Document:

Exhibit
4.3

 

AMENDED AND
RESTATED DECLARATION

 

OF TRUST

 

HCSB
FINANCIAL TRUST I

 

Dated as of December 21, 2004

 

 

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 the 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

  	
   

  

 

i

 

	
  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 the Trustees and the 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.

  	
  Merger,
  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, Calculation 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

  	
   

  

 

ii

 

	
  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

  	
   

  

 

iii

 

	
  SECTION 11.2.

  	
  Meetings
  of the Holders of the 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

  	
   

  

 

iv

 

ANNEXES AND EXHIBITS

 

	
  ANNEX I

  	
  Terms of TP Securities and Common Securities

  
	
   

  	
   

  
	
  EXHIBIT A-1

  	
  Form of Capital Security Certificate

  
	
   

  	
   

  
	
  EXHIBIT A-2

  	
  Form of Common Security Certificate

  

 

v

 

AMENDED AND
RESTATED DECLARATION OF TRUST

 

OF

 

HCSB
FINANCIAL TRUST I

 

December 21,
2004

 

AMENDED AND RESTATED DECLARATION OF TRUST (this “Declaration”), dated
and effective as of December 21, 2004,
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 HCSB Financial Trust I (the “Trust”),
a statutory trust under the Statutory Trust Act (as defined herein), pursuant
to a Declaration of Trust, dated as of December 17,
2004 (the “Original Declaration”), and a Certificate of Trust filed with
the Secretary of State of the State of Delaware on December 17, 2004, 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 the Debentures (as defined
herein) of the Debenture Issuer (as defined herein) in connection with the
issuance of the Capital Securities (as defined herein);

 

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

 

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

 

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

 

ARTICLE I

INTERPRETATION AND DEFINITIONS

 

SECTION 1.1.                       Definitions.  Unless the context otherwise requires:

 

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

 

 

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

 

(c)                                  all
references to “the Declaration” or “this Declaration” are to this Declaration
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 James R.
Clarkson and Glenn R. Bullard,
solely in such Person’s capacity as Administrator of the Trust continued
hereunder and not in such Person’s individual capacity, or such Administrator’s
successor in interest in such capacity, or any successor appointed as herein
provided.

 

“Affiliate” has the same meaning as given to that term in Rule 405 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.

 

2

 

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

 

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

 

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

 

“Capital Securities Purchase Agreement” means the Capital Securities
Purchase Agreement dated as of December 17,
2004 among the Trust, the Sponsor and Alesco
Preferred Funding VI, Ltd.

 

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

 

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

 

“Certificate” means any certificate evidencing Securities.

 

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

 

“Closing Date” means the date of execution and delivery of this
Declaration.

 

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

 

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

 

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

 

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

 

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

 

“Corporate Trust Office” means the office of the Institutional Trustee
at which 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 600 Travis Street, 50th Floor, Houston, TX
77002, Attn: Institutional Trust Services – HCSB
Financial Trust I.

 

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

 

3

 

“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 HCSB Financial
Corporation, a bank holding company incorporated in South Carolina, in its capacity as issuer of
the Debentures under the Indenture.

 

“Debenture Trustee” means JPMorgan Chase Bank, N.A., not in its
individual capacity but solely as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.

 

“Debentures” means the Junior Subordinated Debt Securities due March 15, 2035 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 Coupon Rate applicable during such Extension Period,
compounded quarterly from the date on which such Deferred Interest would
otherwise have been due and payable until paid or made available for payment.

 

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

 

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

 

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

 

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

 

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

 

“Distribution Payment Period” means the period from and including a
Distribution Payment Date, or in the case of the first Distribution Payment
Period, the original date of issuance of the Securities, to, but excluding, the
next succeeding Distribution Payment Date or, in the case of the last
Distribution Payment Period, the Redemption Date, Special Redemption Date or
Maturity Date (each as defined in the Indenture), as the case may be, for the
related Debentures.

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

“Majority in liquidation amount of the Securities” means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the 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.

 

“Notice” has the meaning set forth in Section 2.11 of the
Indenture.

 

“Officers’ Certificate” 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 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 set forth in Section 6.2.

 

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

 

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

 

“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)(E).

 

“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.

 

6

 

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

 

“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.

 

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

 

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

 

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

 

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

 

“Rule 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, as
applicable.

 

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

 

“Sponsor” means HCSB Financial
Corporation, a bank holding company that is a U.S. Person incorporated
in South Carolina, or any successor
entity in a merger, consolidation or amalgamation that is a U.S. Person, in its
capacity as sponsor of the Trust.

