Document:

Exhibit
4.1

 

 

 

YADKIN
VALLEY FINANCIAL CORPORATION,

as Issuer

 

 

INDENTURE

 

Dated as
of November 1, 2007

 

 

WILMINGTON
TRUST COMPANY,

as
Trustee

 

 

FLOATING
RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

 

 

DUE 2037

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I. DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. DEBENTURES

  	
  8

  
	
   

  	
   

  
	
  Section 2.1.

  	
  Authentication
  and Dating

  	
  8

  
	
  Section 2.2.

  	
  Form of
  Trustee’s Certificate of Authentication

  	
  8

  
	
  Section 2.3.

  	
  Form and
  Denomination of Debentures

  	
  9

  
	
  Section 2.4.

  	
  Execution of
  Debentures

  	
  9

  
	
  Section 2.5.

  	
  Exchange and
  Registration of Transfer of Debentures

  	
  9

  
	
  Section 2.6.

  	
  Mutilated,
  Destroyed, Lost or Stolen Debentures

  	
  11

  
	
  Section 2.7.

  	
  Temporary
  Debentures

  	
  12

  
	
  Section 2.8.

  	
  Payment of
  Interest and Additional Interest

  	
  12

  
	
  Section 2.9.

  	
  Cancellation of
  Debentures Paid, etc

  	
  13

  
	
  Section 2.10.

  	
  Computation of
  Interest

  	
  14

  
	
  Section 2.11.

  	
  Extension of
  Interest Payment Period

  	
  15

  
	
  Section 2.12.

  	
  CUSIP Numbers

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY

  	
  16

  
	
   

  	
   

  
	
  Section 3.1.

  	
  Payment of
  Principal, Premium and Interest; Agreed Treatment of the Debentures

  	
  16

  
	
  Section 3.2.

  	
  Offices for
  Notices and Payments, etc

  	
  17

  
	
  Section 3.3.

  	
  Appointments to
  Fill Vacancies in Trustee’s Office

  	
  17

  
	
  Section 3.4.

  	
  Provision as to
  Paying Agent

  	
  17

  
	
  Section 3.5.

  	
  Certificate to
  Trustee

  	
  18

  
	
  Section 3.6.

  	
  Additional Sums

  	
  18

  
	
  Section 3.7.

  	
  Compliance with
  Consolidation Provisions

  	
  19

  
	
  Section 3.8.

  	
  Limitation on
  Dividends

  	
  19

  
	
  Section 3.9.

  	
  Covenants as to
  the Trust

  	
  20

  
	
  Section 3.10.

  	
  Additional
  Junior Indebtedness

  	
  20

  
	
  Section 3.11.

  	
  Subsidiary;
  Insured Depository Institution

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. SECURITYHOLDERS’ LISTS AND REPORTS BY
  THE COMPANY AND THE TRUSTEE

  	
  20

  
	
   

  	
   

  
	
  Section 4.1.

  	
  Securityholders’
  Lists

  	
  20

  
	
  Section 4.2.

  	
  Preservation and
  Disclosure of Lists

  	
  20

  
	
  Section 4.3.

  	
  Reports by the
  Company

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. REMEDIES OF THE TRUSTEE AND
  SECURITYHOLDERS UPON AN EVENT OF DEFAULT

  	
  22

  
	
   

  	
   

  
	
  Section 5.1.

  	
  Events of
  Default

  	
  22

  
	
  Section 5.2.

  	
  Payment of
  Debentures on Default; Suit Therefor

  	
  23

  
	
  Section 5.3.

  	
  Application of
  Moneys Collected by Trustee

  	
  25

  
	
  Section 5.4.

  	
  Proceedings by
  Securityholders

  	
  25

  
	
  Section 5.5.

  	
  Proceedings by
  Trustee

  	
  25

  

 

i

 

	
  Section 5.6.

  	
  Remedies
  Cumulative and Continuing; Delay or Omission Not a Waiver

  	
  25

  
	
  Section 5.7.

