   

  	

  Administrator

  

 

 

ANNEX I

TERMS OF

FIXED RATE MMCapSSM

FIXED RATE COMMON SECURITIES

Pursuant to Section 6.1 of the Amended and Restated Declaration of

Trust, dated as of July 16, 2001 (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 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. 15,000 Capital

Securities of National Mercantile Capital Trust I (the “Trust”), with an

aggregate stated liquidation amount with respect to the assets of the Trust of

Fifteen Million Dollars ($15,000,000) and a stated 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 “Fixed Rate MMCapSSM” (the “Capital Securities”). The Capital Security Certificates

evidencing the Capital Securities shall be substantially in the form of Exhibit

A-l 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. 464 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 stated

liquidation amount with respect to the assets of the Trust of Four Hundred

Sixty-Four Dollars ($464,000) and a stated liquidation amount with respect to

the assets of the Trust of $1,000 per Common Security.

2.             Distributions.

(a) Distributions payable on each Security will be payable at a fixed annual

rate equal to 10.25% (the “Coupon Rate”) of the stated liquidation amount of

$1,000 per Security, such rate being the rate of interest payable on the

Debentures to be held by the Institutional Trustee. Except as set forth below

in respect of an Extension Period, Distributions in arrears for more than one

semi-annual period will bear interest thereon compounded semi-annually at the

Coupon Rate (to the extent permitted by applicable law). The term

“Distributions” as used herein includes cash distributions and any such

compounded distributions payable 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 available in the Property Account therefor. The amount of

Distributions payable for any period will be computed for any full semi-annual

period on the basis of a 360-day year of twelve 30-day months.

(b)           Distributions on the Securities will be cumulative, will accrue from

the date of original issuance, and will be payable, subject to extension of

distribution payment periods as described herein, semi-annually in arrears on

January 25th and July 25th of each year, commencing on January 25,2002 (each, a “Distribution

Payment Date”). 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 10 consecutive semi-annual periods (each, an “Extension Period”) at

any time and from time to time on the Debentures, subject to the conditions

described below, during which Extension Period no interest shall be due and

payable (except any Additional Interest that may be due and payable) although

such interest would continue to accrue on the Debentures, and interest will

accrue on such Deferred Interest at an annual rate equal to 10.25%, compounded

semi-annually to the extent permitted by law during any Extension Period. No

Extension Period may end on a date other than a Distribution Payment Date. At

the end of any such Extension Period the Debenture Issuer shall pay all

Deferred Interest; provided, however, that no Extension Period may extend

beyond the Maturity Date and provided further, that, during any such 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 or (ii) make any

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

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

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

acquisitions of shares of capital stock of the Debenture Issuer in connection

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

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

in connection with a dividend reinvestment or stockholder stock purchase plan

or in connection with the issuance of capital stock of the 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 to such

stock). Prior to the termination of any Extension Period, the Debenture Issuer

may further extend such period, provided that such period together with all

such previous and further consecutive extensions thereof shall not exceed 10

consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the

termination of any Extension Period and upon the payment of all Deferred

Interest, the Debenture Issuer may commence a new Extension Period, subject to

the foregoing requirements. No interest or Deferred Interest shall be due and

payable during an Extension Period, except at the end thereof, but each

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

such Extension Period shall bear Deferred Interest. If Distributions are

deferred, the Distributions due shall be paid on the date that the related

Extension Period terminates, or, if such date is not a Distribution Payment

Date, on the immediately following Distribution Payment Date, to Holders of the

Securities as they appear on the books and records of the Trust on the record

date immediately preceding such date. Distributions on the Securities must be

paid on the dates payable (after giving effect to any Extension Period) to the

extent that the Trust has funds available for the payment of such distributions

in the Property Account of the Trust. The Trust’s funds available for

Distribution 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.

(c)           Distributions on the Securities will be payable to the Holders thereof

as they appear on the books and records of the Trust on the relevant record

dates. The relevant record dates shall be selected by the Administrators, which

dates shall be 15 days before the relevant 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 relevant record date, and such defaulted Distribution

will instead be payable to the Person in whose name such Securities are

registered on the special record date or other specified date determined in

accordance with the Indenture. If any date on which Distributions are payable

on the Securities is not a Business Day, then payment of the Distribution

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

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

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

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

with the same force and effect as if made on such payment date.