 

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

 

“Successor Delaware Trustee” has the meaning set forth in Section 4.7(e).

 

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

 

“Successor Institutional Trustee” has the meaning set forth in Section 4.7(b).

 

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

 

7

 

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

 

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

 

“10% in liquidation amount of the Securities” means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
10% or more of the aggregate liquidation amount (including the stated amount
that would be paid 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.

 

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

 

“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 in Section 7701(a)(30)
of the Code.

 

ARTICLE II

ORGANIZATION

 

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

 

SECTION 2.2.                       Office.  The address of the principal office of the
Trust, which shall be in a state of the United States or the District of
Columbia, is 5201 Broad Street, Loris, South Carolina 29569. On ten Business
Days’ written notice to the Institutional Trustee and the Holders of the
Securities, the Administrators may designate another principal office, which
shall be in a state of the United States or the District of Columbia.

 

SECTION 2.3.                       Purpose.  The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided
beneficial interests in the assets of the Trust, (b) to invest the gross
proceeds from such sale to acquire the Debentures, (c) to facilitate direct

 

8

 

investment
in the assets of the Trust through issuance of the Common Securities and the
Capital Securities and (d) 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 such Trustee’s powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration. The Administrators shall have only those ministerial
duties set forth herein with respect to accomplishing the purposes of the Trust
and are not intended to be trustees or fiduciaries with respect to the Trust or
the Holders. The Institutional Trustee shall have the right, but shall not be
obligated except as provided in Section 2.6, to perform those duties
assigned to the Administrators.

 

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

 

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

 

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

 

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

 

(A)                              the
issuance and sale of the Securities;

 

(B)                                to
acquire the Debentures with the proceeds of the sale of the Securities;
provided, however, that the Administrators shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for
the benefit of the Holders;

 

9

 

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

 

(D)                               ensuring
compliance with the Securities Act and applicable state securities or blue sky
laws;

 

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

 

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

 

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

 

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

 

(I)                                    execution
and delivery of closing certificates pursuant to the Placement Agreement and
the application for a taxpayer identification number;

 

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

 

(K)                               the
taking of any action incidental to the foregoing as the Sponsor or an
Administrator 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);

 

(L)                                 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

 

10

 

relevant notices
to the Holders of Capital Securities and Holders of Common Securities as to
such actions and applicable record dates;

 

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

 

(N)                               to
negotiate the terms of, and the execution and delivery of, the Placement
Agreement and the Capital Securities Purchase Agreement related thereto,
providing for the sale of the Capital Securities;

 

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

 

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

 

(Q)                               to
give the certificate required by § 314(a)(4) of the Trust Indenture Act to
the Institutional Trustee, which certificate may be executed by an
Administrator; and

 

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

 

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

 

(A)                              the
establishment of the Property Account;

 

(B)                                the
receipt of the Debentures;

 

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

 

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

 

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

 

11

 

(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;

 

(I)                                    after
any Event of Default (of which the Institutional Trustee has knowledge (as
provided in Section 2.10(m) hereof)) (provided, that such Event of
Default is not by or with respect to the Institutional Trustee), the taking of
any action 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);

 

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

 

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

 

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

 

(b)                                 So
long as this Declaration remains in effect, the Trust (or the Trustees or
Administrators acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, neither the Trustees nor the Administrators may cause
the Trust to (i) acquire any investments or engage in any activities not
authorized by this Declaration, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would cause (or in the case of the Institutional
Trustee, to the actual knowledge of a Responsible Officer would cause) the
Trust to fail or cease to qualify as a “grantor trust” for United States
federal income tax

 

12

 

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 and direction to 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; and

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

SECTION 2.7.                       Prohibition of Actions by the
Trust and the Trustees.  The Trust
shall not, and the Institutional Trustee and the Administrators shall not, and
the Administrators shall cause the Trust not to, engage in any activity other
than as required or authorized by this Declaration. In particular, the Trust
shall not, and the Institutional Trustee and the Administrators shall not cause
the Trust to:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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 § 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 arise out of or in connection
with an Event of Default of which a Responsible Officer of the Institutional
Trustee has actual knowledge or the Institutional Trustee’s duties and
obligations under this Declaration or the Trust Indenture Act; provided,
however, that if an Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay
interest or premium, if any, on or principal of the Debentures on the date such
interest, premium, if any, or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of the Capital Securities
may directly institute a proceeding for enforcement of payment to such Holder
of the

 

15

 

principal
of or premium, if any, 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 Common Securities may exercise such right of subrogation
only if no Event of Default with respect to the Capital Securities has occurred
and is continuing.