  	
  Direction of
  Proceedings and Waiver of Defaults by Majority of Securityholders

  	
  26

  
	
  Section 5.8.

  	
  Notice of
  Defaults

  	
  26

  
	
  Section 5.9.

  	
  Undertaking to
  Pay Costs

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI. CONCERNING THE TRUSTEE

  	
  27

  
	
   

  	
   

  
	
  Section 6.1.

  	
  Duties and
  Responsibilities of Trustee

  	
  27

  
	
  Section 6.2.

  	
  Reliance on Documents, Opinions, etc

  	
  28

  
	
  Section 6.3.

  	
  No
  Responsibility for Recitals, etc

  	
  29

  
	
  Section 6.4.

  	
  Trustee,
  Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
  Debentures

  	
  29

  
	
  Section 6.5.

  	
  Moneys to be
  Held in Trust

  	
  29

  
	
  Section 6.6.

  	
  Compensation and
  Expenses of Trustee

  	
  29

  
	
  Section 6.7.

  	
  Officers’
  Certificate as Evidence

  	
  30

  
	
  Section 6.8.

  	
  Eligibility of
  Trustee

  	
  30

  
	
  Section 6.9.

  	
  Resignation or
  Removal of Trustee

  	
  30

  
	
  Section 6.10.

  	
  Acceptance by Successor
  Trustee

  	
  31

  
	
  Section 6.11.

  	
  Succession by
  Merger, etc

  	
  32

  
	
  Section 6.12.

  	
  Authenticating
  Agents

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. CONCERNING THE SECURITYHOLDERS

  	
  33

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Action by
  Securityholders

  	
  33

  
	
  Section 7.2.

  	
  Proof of
  Execution by Securityholders

  	
  34

  
	
  Section 7.3.

  	
  Who Are Deemed
  Absolute Owners

  	
  34

  
	
  Section 7.4.

  	
  Debentures Owned
  by Company Deemed Not Outstanding

  	
  34

  
	
  Section 7.5.

  	
  Revocation of
  Consents; Future Holders Bound

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. SECURITYHOLDERS’ MEETINGS

  	
  35

  
	
   

  	
   

  
	
  Section 8.1.

  	
  Purposes of Meetings

  	
  35

  
	
  Section 8.2.

  	
  Call of Meetings
  by Trustee

  	
  35

  
	
  Section 8.3.

  	
  Call of Meetings
  by Company or Securityholders

  	
  35

  
	
  Section 8.4.

  	
  Qualifications
  for Voting

  	
  36

  
	
  Section 8.5.

  	
  Regulations

  	
  36

  
	
  Section 8.6.

  	
  Voting

  	
  36

  
	
  Section 8.7.

  	
  Quorum; Actions

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX. SUPPLEMENTAL INDENTURES

  	
  37

  
	
   

  	
   

  
	
  Section 9.1.

  	
  Supplemental
  Indentures without Consent of Securityholders

  	
  37

  
	
  Section 9.2.

  	
  Supplemental
  Indentures with Consent of Securityholders

  	
  38

  
	
  Section 9.3.

  	
  Effect of
  Supplemental Indentures

  	
  39

  
	
  Section 9.4.

  	
  Notation on
  Debentures

  	
  39

  
	
  Section 9.5.

  	
  Evidence of
  Compliance of Supplemental Indenture to be Furnished to Trustee

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE X. REDEMPTION OF SECURITIES

  	
  40

  
	
   

  	
   

  
	
  Section 10.1.

  	
  Optional
  Redemption

  	
  40

  
	
  Section 10.2.

  	
  Special Event
  Redemption

  	
  40

  
	
  Section 10.3.

  	
  Notice of
  Redemption; Selection of Debentures

  	
  40

  

 

ii

 

	
  Section 10.4.

  	
  Payment of Debentures
  Called for Redemption

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE
  AND LEASE

  	
  41

  
	
   

  	
   

  
	
  Section 11.1.

  	
  Company May
  Consolidate, etc, on Certain Terms

  	
  41

  
	
  Section 11.2.