(d)           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.

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”) other than in connection with a redemption of

the Debentures, the Holders of the Securities will be entitled to receive out

of the assets of the Trust 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), distributions equal to the

aggregate of the stated liquidation amount of $1,000 per Security plus accrued

and unpaid Distributions thereon to the date of payment (such amount being the

“Liquidation Distribution”), unless in connection with such Liquidation, the

Debentures in an aggregate stated principal amount equal to the aggregate

stated liquidation amount of such Securities, with an interest rate equal to

the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal

to the accrued and unpaid Distributions on, and having the same record date as, 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

Business Trust Act, shall be distributed on a Pro Rata basis to the Holders of

the Securities in exchange for such Securities.

 

The Sponsor, as the Holder of all of the Common Securities, has the

right at any time to dissolve the Trust (including without limitation upon the

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

Event), subject to the receipt by the Debenture Issuer 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 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 stated liquidation amount thereof.

The Trust shall dissolve on the first to occur of (i) July 25, 2036,

the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect

to the Sponsor, 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 of 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 to the

Holders of the Securities of the Debentures, upon exercise of the right of the

Holder 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 the

Sponsor or the Trust, or (vi) when all of the Securities shall have been called

for redemption and the amounts necessary for redemption thereof shall have been

paid to the Holders in accordance with the terms of the Securities. 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.

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 Trustees of the Trust as expeditiously as such Trustees

determine to be possible by distributing, after satisfaction of liabilities to

creditors of the Trust, to the Holders of the Securities, the Debentures on a

Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such

distribution is determined by the Institutional Trustee not to be practical, in

which event such Holders will be entitled to receive out of the assets of the

Trust available for distribution to the Holders, after satisfaction of

liabilities of creditors of the Trust to the extent not satisfied by the

Debenture Issuer, an amount equal to the Liquidation Distribution. An early

Liquidation of the Trust pursuant to clause (iv) above shall occur if the

Institutional Trustee determines that such Liquidation is possible by

distributing, after satisfaction of liabilities to creditors of Trust, to the

Holders of the Securities on a Pro Rata basis, the Debentures, and such

distribution occurs.

If, upon any such Liquidation the Liquidation Distribution can be paid

only in part because the Trust has insufficient assets available to pay in full

the aggregate Liquidation Distribution, then the amounts payable directly by

the Trust on such Capital 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, the Capital Securities shall have a preference over the

Common Securities with regard to such distributions.

 

Upon any such 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 dissolution

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 stated liquidation

amount of, with an interest rate identical to the distribution rate of, and

bearing accrued and unpaid interest equal to accrued and unpaid distributions

on, the 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 of interest or principal 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 under the Capital Securities or

the Common Securities, as applicable, 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 July 25, 2031. The Debentures may be

redeemed by the Debenture Issuer, in whole or in part, on any January 25th or July 25th on or after July 25,

2006, at the Redemption Price, upon not less than 30 days nor more than 60

day’s 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 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’ 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 is subject to the Debenture

Issuer 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 “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) 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 more than a

de minimis amount of other taxes, duties 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 the occurrence of a change in law or regulation or

written change in interpretation or application of law or regulation by any

legislative body, court, governmental agency or regulatory authority, there is

more than an insubstantial risk that the Trust is or, within 90 days of the

date of such opinion will be, considered an “investment company” that is

required to be registered under the Investment Company Act of 1940, as amended,

which change or prospective change becomes effective or would become effective,

as the case may be, on or after the date of the original issuance of the

Debentures.