 

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

 

(i)                                     the
Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of the Securities pursuant to the terms of the
Securities and this Declaration (including Annex I) and the certificate of
cancellation referenced in Section 7.1(b) has been filed; 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.

 

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

 

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

 

(a)                                  The
Institutional Trustee, before the occurrence of any Event of Default (of which
the Institutional Trustee has knowledge (as provided in Section 2.10(m)
hereof)) and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default (of which the
Institutional Trustee has knowledge (as provided in Section 2.10(m)
hereof)), has occurred (that has not been cured or waived pursuant to Section 6.8),
the Institutional Trustee shall exercise such of the rights and powers vested
in it by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

 

(b)                                 The
duties and responsibilities of the Trustees and the Administrators shall be as
provided by this Declaration and, in the case of the Institutional Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Declaration shall require any Trustee or Administrator to expend or risk its
own funds or otherwise incur any financial liability

 

16

 

in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Declaration relating to the
conduct or affecting the liability of or affording protection to the Trustees
or the Administrators shall be subject to the provisions of this Article.
Nothing in this Declaration shall be construed to release a Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct or bad faith. Nothing in this Declaration shall be
construed to release an Administrator from liability for its own gross
negligent action, its own gross negligent failure to act, or its own willful
misconduct or bad faith. To the extent that, at law or in equity, a Trustee or
an Administrator has duties 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 for its own negligent action, its own negligent failure
to act, or its own willful misconduct or bad faith with respect to matters that
are within the authority of the Institutional Trustee under this Declaration,
except that:

 

(i)                                     the
Institutional Trustee shall not be liable for any error or judgment made in
good faith by a Responsible 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;

 

17

 

(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, written
opinion of counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;

 

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

 

18

 

suffering
or omitting any action hereunder, the Institutional Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers’ Certificate which,
upon receipt of such request, shall be promptly delivered by the Sponsor or the
Administrators;

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

(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 Statutory
Trust Act). Except as set forth in Section 4.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
§ 3807 of the Statutory Trust Act.

 

SECTION 2.12.                 Execution of Documents.  Unless otherwise determined in writing by the
Institutional Trustee, and except as otherwise required by the Statutory Trust
Act, the Institutional Trustee, or any one or more of the Administrators, as
the case may be, is authorized

 

20

 

to
execute and deliver on behalf of the Trust any documents, agreements,
instruments or certificates that the Trustees or the Administrators, as the
case may be, have the power and authority to execute pursuant to Section 2.6.

 

SECTION 2.13.                 Not Responsible for Recitals or
Issuance of Securities.  The recitals
contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the value or condition
of the 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
and except with respect to the distribution of Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4
of Annex I.

 

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

 

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

 

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

 

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

 

(ii)                                  the
Sponsor expressly appoints 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 quoted, or any Successor
Securities will be listed or quoted upon notification of issuance, on any

 

21

 

national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted, if any;

 

(iv)                              such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the 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, replacement, conveyance, transfer or lease
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, replacement, conveyance, transfer
or lease, the Trust has received a written opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

ARTICLE III

SPONSOR

 

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

 

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

 

(a)                                  to
determine the 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, as
requested by the Holders of not less than a Majority in liquidation amount of
the Capital Securities; and

 

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

 

23

 

Delaware
Trustee if it meets the applicable requirements, in which case Section 2.11
shall have no application to such entity in its capacity as Institutional
Trustee.

 

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

 

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

 

(b)                                 If
at any time the Institutional Trustee shall cease to be eligible to so act
under Section 4.3(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 4.7.

 

(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 JPMorgan Chase Bank, N.A.

 

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.

 

24

 

SECTION 4.5.                       Administrators.  Each Administrator shall be a U.S. Person.

 

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

 

SECTION 4.6.                       Initial Delaware Trustee.  The initial Delaware Trustee shall be Chase
Manhattan Bank USA, National Association.

 

SECTION 4.7.                       Appointment, Removal and
Resignation of the Trustees and the Administrators.

 

(a)                                  No
resignation or removal of any Trustee (the “Relevant Trustee”) and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section 4.7.