  	
  Successor Entity
  to be Substituted

  	
  41

  
	
  Section 11.3.

  	
  Opinion of
  Counsel to be Given to Trustee

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE

  	
  42

  
	
   

  	
   

  
	
  Section 12.1.

  	
  Discharge of Indenture

  	
  42

  
	
  Section 12.2.

  	
  Deposited Moneys
  to be Held in Trust by Trustee

  	
  42

  
	
  Section 12.3.

  	
  Paying Agent to
  Repay Moneys Held

  	
  43

  
	
  Section 12.4.

  	
  Return of
  Unclaimed Moneys

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII. IMMUNITY OF INCORPORATORS,
  STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
  43

  
	
   

  	
   

  
	
  Section 13.1.

  	
  Indenture and
  Debentures Solely Corporate Obligations

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV. MISCELLANEOUS PROVISIONS

  	
  43

  
	
   

  	
   

  
	
  Section 14.1.

  	
  Successors

  	
  43

  
	
  Section 14.2.

  	
  Official Acts by
  Successor Entity

  	
  43

  
	
  Section 14.3.

  	
  Surrender of
  Company Powers

  	
  43

  
	
  Section 14.4.

  	
  Addresses for
  Notices, etc

  	
  43

  
	
  Section 14.5.

  	
  Governing Law

  	
  44

  
	
  Section 14.6.

  	
  Evidence of
  Compliance with Conditions Precedent

  	
  44

  
	
  Section 14.7.

  	
  Table of
  Contents, Headings, etc

  	
  44

  
	
  Section 14.8.

  	
  Execution in
  Counterparts

  	
  44

  
	
  Section 14.9.

  	
  Separability

  	
  44

  
	
  Section 14.10.

  	
  Assignment

  	
  44

  
	
  Section 14.11.

  	
  Acknowledgment
  of Rights

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV. SUBORDINATION OF DEBENTURES

  	
  45

  
	
   

  	
   

  
	
  Section 15.1.

  	
  Agreement to
  Subordinate

  	
  45

  
	
  Section 15.2.

  	
  Default on
  Senior Indebtedness

  	
  45

  
	
  Section 15.3.

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
  46

  
	
  Section 15.4.

  	
  Subrogation

  	
  47

  
	
  Section 15.5.

  	
  Trustee to
  Effectuate Subordination

  	
  47

  
	
  Section 15.6.

  	
  Notice by the
  Company

  	
  47

  
	
  Section 15.7.

  	
  Rights of the
  Trustee; Holders of Senior Indebtedness

  	
  48

  
	
  Section 15.8.

  	
  Subordination
  May Not Be Impaired

  	
  48

  

 

	
  Exhibit A

  	
  Form of Floating
  Rate Junior Subordinated Deferrable Interest Debenture

  
	
  Exhibit B

  	
  Form of
  Certificate to Trustee

  
	
  Exhibit C

  	
  Form of
  Quarterly Report

  

 

iii

 

THIS INDENTURE, dated as of November 1, 2007,
between Yadkin Valley Financial Corporation, a North Carolina corporation (the “Company”),
and Wilmington Trust Company, a Delaware banking corporation, as debenture
trustee (the “Trustee”).

 

WITNESSETH:

 

WHEREAS, for its lawful corporate purposes, the
Company has duly authorized the issuance of its Floating Rate Junior
Subordinated Deferrable Interest Debentures due 2037 (the “Debentures”)
under this Indenture to provide, among other things, for the execution and
authentication, delivery and administration thereof, and the Company has duly
authorized the execution of this Indenture; and

 

WHEREAS, all acts and things necessary to make this
Indenture a valid agreement according to its terms, have been done and
performed;

 

NOW, THEREFORE, This Indenture Witnesseth:

 

In consideration of the premises, and the purchase of
the Debentures by the holders thereof, the Company covenants and agrees with
the Trustee for the equal and proportionate benefit of the respective holders
from time to time of the Debentures as follows:

 

DEFINITIONS

 

Definitions. The terms
defined in this Section 1.1 (except as herein otherwise expressly provided
or unless the context otherwise requires) for all purposes of this Indenture
and of any indenture supplemental hereto shall have the respective meanings
specified in this Section 1.1. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles and the term “generally accepted
accounting principles” means such accounting principles as are generally
accepted in the United States at the time of any computation. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.