“Capital Treatment 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 the occurrence of any amendment to, or change in, the

laws, rules or regulations of the United States or any political subdivision

thereof or therein, or as the result of any official or administrative

pronouncement or action or decision interpreting or applying such laws, rules

or regulations, which amendment or change is effective or which pronouncement,

action or decision is announced on or after the date of original issuance of

the 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 an amount equal to the aggregate Liquidation Amount of the Capital

Securities as “Tier 1 Capital” (or the then equivalent thereof) for purposes of

the capital adequacy guidelines of the Federal Reserve, as then in effect and

applicable to the Debenture Issuer; provided, however, that the distribution of

the Debentures in connection with the 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.

“Special Event” means any of a Capital Treatment Event, a Tax Event or

an Investment Company Event.

“Redemption Price” means the price set forth in the following table for

any Redemption Date or Special Redemption Date that occurs within the

twelve-month period beginning in the relevant date indicated below, expressed

in percentage of the principal amount of the Debentures being redeemed:

 

	

  Year Beginning

  	

   

  	

  Percentage

  	

   

  
	

  July 25, 2006

  	

   

  	

  107.6875

  	

  %

  
	

  July 25, 2007

  	

   

  	

  106.1500

  	

  %

  
	

  July 25, 2008

  	

   

  	

  104.6125

  	

  %

  
	

  July 25, 2009

  	

   

  	

  103.0750

  	

  %

  
	

  July 25, 2010

  	

   

  	

  101.5375

  	

  %

  
	

  July 25, 201l and

  after

  	

   

  	

  100.0000

  	

  %

  

 

plus accrued and

unpaid interest on such Debentures to the Redemption Date or, in the case of a

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

Date.

“Special Redemption

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

greater of (a) 100% of the principal amount of the Debentures being redeemed

pursuant to Section 10.02 of the Indenture or (b) as determined by a Quotation

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

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

25, 2006 together with the present value of scheduled payments of interest over

the Remaining Life of such Debentures, discounted to the Special Redemption

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

30-day months) at the Treasury Rate plus 0.50%, plus, in the case of either (a)

or (b), accrued and unpaid interest on such Debentures to the Special

Redemption Date and (2) if the Special Redemption Date is on or after July 25,

2006, the Redemption Price for such Special Redemption Date.

“Comparable

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

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

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

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

issues of corporate debt securities of comparable maturity to the Remaining

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

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

most closely corresponding United States Treasury securities shall be used as

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

extrapolated on a straight-line basis, rounding to the nearest month using such

securities.

“Comparable

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

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

lowest such Reference Treasury Dealer Quotations, or (b) if the Quotation Agent

obtains fewer than five such Reference Treasury Dealer Quotations, the average

of all such Quotations.

“Primary Treasury Dealer” shall mean a primary United States Government

securities dealer in New York City.

“Quotation Agent” means Salomon Smith Barney Inc. and its successors; provided, however, that if the

foregoing shall cease to be a Primary Treasury Dealer, the Debenture Issuer

shall substitute therefore another Primary Treasury Dealer.

“Redemption Date”

shall mean the date fixed for the redemption of Capital Securities, which shall

be any January 25th or July 25th commencing on July

25, 2006.

“Reference Treasury

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

Dealer selected by the Debenture Trustee after consultation with the Debenture

Issuer.

“Reference Treasury

Dealer Quotations” means, with respect to each Reference Treasury Dealer and

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

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

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

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

time, on the third Business Day preceding such Special Redemption Date.

“Remaining Life”

means, with respect to any Debenture, the period from the Special Redemption

Date for such Debenture to July 25, 2006.

“Treasury Rate”

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

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

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

publication which is published weekly by the Federal Reserve and which

establishes yields on actively traded United States Treasury securities

adjusted to constant maturity under the caption “Treasury Constant Maturities”,

for the maturity corresponding to the Remaining Life (if no maturity is within

three months before or after the Remaining Life, yields for the two published maturities

most closely corresponding to the Remaining Life shall be determined and the

Treasury Rate shall be interpolated or extrapolated from such yields on a

straight-line basis, rounding to the nearest month) or (ii) if such release (or

any successor release) is not published during the week preceding the

calculation date or does not contain such yields, the rate per annum equal to

the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,

calculated using a price for the Comparable Treasury Issue (expressed as a

percentage of its principal amount) equal to the Comparable Treasury Price for

such Special Redemption Date. The Treasury Rate shall be calculated on the

third Business Day preceding the Special Redemption Date.