 

(b)                                 Subject
to Section 4.7(a), a Relevant Trustee may resign at any time by giving
written notice thereof to the Holders of the Securities and by appointing a
successor Relevant Trustee, except in the case of the Delaware Trustee’s
successor which shall be appointed by Holders of a Majority in liquidation
amount of the Common Securities. Upon the resignation of the Institutional
Trustee, the Institutional Trustee shall appoint a successor by requesting from
at least three Persons meeting the eligibility requirements their expenses and
charges to serve as the successor Institutional Trustee on a form provided by
the Administrators, and selecting the Person who agrees to the lowest
reasonable expense and charges (the “Successor Institutional Trustee”). If the
instrument of acceptance by the successor Relevant Trustee required by this 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.

 

(c)                                  Unless
an Event of Default shall have occurred and be continuing, any Trustee may be
removed at any time by an act of the Holders of a Majority in liquidation
amount of the Common Securities. If any Trustee shall be so removed, the
Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee, and such successor 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

 

25

 

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.

 

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

 

(e)                                  Notwithstanding
the foregoing or any other provision of this Declaration, in the event a
Delaware Trustee who is a natural person dies or is adjudged by a court to have
become incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee (provided
the Institutional Trustee satisfies the requirements of a Delaware Trustee as
set forth in Section 4.2) 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”).

 

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

 

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

 

26

 

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

 

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

 

SECTION 4.8.                       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, in the case of the Administrators, a
Quorum is present, or without a meeting by the unanimous written consent of the
Trustees or the Administrators, as the case may be. Meetings of the Trustees
and the Administrators together shall be held from time to time upon the call
of any Trustee or Administrator.

 

27

 

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, instruments or other writings contemplated in Section 2.6.

 

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

 

SECTION 4.12.                 Merger, Conversion, Consolidation
or Succession to Business.  Any
Person into which the Institutional Trustee or the Delaware Trustee, as the
case maybe, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided such Person shall be otherwise qualified
and eligible under this Article and, provided, further, that such Person
shall file an amendment to the Certificate of Trust with the Secretary of State
of the State of Delaware as contemplated in Section 4.7(i).

 

ARTICLE V

DISTRIBUTIONS

 

SECTION 5.1.                       Distributions.  Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder’s Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Interest or Deferred Interest) or premium, if any, on 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. For the avoidance of doubt, funds in the Property Account shall not be
distributed to Holders to the extent of any taxes payable by the Trust, in the
case of withholding taxes, as determined by the Institutional Trustee or any
Paying Agent and, in the case of taxes other than withholding tax taxes, as
determined by the Administrators in a written notice to the Institutional
Trustee.

 

28

 

ARTICLE VI

ISSUANCE OF SECURITIES

 

SECTION 6.1.                       General Provisions Regarding
Securities.

 

(a)                                  The
Administrators shall on behalf of the Trust issue one series of capital
securities, evidenced by a certificate substantially in the form of Exhibit
A-1, representing undivided beneficial interests in the assets of the Trust and
having such terms as are set forth in Annex I (the “Capital Securities”), and
one series of common securities, evidenced by a certificate substantially in
the form of Exhibit A-2, representing undivided beneficial interests in the
assets of the Trust and having such terms as are set forth in Annex I (the “Common
Securities”). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common
Securities. The Capital Securities rank pari
passu 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. 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 and shall be valid upon execution
by one or more Administrators.

 

(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, and
each Holder thereof shall be entitled to the benefits provided by this
Declaration.

 

(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.

 

29

 

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

 

(a)                                  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 Trustee hereby appoints the Institutional
Trustee as Paying Agent and Transfer Agent at ITS Unit Trust Window, 4 New
York Plaza, Ground Floor, New York, New York 10004, Attn: ITS (Houston) – HCSB Financial Trust I.  The Trust shall also keep or cause to be kept
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, one or more
co-Registrars, or one or more co-Transfer Agents in such other locations as it
shall determine. The term “Paying Agent” includes any additional Paying Agent,
the term “Registrar” includes any additional Registrar or co-Registrar and the
term “Transfer Agent” includes any additional Transfer Agent or co-Transfer
Agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Registrar for the Capital Securities and the Common Securities at its Corporate
Trust Office. The Institutional Trustee or any of its Affiliates in the United
States may act as Paying Agent, Transfer Agent or Registrar.

 

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

 

SECTION 6.3.                       Form and Dating.

 

(a)                                  The
Capital Securities and the Institutional Trustee’s certificate of
authentication thereon shall be substantially in the form of Exhibit A-1, and
the Common Securities shall be 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
Certificates may have letters, numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided, that any such notation, legend or endorsement is in a form
acceptable to the Sponsor). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Institutional
Trustee in writing. Each Capital Security 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-1 and A-2 are part of the
terms of this Declaration and to the extent applicable, the Institutional
Trustee, the Delaware Trustee, the Administrators and the Sponsor, by their
execution and delivery of 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 $100,000 and
multiples of $1,000 in excess thereof.