 

“Acceleration Event of Default” means an Event
of Default under Section 5.1(a), (d), (e) or (f), whatever the reason for
such Acceleration Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

 

“Additional Interest” has the meaning set forth
in Section 2.11.

 

“Additional Junior Indebtedness” means, without
duplication and other than the Debentures, any indebtedness, liabilities or
obligations of the Company, or any Subsidiary of the Company, under debt
securities (or guarantees in respect of debt securities) initially issued after
the date of this Indenture to any trust, or a trustee of a trust, partnership
or other entity affiliated with the Company that is, directly or indirectly, a
finance subsidiary (as such term is defined in Rule 3a-5 under the Investment
Company Act of 1940) or other financing vehicle of the Company or any
Subsidiary of the Company in connection with the issuance by that entity of
preferred securities or other securities that are eligible to qualify for
Tier 1 capital treatment (or its then equivalent) for purposes of the
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company (or, if the Company is not a bank holding company,
such guidelines applied to the Company as if the Company were subject to such
guidelines); provided, however, that the inability of the Company
to treat all or any portion of the Additional Junior Indebtedness as
Tier 1 capital shall not disqualify it as Additional Junior Indebtedness
if such inability results from the Company having cumulative preferred stock,
minority interests in consolidated 

 

1

 

subsidiaries, or any
other class of security or interest which the Federal Reserve now or may
hereafter accord Tier 1 capital treatment (including the Debentures) in
excess of the amount which may qualify for treatment as Tier 1 capital
under applicable capital adequacy guidelines.

 

“Additional Sums” has the meaning set forth in
Section 3.6.

 

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

 

“Authenticating Agent” means any agent or
agents of the Trustee which at the time shall be appointed and acting pursuant
to Section 6.12.

 

“Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors.

 

“Board of Directors” means the board of
directors or the executive committee or any other duly authorized designated
officers of the Company.

 

“Board Resolution” means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification and delivered to the Trustee.

 

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

 

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

 

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

 

“Capital Treatment Event” means the receipt by
the Company and the Trust of an opinion of counsel experienced in such matters
to the effect that, as a result of the occurrence of any amendment to, or
change (including any announced prospective change) in, the laws, rules or
regulations of the United States or any political subdivision thereof or
therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of original issuance of the
Debentures, there is more than an insubstantial risk that the Company will not,
within 90 days of the date of such opinion, be entitled to treat an amount
equal to the aggregate liquidation amount of the Capital Securities as “Tier 1
Capital” (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company (or if the Company is not a bank holding company or otherwise is not
subject to the Federal Reserve’s risk-based capital adequacy guidelines, such
guidelines applied to the Company as if the Company were subject to such
guidelines); provided, however, that the inability of the Company
to treat all or any portion of the liquidation amount of the Capital Securities
as Tier l Capital shall not constitute the basis for a Capital Treatment
Event, if such inability results from the Company having cumulative preferred
stock, minority interests in consolidated subsidiaries, or any other class of
security or interest which the 

 

2

 

Federal Reserve or OTS,
as applicable, may now or hereafter accord Tier 1 Capital treatment in
excess of the amount which may now or hereafter qualify for treatment as
Tier 1 Capital under applicable capital adequacy guidelines; provided
further, however, that the distribution of Debentures in
connection with the liquidation of the Trust shall not in and of itself
constitute a Capital Treatment Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.

 

“Certificate” means a certificate signed by any
one of the principal executive officer, the principal financial officer or the
principal accounting officer of the Company.

 

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

 

“Company” means Yadkin Valley Financial
Corporation, a North Carolina corporation, and, subject to the provisions of
Article XI, shall include its successors and assigns.

 

“Coupon Rate” has the meaning set forth in
Section 2.8.