(b)           Upon the repayment in full at maturity or redemption in whole or in

part of the Debentures (other than following the distribution of the Debentures

to the Holders of the Securities), the proceeds from such repayment or payment

shall concurrently be applied to redeem Pro Rata at the applicable Redemption

Price, Securities having an aggregate liquidation amount equal to the aggregate

principal amount of the Debentures so repaid or redeemed; provided, however,

that holders of such Securities shall be given not less than 30 nor more than

60 days’ notice of such redemption (other than at the scheduled maturity of the

Debentures).

 

(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.

(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 semi-annual Distribution periods terminating on or

before the date of redemption.

(e)           Redemption or Distribution

Procedures.

(i)            Notice of any redemption of, or 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 fixed for

redemption or exchange thereof which, in the case of a redemption, will be the

date fixed for 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 Trust. 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 Securities are to be redeemed, the Securities to

be redeemed shall be redeemed Pro Rata from each Holder of Capital Securities.

(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 as set out in this Section 4 (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 pay the relevant

Redemption Price 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 redemption date. 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 called for redemption and all rights of Holders of such

Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the

applicable Redemption Price specified in Section

4(a), but without interest on such Redemption Price. If any date fixed for

redemption of Securities is not a Business Day, then payment of any such

Redemption Price payable on such date will be made on the next succeeding day

that is a Business Day (and without any interest or other payment in respect of

any such delay) except that, if such Business Day falls in the next calendar

year, such payment will be made on the immediately preceding Business Day, in

each case with the same force and effect as if made on such date fixed for

redemption. If payment of the Redemption Price in respect of any Securities is

improperly withheld or refused and not paid either by the Trust or by the

Debenture Issuer as guarantor pursuant to the Guarantee, Distributions on such

Securities will continue to accrue at the then applicable rate from the

original redemption date to the actual date of payment, in which case the

actual payment date will be considered the date fixed for redemption for

purposes of calculating the Redemption Price. 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), and provided that the

acquirer is not the Holder of the Common Securities or the obligor under the

Indenture, the Sponsor or any of its subsidiaries 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 at least 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 the right to direct

the Institutional Trustee, as holder of the Debentures, to (i) exercise the

remedies available under the Indenture as the holder of the Debentures, (ii)

waive any past default that is waivable under the Indenture, or (iii) exercise

any right to rescind or annul a declaration that the principal of all the

Debentures shall be due and payable or (iv) consent 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 Indenturewould 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 at least the proportion in

liquidation amount of the Capital Securities outstanding which the relevant

Super Majority represents of the 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 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 principal on the Debentures on the date the interest

or principal is payable (or in the case of redemption, the redemption date),

then a Holder of record 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

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) or (iii) 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.

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, 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 the consent of a Super

Majority, the Institutional Trustee may only give such consent at the written

direction of the Holders of at least the proportion in liquidation amount of

such Securities outstanding which the relevant Super Majority represents of the

aggregate principal amount of the Debentures outstanding. The Institutional

Trustee shall not take any such action in accordance with the written

directions of the Holders of the Securities 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 record

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.

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 Holders of the Common Securities are entitled, in accordance with

Article IV of the Declaration, to vote to appoint, remove or replace any

Administrators.

(c)           Subject to Section 6.7 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 Holders of a Majority in liquidation amount 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) waive any past default and its

consequences that is waivable under the Indenture or (iii) exercise any right

to rescind or annul a declaration that the principal of all the Debentures

shall be due and payable, provided, however, that, where a consent or action

under the Indenture would require a Super Majority, the Institutional Trustee

may only give such consent or take such action at the written direction of the

Holders of at least the proportion in liquidation amount of the Common

Securities which the relevant Super Majority represents of the aggregate

principal amount of the Debentures outstanding. 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, any 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 Holders 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

Holders of the Common 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 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 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 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. (a) In addition to any requirements under

Section 11 .I 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 at least 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 the affected 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 a Majority in liquidation amount of such

class of Securities.