 

30

 

(b)                                 The
Capital Securities sold by the Trust to the initial purchasers pursuant to the
Placement Agreement and the Capital Securities Purchase Agreement shall be
issued in definitive form, registered in the name of the Holder thereof,
without coupons and 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
hold 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 Registrar 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 in
accordance with its standard procedures or otherwise 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, and the issuance of the
Securities shall not be subject to,

 

31

 

preemptive
or other similar rights and when issued and delivered to Holders against
payment of the purchase price therefor, the Securities will be fully paid and
nonassessable by the Trust.

 

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

 

(c)                                  At
any time after a declaration of acceleration of maturity of the Debentures has
been made and before a judgment or decree for payment of the money due has been
obtained by the Debenture Trustee as provided in the Indenture, if the
Institutional Trustee, subject to the provisions hereof, fails to annul any
such declaration and waive such default, the Holders of not less than 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)                                all
payments 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, documented expenses, disbursements and advances of the
Debenture Trustee and the Institutional Trustee, their agents and counsel; and

 

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

 

(d)                                 The
Holders of not less than 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

 

32

 

holder
of each outstanding Debenture. No such rescission shall affect any subsequent
default or impair any right consequent thereon.

 

(e)                                  Upon
receipt by the Institutional Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities, a record date shall be established for determining
Holders of outstanding Capital Securities entitled to join in such notice,
which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that, unless such declaration of acceleration, or rescission
and annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.7.

 

(f)                                    Except
as otherwise provided in this Section 6.7, the Holders of not less than a
Majority in liquidation amount of the Capital Securities may, on behalf of the
Holders of all the Capital Securities, waive any past default or Event of
Default and its consequences. Upon such waiver, any such default or Event of
Default shall cease to exist, and any default or Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

 

ARTICLE VII

DISSOLUTION AND TERMINATION
OF TRUST

 

SECTION 7.1.                       Dissolution and Termination
of Trust.

 

(a)                                  The
Trust shall dissolve on the first to occur of

 

(i)                                     unless
earlier dissolved, on December 21, 2039,
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;

 

33

 

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

 

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

 

(vi)                              when
all of the Securities 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 Statutory Trust Act, and
subject to the terms set forth in Annex I, the Delaware Trustee, when notified
in writing of the completion of the winding up of the Trust in accordance with
the Statutory Trust Act, shall terminate the Trust by filing, at the expense of
the Sponsor, a certificate of cancellation with the Secretary of State of the
State of Delaware.

 

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

 

ARTICLE VIII

TRANSFER OF INTERESTS

 

SECTION 8.1.                       General.

 

(a)                                  Subject
to Section 6.4 and Section 8.1(c), when Capital Securities are
presented to the 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
the requirements provided for herein for such transactions are met. To permit
registrations of transfers 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

 

34

 

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 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)                                  The
Capital Securities shall bear the Restricted Securities Legend (as defined
below), which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel reasonably
acceptable to the Administrators and the Institutional Trustee, as may be
reasonably required by the Trust or the Institutional Trustee, 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 Administrators, shall
authenticate and deliver Capital Securities that do not bear the Restricted
Securities Legend (other than the legend contemplated by Section 8.2(d)).

 

(b)                                 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 represented by different Certificates, 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

 

35

 

exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Administrators, the Institutional Trustee
and the Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.

 

(c)                                  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 THE HOLDER REASONABLY BELIEVES IS
A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C)
TO A “NON U.S. PERSON” IN AN “OFFSHORE TRANSACTION” PURSUANT TO
REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
DEBENTURE ISSUER’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM
IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF
WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

 

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

 

36

 

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

 

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THE CERTIFICATE WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST
TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO
BE THE HOLDER OF THIS SECURITY 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)                                 Capital
Securities may only be transferred in minimum blocks of $100,000 aggregate
liquidation amount (100 Capital Securities) and multiples of $1,000 in excess
thereof. Any attempted transfer of Capital Securities in a block having an
aggregate liquidation amount of less than $100,000 shall be deemed to be void
and of no legal effect whatsoever. Any such

 

37

 

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.