 

“Debenture” or “Debentures” has the
meaning stated in the first recital of this Indenture.

 

“Debenture Register” has the meaning specified
in Section 2.5.

 

“Declaration” means the Amended and Restated
Declaration of Trust of the Trust, as amended or supplemented from time to
time.

 

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

 

“Defaulted Interest” has the meaning set forth
in Section 2.8.

 

“Determination Date” has the meaning set forth
in Section 2.10.

 

“Distribution Period” means (i) with
respect to interest paid on the first Interest Payment Date, the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in December 2007 and (ii) thereafter,
with respect to interest paid on each successive Interest Payment Date, the
period beginning on (and including) the preceding Interest Payment Date and
ending on (but excluding) such current Interest Payment Date.

 

“Event of Default” means any event specified in
Section 5.1, continued for the period of time, if any, and after the
giving of the notice, if any, therein designated.

 

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

 

“Federal Reserve” means the Board of Governors
of the Federal Reserve System, or its designated district bank, as applicable,
and any successor federal agency that is primarily responsible for regulating
the activities of bank holding companies.

 

“Indenture” means this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented, or both.

 

“Institutional Trustee” has the meaning set
forth in the Declaration.

 

3

 

“Interest Payment Date” means March 15,
June 15, September 15 and December 15 of each year during the
term of this Indenture, or if such day is not a Business Day, then the next
succeeding Business Day (it being understood that interest accrues for any such
non-Business Day), commencing in December 2007.

 

“Interest Rate” means for the Distribution
Period beginning on (and including) the date of original issuance and ending on
(but excluding) the Interest Payment Date in December 2007 the rate per annum
of 6.21375%, and for each Distribution Period beginning on or after the Interest
Payment Date in December 2007, the Coupon Rate for such Distribution Period.

 

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

 

“Liquidation Amount” means the stated amount of
$1,000.00 per Trust Security.

 

“Maturity Date” means December 15, 2037.

 

“Officers’ Certificate” means a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the Vice
Chairman, the President, any Managing Director or any Vice President, and by
the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee. Each such certificate shall include the statements provided for in
Section 14.6 if and to the extent required by the provisions of such
Section.

 

“Opinion of Counsel” means an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company, or may be other counsel reasonably satisfactory to the Trustee. Each
such opinion shall include the statements provided for in Section 14.6 if
and to the extent required by the provisions of such Section.

 

“OTS” means the Office of Thrift Supervision
and any successor federal agency that is primarily responsible for regulating
the activities of savings and loan holding companies.

 

The term “outstanding,” when used with
reference to Debentures, means, subject to the provisions of Section 7.4,
as of any particular time, all Debentures authenticated and delivered by the
Trustee or the Authenticating Agent under this Indenture, except:

 

(a)           Debentures
theretofore canceled by the Trustee or the Authenticating Agent or delivered to
the Trustee for cancellation;

 

(b)           Debentures,
or portions thereof, for the payment or redemption of which moneys in the
necessary amount shall have been deposited in trust with the Trustee or with
any paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that, if such Debentures, or portions
thereof, are to be redeemed prior to maturity thereof, notice of such
redemption shall have been given as provided in Section 10.3 or provision
satisfactory to the Trustee shall have been made for giving such notice; and

 

4

 

(c)           Debentures
paid pursuant to Section 2.6 or in lieu of or in substitution for which
other Debentures shall have been authenticated and delivered pursuant to the
terms of Section 2.6 unless proof satisfactory to the Company and the
Trustee is presented that any such Debentures are held by bona fide holders in
due course.

 

“Person” means any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

 

“Predecessor Security” of any particular
Debenture means every previous Debenture evidencing all or a portion of the
same debt as that evidenced by such particular Debenture; and, for purposes of
this definition, any Debenture authenticated and delivered under
Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be
deemed to evidence the same debt as the lost, destroyed or stolen Debenture.

 

“Principal Office of the Trustee,” or other
similar term, means the office of the Trustee, at which at any particular time
its corporate trust business shall be principally administered, which at the
time of the execution of this Indenture shall be Rodney Square North, 1100
North Market Street, Wilmington, Delaware 
19890-1600, Attention: Corporate Trust Administration.