(b)          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 at least the proportion in

liquidation amount of the Securities which the relevant Super Majority

represents of the aggregate principal amount of the Debentures outstanding.

(c)          Notwithstanding the foregoing, no amendment or modification may be made

to a 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.

(d)          Notwithstanding any provision of the Declaration, the right of any

Holder of the Capital Securities to receive payment of distributions and other

payments upon redemption 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 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.  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

Redemption Price of, any Common Security, and no other payment on account of redemption,

liquidation or other acquisition of Common Securities, shall be made unless

payment in full in cash of all accumulated and unpaid Distributions on all

outstanding Capital Securities for all distribution periods terminating on or

prior thereto, or in the case of payment of the Redemption Price the full

amount of such Redemption Price on all outstanding Capital Securities then

called for redemption, 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 all Distributions on, or the Redemption Price

of, the Capital Securities 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, including the

subordination provisions therein and to the provisions of the Indenture.

11.          No Preemptive Rights.  The Holders of the Securities shall have no

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.

 

EXHIBIT

A-l

FORM OF CAPITAL SECURITY

CERTIFICATE

[FORM OF FACE OF

SECURITY]

THIS SECURITY HAS

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE

SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN

MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE

DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS

EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES

ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL

OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE

TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A

PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED

IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A

QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS

BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN “ACCREDITED INVESTOR” WITHIN THE

MEANING OF SUBPARAGRAPH (a) (l), (2), (3) OR (7) OF RULE 501 UNDER THE

SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE

ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A

VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION

OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION

REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER’S AND THE

TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C)

OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR

OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE

DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER

OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE

FOREGOING RESTRICTIONS.

 

THE HOLDER OF THIS

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

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

ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE

CODE OF 1986, AS AMENDED (THE “CODE”), (EACH A “PLAN”), OR AN ENTITY WHOSE

UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN

THE ENTITY AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR

HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS

ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR

PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-l OR 84-14 OR

ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS

NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT

TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY

INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING

THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING

OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS

APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT

PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE

BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT

RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975

OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE

EXEMPTION.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO

THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY

BE REQUIRED BY THE 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

SUCHPURPORTEDTRANSFEREESHALLBEDEEMEDNOTTOBETHEHOLDEROF THIS SECURITY FOR ANY

PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS

SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST

WHATSOEVER IN THIS SECURITY.

 

 

	

  Certificate

  Number: ________

  	

   

  	

  Number of Capital Securities: ________

  

 

CUSIP NO [________]

Certificate Evidencing Capital Securities of

National Mercantile Capital Trust I

Fixed Rate MMCapSSM

(liquidation amount $1,000 per Capital

Security)

National Mercantile

Capital Trust I, a statutory business trust created under the laws of the State

of Delaware (the “Trust”), hereby certifies that [____________] (the “ Holder ”

) is the registered owner of securities of the Trust representing undivided

beneficial interests in the assets of the Trust, designated the Fixed Rate

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 designation, rights, privileges, restrictions, preferences and

other terms and provisions of the Capital Securities represented hereby are

issued pursuant to, and shall in all respects be subject to, the provisions of

the Amended and Restated Declaration of Trust of the Trust dated as of July 16,

2001, among Scott A. Montgomery and David R. Brown, as Administrators, The Bank

of New York (Delaware), as Delaware Trustee, The Bank of New York, as Institutional

Trustee, National Mercantile Bancorp, 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 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 Trust at its principal place of business.

Upon receipt of

this Security, the Holder is bound by the Declaration and is entitled to the

benefits thereunder.

By acceptance of

this Security, the Holder agrees to treat, for United States federal income tax

purposes, the Debentures as indebtedness and the Capital Securities as evidence

of beneficial ownership in the Debentures.

This Capital

Security is governed by, and construed in accordance with, the laws of the

State of Delaware, without regard to principles of conflict of laws.

 

 

                IN WITNESS WHEREOF, the Trust has duly

executed this certificate.