 

(e)                                  Each
party hereto understands and hereby agrees that the Initial Purchaser is
intended solely to be an interim holder of the Capital Securities and is
purchasing such securities to facilitate consummation of the transactions
contemplated herein and in the documents ancillary hereto. Notwithstanding any
provision in this Declaration to the contrary, the Initial Purchaser shall have
the right upon notice (a “Transfer Notice”) to the Institutional Trustee and
the Sponsor to transfer title in and to the Capital Securities; provided the
Initial Purchaser shall take reasonable steps to ensure that such transfer is
exempt from registration under the Securities Act of 1933, as amended, and
rules promulgated thereunder. Any Transfer Notice delivered to the
Institutional Trustee and Sponsor pursuant to the preceding sentence shall
indicate the aggregate liquidation amount of Capital Securities being
transferred, the name and address of the transferee thereof (the “Transferee”)
and the date of such transfer. Notwithstanding any provision in this Declaration
to the contrary, the transfer by the Initial Purchaser of title in and to the
Capital Securities pursuant to a Transfer Notice shall not be subject to any
requirement relating to Opinions of Counsel, Certificates of Transfer or any
other Opinion or Certificate applicable to transfers hereunder and relating to
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.

 

38

 

(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)                                  Except
to the extent provided in Section 9.1(b), and pursuant to § 3803(a)
of the Statutory Trust Act, the Holders of the Securities shall be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware, except as otherwise specifically set forth herein.

 

SECTION 9.2.                       Exculpation.

 

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

 

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

 

SECTION 9.3.                       Fiduciary Duty.

 

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

 

39

 

desires, including
its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any other
Person; or

 

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

 

SECTION 9.4.                       Indemnification.

 

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

 

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

 

40

 

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

 

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

 

(v)                                 To
the fullest extent permitted by law, expenses (including attorneys’ fees and
expenses) incurred by an Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the
Sponsor in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Indemnified Person to
repay such amount if it shall ultimately be determined that such Person is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (1) in the case of a Company
Indemnified Person (A) by the Administrators by a majority vote of a Quorum of
disinterested Administrators, (B) if such a Quorum is not obtainable, or, even
if obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion or (C) by the Common Security
Holder of the Trust, that, based upon the facts known to the Administrators,
counsel or the Common Security Holder at the time such determination is made,
such Indemnified Person acted in bad faith or in a manner that such Person
either believed to be opposed to or did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe such conduct was
unlawful, or (2) in the case of a Fiduciary Indemnified Person, by independent
legal counsel in a written opinion that, based upon the facts known to the
counsel at the time such determination is made, such Indemnified Person acted
in bad faith or in a manner that such Indemnified Person either believed to be
opposed to or did not believe to be in the best interests of the Trust, or,
with respect to any criminal proceeding, that such Indemnified Person believed
or had reasonable cause to believe such conduct was unlawful. In no event shall
any advance be made (i) to a Company Indemnified

 

41

 

Person in
instances where the Administrators, independent legal counsel or the Common
Security Holder reasonably determine that such Person deliberately breached
such Person’s duty to the Trust or its Common or Capital Security Holders or
(ii) to a Fiduciary Indemnified Person in instances where independent legal
counsel promptly and reasonably determines in a written opinion that such
Person deliberately breached such Person’s duty to the Trust or its Common or
Capital Security Holders.

 

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

 

(c)                                  The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 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 such Person’s 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 such
Person and incurred by such Person in any such capacity, or arising out of such
Person’s status as such, whether or not the Sponsor would have the power to
indemnify such Person against such liability under the provisions of this Section 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 such Person would have
with respect to such constituent entity if its separate existence had continued.

 

42

 

(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.

 

(g)                                 The
provisions of this Section 9.4 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
Capital Securities, provided, that the Sponsor is the holder of the
Common Securities.

 

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

 

SECTION 9.6.                       Compensation; Fee.

 

(a)                                  Subject
to the provisions set forth in the Fee Agreement between the Institutional
Trustee, Cohen Bros. & Company and the Company of even date herewith, the
Sponsor agrees:

 

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

 

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

 

43

 

disbursements of
their respective agents and counsel), except any such expense, disbursement or
advance attributable to their negligence or willful misconduct.

 

(b)                                 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 § 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 10-K and Form 10-Q prepared by
the Sponsor and filed with the Commission in accordance with the Exchange Act
to be delivered to each Holder of Securities, within 90 days after the filing
of each Form 10-K and within 30 days after the filing of each Form 10-Q or (ii)
cause to be prepared at the principal office of the Trust in the United States,
as defined for purposes of Treasury Regulations § 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 § 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.