 

“Redemption Date” has the meaning set forth in
Section 10.1.

 

“Redemption Price” means 100% of the principal
amount of the Debentures being redeemed, plus accrued and unpaid interest
(including any Additional Interest) on such Debentures to the Redemption Date.

 

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

 

“Reuters Page LIBOR01” has the meaning set
forth in Section 2.10.

 

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

 

“Securityholder,” “holder of Debentures,” or
other similar terms, means any Person in whose name at the time a particular
Debenture is registered on the register kept by the Company or the Trustee for
that purpose in accordance with the terms hereof.

 

“Senior Indebtedness” means, with respect to
the Company, (i) the principal, premium, if any, and interest in respect
of (A) indebtedness of the Company for all borrowed and purchased money
and (B) indebtedness evidenced by securities, debentures, notes, bonds or
other similar instruments issued by the Company; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement; (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker’s acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all obligations of the
Company associated with derivative products such as interest and foreign
exchange rate contracts, 

 

5

 

commodity contracts, and
similar arrangements; (vi) all obligations of the type referred to in clauses (i)
through (v) above of other Persons for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise including, without
limitation, similar obligations arising from off-balance sheet guarantees and
direct credit substitutes; and (vii) all obligations of the type referred
to in clauses (i) through (vi) above of other Persons secured by any lien
on any property or asset of the Company (whether or not such obligation is
assumed by the Company), whether incurred on or prior to the date of this
Indenture or thereafter incurred. Notwithstanding the foregoing, “Senior
Indebtedness” shall not include (1) any Additional Junior Indebtedness,
(2) Debentures issued pursuant to this Indenture and guarantees in respect
of such Debentures, (3) trade accounts payable of the Company arising in
the ordinary course of business (such trade accounts payable being pari passu in right of payment to the Debentures), or
(4) obligations with respect to which (a) in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are pari passu,
junior or otherwise not superior in right of payment to the Debentures and
(b) the Company, prior to the issuance thereof, has notified (and, if then
required under the applicable guidelines of the regulating entity, has received
approval from) the Federal Reserve (if the Company is a bank holding company)
or the OTS (if the Company is a savings and loan holding company). Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.

 

“Special Event” means any of a Capital
Treatment Event, an Investment Company Event or a Tax Event.

 

“Special Redemption Date” has the meaning set
forth in 0.

 

“Special Redemption Price” means the price set
forth in the following table for any Special Redemption Date that occurs on the
date indicated below (or if such day is not a Business Day, then the next
succeeding Business Day), expressed as the percentage of the principal amount
of the Debentures being redeemed:

 

	
  Month in which Special 

  Redemption Date Occurs

  	
   

  	
  Special Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2007

  	
   

  	
  104.625

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2008

  	
   

  	
  104.300

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2008

  	
   

  	
  104.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2008

  	
   

  	
  103.650

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2008

  	
   

  	
  103.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2009

  	
   

  	
  103.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2009

  	
   

  	
  102.700

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2009

  	
   

  	
  102.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2009

  	
   

  	
  102.050

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2010

  	
   

  	
  101.700

  	
  %

  

 

6

 

	
  June 2010

  	
   

  	
  101.400

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2010

  	
   

  	
  101.050

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2010

  	
   

  	
  100.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2011

  	
   

  	
  100.450

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2011

  	
   

  	
  100.200

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2011 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

plus, in each case,
accrued and unpaid interest (including any Additional Interest) on such
Debentures to the Special Redemption Date.

 

“Subsidiary” means with respect to any Person,
(i) any corporation at least a majority of the outstanding voting stock of
which is owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries,
(ii) any general partnership, joint venture or similar entity, at least a
majority of the outstanding partnership or similar interests of which shall at
the time be owned by such Person, or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner. For the purposes of this definition, “voting stock” means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.