 

	

   

  	

  NATIONAL MERCANTILE

  CAPITAL TRUST I

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  Administrator

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Dated:

  	

   

  
	

   

  

 

CERTIFICATE OF

AUTHENTICATION

 

                                This is one of the Capital Securities

referred to in the within-mentioned Declaration.

 

 

 

	

   

  	

  THE BANK OF NEW YORK, 

  as the Institutional Trustee

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Authorized Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  Dated:

  	

   

  

 

 

[FORM OF REVERSE OF SECURITY]

Distributions

payable on each Capital Security will be payable at a fixed annual rate of

10.25% (the “Coupon Rate”) of the stated liquidation amount of $1,000 per

Capital Security, such rate being the rate of interest payable on the

Debentures to be held by the Institutional Trustee. Except as set forth below

in respect of an Extension Period, Distributions in arrears for more than one

semi-annual period will bear interest thereon compounded semiannually at the

Coupon Rate (to the extent permitted by applicable law).  The term “Distributions” as used herein

includes cash distributions, any such compounded interest and any Additional

Interest 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 available in the Property Account therefor. The amount of

Distributions payable for any period will be computed for any full semiannual

Distribution period on the basis of a 360-day year of twelve 30-day months.

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 semi-annually in arrears on January 25th and July 25th of each year,

commencing on January 25, 2002 (each, a “Distribution Payment Date”). 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

10 consecutive semi-annual periods (each, an “Extension Period”) at any time

and from time to time on the Debentures, subject to the conditions described

below, during which Extension Period no interest shall be due and payable

(except any Additional Interest that may be due and payable) although such

interest would continue to accrue on the Debentures, and Interest will accrue

on such Deferred Interest, at an annual rate equal to 10.25%, compounded

semi-annually to the extent permitted by law during any Extension Period. No

Extension Period may end on a date other than a Distribution Payment Date. At

the end of any such Extension Period the Debenture Issuer shall pay all

Deferred Interest then accrued and unpaid on the Debentures; provided however,

that no Extension Period may extend beyond the Maturity Date. Prior to the

termination of any Extension Period, the Debenture Issuer may further extend

such period, provided that such period together with all such previous and

further consecutive extensions thereof shall not exceed 10 consecutive

semi-annual periods, or extend beyond the Maturity Date. Upon the termination

of any Extension Period and upon the payment of all Deferred Interest, the

Debenture Issuer may commence a new Extension Period, subject to the foregoing

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

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

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

Period shall bear Deferred Interest. If Distributions are deferred, the

Distributions due shall be paid on the date that the related Extension Period

terminates, or, if such date is not a Distribution Payment Date, on the

immediately following Distribution Payment Date, to Holders of the Securities

as they appear on the books and records of the Trust on the record date

immediately preceding such date. Distributions on the Securities must be paid

on the dates payable (after giving effect to any Extension Period) to the

extent that the Trust has funds available for the payment of such distributions

in the Property Account of the Trust. The Trust’s funds available for

Distribution 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.

The Capital

Securities shall be redeemable as provided in the Declaration.

 

ASSIGNMENT

FOR VALUE

RECEIVED, the undersigned assigns and transfers 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 this Capital 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.

 

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.

 

 

	

  Certificate Number: ________

  	

   

  	

  Number of Common Securities: ________

  

 

Certificate Evidencing Common Securities

of

National Mercantile Capital Trust I

National Mercantile

Capital Trust I, a statutory business trust created under the laws of the State

of Delaware (the “Trust”), hereby certifies that [____________] (the “ Holder”)

is the registered owner of common securities of the Trust representing

undivided beneficial interests in the assets of the Trust (the “Common

Securities”). The designation, rights, privileges, restrictions, preferences

and other terms and provisions of the Common Securities represented hereby are

issued pursuant to, and shall in all respects be subject to, the provisions of

the Amended and Restated Declaration of Trust of the Trust dated as of July 16,

2001, among Scott A. Montgomery and David R. Brown, as Administrators, The Bank

of New York (Delaware), as Delaware Trustee, The Bank of New York, as

Institutional Trustee, National Mercantile Bancorp, as Sponsor, and the holders

from time to time of undivided beneficial interest 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 Holder is entitled to the benefits

of the Guarantee 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.