 

SECTION 10.3.                 Banking.  The Trust shall maintain one or more bank
accounts in the United States, as defined for purposes of Treasury Regulations § 301.7701-7,
in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and

 

44

 

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. As a condition to the payment of any principal of or interest on any Debt
Security without the imposition of withholding tax, the Institutional Trustee
or any Paying Agent shall require the previous delivery of properly completed
and signed applicable U.S. federal income tax certifications (generally, an
Internal Revenue Service Form W-9 (or applicable successor form) in the case of
a person that is a “United States person” within the meaning of Section 7701(a)(30)
of the Code or an Internal Revenue Service Form W-8 (or applicable successor
form) in the case of a person that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code) and any other certification
acceptable to it to enable the Institutional Trustee or any Paying Agent and
the Trustee to determine their respective duties and liabilities with respect
to any taxes or other charges that they may be required to pay, deduct or
withhold in respect of such Debt Security or the holder of such Debt Security
under any present or future law or regulation of the United States or any
political subdivision thereof or taxing authority therein or to comply with any
reporting or other requirements under any such law or regulation. The
Administrators shall file required forms with applicable jurisdictions and,
unless an exemption from withholding is properly established by a Holder, shall
remit amounts withheld with respect to the Holder to applicable jurisdictions.
To the extent that the Institutional Trustee or any Paying Agent is required to
withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a Distribution to the Holder in the amount of the withholding. In the
event of any claimed overwithholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Institutional Trustee or any
Paying Agent may reduce subsequent Distributions by the amount of such
withholding.

 

ARTICLE XI

AMENDMENTS AND MEETINGS

 

SECTION 11.1.                 Amendments.

 

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

 

(i)                                     the
Institutional Trustee,

 

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

 

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

 

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

 

45

 

(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) and that all conditions precedent to
the execution and delivery of such amendment have been satisfied; or

 

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

 

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

 

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

 

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

 

(D)                               cause
the Debenture Issuer to be unable to treat an amount equal to the Liquidation
Amount of the Capital Securities as “Tier 1 Capital” for purposes of the
capital adequacy guidelines of (x) the Federal Reserve (or, if the
Debenture Issuer is not a bank holding company, such guidelines or policies
applied to the Debenture Issuer as if the Debenture Issuer were subject to such
guidelines of policies) or of (y) any other regulatory authority having
jurisdiction over the Debenture Issuer.

 

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

 

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

 

46

 

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

 

(g)                                 Subject
to Section 11.1(a), 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; or

 

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

 

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

 

(a)                                  Meetings
of the Holders of 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 not less than 10%
in liquidation amount of such class of Securities. Such direction shall be
given by delivering to the Administrators one or more notices 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

 

47

 

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 Statutory Trust Act, this Declaration, the terms of the Securities, the
Trust Indenture Act or the listing rules of any stock exchange on which the
Capital Securities are then listed 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;

 

48

 

provided,
however, that each meeting shall be conducted in the United States (as
that term is defined in Treasury Regulations § 301.7701-7).

 

ARTICLE XII

REPRESENTATIONS OF
INSTITUTIONAL TRUSTEE

AND DELAWARE TRUSTEE

 

SECTION 12.1.                 Representations and Warranties of
Institutional Trustee.  The Trustee
that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor
Institutional Trustee represents and warrants to the Trust and the Sponsor at
the time of the Successor Institutional Trustee’s acceptance of its appointment
as Institutional Trustee, that:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

49

 

(a)                                  if
it is not a natural person, the Delaware Trustee is duly organized, validly
existing and has its principal place of business in 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 under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors’ rights generally and to
general principles of equity and the discretion of the court (regardless of
whether considered in a proceeding in equity or at law);

 

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

 

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

 

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

 

(f)                                    if
the Delaware Trustee is a natural person, he or she is a resident of the State
of Delaware.

 

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):

 

HCSB Financial Trust I

c/o HCSB Financial Corporation

5201 Broad Street

Loris, South Carolina 29569

Attention: James R. Clarkson

Telecopy: (843) 716-6136

Telephone: (843) 756-6333

 

50

 

(b)                                 if
given to the Delaware Trustee, at the mailing address set forth below (or such
other address as the Delaware Trustee may give notice of to the Holders of the
Securities):

 

Chase Manhattan Bank USA,
National Association

500 Stanton Christiana Rd., FL3/OPS4

Newark, DE 19713

Attn: Institutional Trust Services

Telecopy: 302-552-6280

Telephone: 302-552-6279

 

(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):

 

JPMorgan Chase Bank, N.A.