As set forth in the

Declaration, where an Event of Default has occurred and continuing, the rights

of Holders 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.

Upon receipt 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 Common Security is governed by, and construed in accordance with,

the laws of the State of Delaware, without regard to principles of conflict of

laws.

IN WITNESS WHEREOF, the Trust

has executed this certificate this [____]

day of [____], _____.

 

	

   

  	

  NATIONAL

  MERCANTILE CAPITAL TRUST

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  Administrator

  

 

[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 fixed annual rate

of 10.25% (the “Coupon Rate”) of the stated liquidation amount of $1,000 per

Capital Security, such rate being the rate of interest payable on the

Debentures to be held by the Institutional Trustee. Except as set forth below

in respect of an Extension Period, Distributions in arrears for more than one

semi-annual period will bear interest thereon compounded semi-annually at the

Coupon Rate (to the extent permitted by applicable law). The term “Distributions”

as used herein includes cash distributions, any such compounded distribution

and any Additional Interest 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 available in the Property Account therefor. The

amount of Distributions payable for any period will be computed for any full

semi-annual Distribution period on 360-day year of twelve 30-day months.

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 semiannually in arrears on January 25th and July 25th of each year,

commencing on January 25, 2002 (each, a “Distribution Payment Date”). 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

10 consecutive semi-annual periods (each, an “Extension Period”) at any time

and from time to time on the Debentures, subject to the conditions described

below, during which Extension Period no interest shall be due and payable

(except any Additional Interest that may be due and payable). No Extension

Period may end on a date other than a Distribution Payment Date. During an

Extension Period, interest would 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 10.25%, compounded semi-annually from the date such Deferred Interest would

have been payable were it not for the Extension Period to the extent permitted

by law during any Extension Period. At the end of any such Extension Period the

Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the

Debentures; provided, however, that no Extension Period may extend beyond the

Maturity Date. Prior to the termination of any Extension Period, the Debenture

Issuer may further extend such period, provided that such period together with

all such previous and further consecutive extensions thereof shall not exceed

10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon

the termination of any Extension Period and upon the payment of all Deferred

Interest, the Debenture Issuer may commence a new Extension Period, subject to

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

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

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

Period shall bear Deferred Interest. If Distributions are deferred, the

Distributions due shall be paid on the date that the related Extension Period

terminates, or, if such date is not a Distribution Payment Date, on the

immediately following Distribution Payment Date, to Holders of the Securities

as they appear on the books and records of the Trust on the record date

immediately preceding such date. Distributions on the Securities must be paid

on the dates payable (after giving effect to any Extension Period) to the

extent that the Trust has funds available for the payment of such distributions

in the Property Account of the Trust. The Trust’s funds available for

Distribution 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.

The Common Securities shall be redeemable as provided in the

Declaration.

 

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers 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 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 Common

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.

 

EXHIBIT B

FORM OF TRANSFEREE CERTIFICATE

TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS

_________, [     ]

National Mercantile

Bancorp

National Mercantile

Capital Trust I

1840 Century Park

East

Los Angeles, California 90067

Re:          Purchase of $1,000

stated liquidation amount of Fixed Rate MMCapSSM

(the “Capital

Securities”) of National Mercantile Capital Trust I

Ladies and

Gentlemen:

In connection with

our purchase of the Capital Securities we confirm that:

1.            We understand that

the Fixed Rate MMCapSSM (the “Capital Securities”) of National Mercantile Capital Trust I (the

“Trust”) (including the guarantee (the “Guarantee”) of National Mercantile

Bancorp (the “Company”) executed in connection therewith) and the 10.25% Fixed

Rate Junior Subordinated Deferrable Interest Debentures due July 25, 2031 of

the Company (the “Subordinated Debt Securities”) (the Capital Securities, the

Guarantee and the Subordinated Debt Securities together being referred to

herein as “Offered Securities”), 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 Offered

Securities that, if, we decide to offer, sell or otherwise transfer any such

Offered Securities, such offer, sale or 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) to an “accredited investor” with the meaning of subparagraph (a) (I), (2),

(3) or (7) of Rule 501 under the Securities Act that is acquiring Offered 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, or (d)

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. The foregoing restrictions on resale will not

apply subsequent to the date on which, in the written opinion of counsel, the

Capital Securities are not “restricted securities” within the meaning of Rule

144 under the Securities Act. If any resale or other transfer of the Offered

Securities is proposed to be made pursuant to clause (c) or (d) above the

transferor shall deliver a letter from the transferee substantially in the form

of this letter to The Bank of New York as Transfer Agent, which shall provide

as applicable, among other things, that the transferee is an “accredited

investor” within the meaning of subparagraph (a) (l), (2), (3) or (7) of Rule

501 under the Securities Act that is acquiring such Securities for investment

purposes and not for distribution in violation of the Securities Act. We

acknowledge on our behalf and on behalf of any investor account for which we

are purchasing Securities that the Trust and the Company reserve the right

prior to any offer, sale or other transfer pursuant to clause (c) or (d) to

require the delivery of any opinion of counsel, certifications and/or other

information satisfactory to the Trust and the Company. We understand that the

certificates for any Offered Security that we receive will bear a legend

substantially to the effect of the foregoing.

2.            We are an “accredited

investor” with the meaning of subparagraph (a) (l), (2) (3) or (7) 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 Offered Securities for

the 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 Offered

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 Offered

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 Offered Securities, 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 or any Subordinated Debt Securities, we will acquire such

Capital Securities having an aggregate stated liquidation amount of not less

than $100,000 or such Subordinated Debt Securities having an aggregate

principal amount 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 subject to the Employee Retirement Income Security Act of

1974, as amended (“ERISA”) (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 Offered Securities on behalf of or with “plan assets” by reason of any

Plan’s investment in the entity and is not purchasing the Offered Securities on

behalf of or with “plan assets” of any Plan or (B) are eligible for the

exemptive relief available under one ore 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-l or 84-14.

6.             We acknowledge that

the Trust and the Company and others will rely upon the truth and accuracy of

the foregoing acknowledgments, representations, warranties and agreements and

agree that if any of the acknowledgments, representations, warranties and

agreements deemed to have been made by our purchase of the Offered Securities

are no longer accurate, we shall promptly notify the Placement Agents. If we

are acquiring any Offered 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 agreement on behalf of each such investor

account.

 

 

	

   

  	

  Very truly yours,

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  (Name of Purchaser)

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

  	

   

  
				

 

Upon transfer of the Offered Securities would be registered in the name

of the new beneficial owner as follows.

 

 

	

  Name:

  	

   

  
	

   

  	

   

  
	

  Address:

  	

   

  
	

   

  	

   

  
	

  Taxpayer ID

  Number:

  	

   

  
			

 

 

EXHIBIT C

 

FORM OF TRANSFEROR CERTIFICATE

TO BE EXECUTED FOR QIBS

_________, [     ]

National Mercantile

Bancorp

National Mercantile

Capital Trust I

1840 Century Park

East

Los Angeles, California 90067

Re:         Purchase of $1,000

stated liquidation amount of Fixed Rate MMCapSSM

(the “Capital

Securities”) of National Mercantile Capital Trust I

Reference is hereby

made to the Amended and Restated Declaration dated as of July 16, 2001 (the

“Declaration”) among Scott A. Montgomery and David R. Brown, as Administrators;

The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as

Institutional Trustee, National Mercantile Bancorp, as Sponsor, and the holders

from time to time of undivided beneficial interest in the assets of National

Mercantile Capital Trust I. 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”).

In connection with

such request, and in respect to such Capital Securities, 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 United States Securities Act of 1933, as amended (“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.

You are entitled to rely upon this letter and are irrevocably

authorized to produce this letter or a copy hereof to any interested party in

any administrative or legal proceeding or official inquiry with respect to the

matters covered hereby.

 

	

   

  	

  (Name

  of Transferor)

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

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