600 Travis Street, 50th
Floor

Houston, TX 77002

Attention:  Institutional Trust Services

HCSB Financial
Trust I

Telecopy: 713-216-2101

Telephone: 713-216-4781

 

(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):

 

HCSB Financial Corporation

5201 Broad Street

Loris, South Carolina 29569

Attention: James R. Clarkson

Telecopy: (843) 716-6136

Telephone: (843) 756-6333

 

(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.

 

51

 

SECTION 13.3.                 Submission to Jurisdiction.

 

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

 

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

 

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

 

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.

 

52

 

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.

 

53

 

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

 

	
   

  	
  CHASE MANHATTAN BANK USA,

  NATIONAL ASSOCIATION,

  
	
   

  	
  as Delaware
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  as Institutional Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  HCSB FINANCIAL CORPORATION,

  as Sponsor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Administrator

  
							

 

A-2-54Exhibit 10.1

 

AMENDMENT NUMBER ONE

to the

Master Loan and Security
Agreement

Dated as of December 30,
2003

between

HOMEONE FUNDING I

and

GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC.

 

This AMENDMENT NUMBER ONE is made this 23rd day of
December, 2004, between HOMEONE FUNDING I, having an address at 2150 West 18th
Street, Houston, Texas 77008 (the “Borrower”) and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., having an address at 600 Steamboat Road, Greenwich,
Connecticut 06830 (the “Lender”), to the Master Loan and Security
Agreement, dated as of December 30, 2003, by and between the Borrower and the
Lender (the “Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement.

 

RECITALS

 

WHEREAS, the Borrower has requested that the Lender
agree to amend the Agreement to extend the Termination Date thereunder to
January 31, 2005;

 

WHEREAS, as of the date of this Amendment, the
Borrower represents to the Lender that it is in compliance with all of the
representations and warranties and all of the affirmative and negative
covenants set forth in the Agreement and is not in default under the Agreement;
and

 

WHEREAS, the
Borrower and the Lender have agreed to amend the Agreement as set forth herein.

 

NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and for the mutual covenants herein contained, the parties
hereto hereby agree as follows:

 

SECTION 1.  Effective
as of December 23, 2004, Section 1 of the Agreement is hereby amended by
deleting the definition of Termination Date and replacing it with the
following:

 

“Termination Date”
shall mean January 31, 2005, or such earlier date on which this Loan Agreement
shall terminate in accordance with the provisions hereof or by operation of
law.

 

SECTION 2.  Defined
Terms.  Any terms capitalized but not
otherwise defined herein shall have the respective meanings set forth in the
Agreement.

 

SECTION 3.  Limited
Effect.  Except as amended hereby,
the Agreement shall continue in full force and effect in accordance with its
terms.  Reference to this Amendment need
not be made in the Agreement or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or

 

 

made pursuant to, or with
respect to, the Agreement, any reference in any of such items to the Agreement
being sufficient to refer to the Agreement as amended hereby.

 

SECTION 4.  Representations.  The Borrower hereby represents to the Lender
that as of the date hereof, the Borrower is in full compliance with all of the
terms and conditions of the Agreement and no Default or Event of Default has
occurred and is continuing under the Agreement.

 

SECTION 5.  Governing
Law. This Amendment Number One shall be construed in accordance with the
laws of the State of New York and the obligations, rights, and remedies of the
parties hereunder shall be determined in accordance with such laws without
regard to conflict of laws doctrine applied in such state (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law).

 

SECTION 6.  Counterparts.  This Amendment Number One may be executed by
each of the parties hereto on any number of separate counterparts, each of
which shall be an original and all of which taken together shall constitute one
and the same instrument.

 

 

[REMAINDER OF THIS
PAGE LEFT INTENTIONALLY BLANK]

 

2

 

IN WITNESS
WHEREOF, the Borrower and the Lender have caused this Amendment Number One to
be executed and delivered by their duly authorized officers as of the day and
year first above written.

 

	
   

  	
  HOMEONE FUNDING I

  
	
   

  	
  (Borrower)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary V. Busch

  	
   

  
	
   

  	
  Name:

  	
  Gary V. Busch

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREENWICH CAPITAL FINANCIAL

  PRODUCTS. INC.

  
	
   

  	
  (Lender)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jon Stapleton

  	
   

  
	
   

  	
  Name:

  	
  Jon Stapleton

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HOMEONE CREDIT CORP.

  	
   

  	
   

  
	
  (Guarantor)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph N. Corona, Jr.

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Joseph N. Corona, Jr.

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FLEETWOOD ENTERPRISES, INC.

  	
   

  	
   

  
	
  (Guarantor)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Forrest Theobald

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Forrest Theobald

  	
   

  	
   

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  
										

 

3

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