 

“Tax Event” means the receipt by the Company
and the Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of any amendment to or change (including any announced
prospective change) in the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement (including any private
letter ruling, technical advice memorandum, field service advice, regulatory
procedure, notice or announcement, including any notice or announcement of intent
to adopt such procedures or regulations) (an “Administrative Action”) or
judicial decision interpreting or applying such laws or regulations, regardless
of whether such Administrative Action or judicial decision is issued to or in
connection with a proceeding involving the Company or the Trust and whether or
not subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: 
(i) the Trust is, or will be within 90 days of the date of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the
Company on the Debentures is not, or within 90 days of the date of such
opinion, will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes; or (iii) the Trust is, or will
be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.

 

“3-Month LIBOR” has the meaning set forth in
Section 2.10.

 

“Trust” shall mean Yadkin Valley Statutory
Trust I, a Delaware statutory trust, or any other similar trust created
for the purpose of issuing Capital Securities in connection with the issuance
of Debentures under this Indenture, of which the Company is the sponsor.

 

7

 

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

 

“Trustee” means Wilmington Trust Company, and,
subject to the provisions of Article VI hereof, shall also include its
successors and assigns as Trustee hereunder.

 

DEBENTURES

 

Authentication and Dating. Upon
the execution and delivery of this Indenture, or from time to time thereafter,
Debentures in an aggregate principal amount not in excess of $25,774,000.00 may
be executed and delivered by the Company to the Trustee for authentication, and
the Trustee, upon receipt of a written authentication order from the Company,
shall thereupon authenticate and make available for delivery said Debentures to
or upon the written order of the Company, signed by its Chairman of the Board
of Directors, Chief Executive Officer, Vice Chairman, the President, one of its
Managing Directors or one of its Vice Presidents without any further action by
the Company hereunder. Notwithstanding anything to the contrary contained
herein, the Trustee shall be fully protected in relying upon the aforementioned
authentication order and written order in authenticating and delivering said
Debentures. In authenticating such Debentures, and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall
be fully protected in relying upon:

 

a copy of any Board Resolution or Board Resolutions
relating thereto and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the Secretary or an
Assistant Secretary of the Company, as the case may be; and

 

an Opinion of Counsel prepared in accordance with
Section 14.6 which shall also state:

 

that such
Debentures, when authenticated and delivered by the Trustee and issued by the
Company in each case in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and legally binding obligations
of the Company, subject to or limited by applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium and other statutory
or decisional laws relating to or affecting creditors’ rights or the
reorganization of financial institutions (including, without limitation, preference
and fraudulent conveyance or transfer laws), heretofore or hereafter enacted or
in effect, affecting the rights of creditors generally; and

 

that all laws and
requirements in respect of the execution and delivery by the Company of the
Debentures have been complied with and that authentication and delivery of the
Debentures by the Trustee will not violate the terms of this Indenture.

 

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

 

The definitive Debentures shall be typed, printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.

 

Form of Trustee’s Certificate of Authentication.
The Trustee’s certificate of authentication on all Debentures shall be in
substantially the following form:

 

8

 

	
   

  	
  This is one of
  the Debentures referred to in the within-mentioned Indenture.

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  

 

Form and
Denomination of Debentures. The Debentures shall be
substantially in the form of Exhibit A attached hereto. The Debentures shall be
in registered, certificated form without coupons and in minimum denominations
of $100,000.00 and any multiple of $1,000.00 in excess thereof. Any attempted
transfer of the Debentures in a block having an aggregate principal amount of
less than $100,000.00 shall be deemed to be void and of no legal effect
whatsoever. Any such purported transferee shall be deemed not to be a holder of
such Debentures for any purpose, including, but not limited to the receipt of
payments on such Debentures, and such purported transferee shall be deemed to
have no interest whatsoever in such Debentures. The Debentures shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.

 

Execution
of Debentures. The Debentures shall be signed in the name
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman,
President, one of its Managing Directors or one of its Executive Vice
Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as
shall bear thereon a certificate of authentication substantially in the form
herein before recited, executed by the Trustee or the Authenticating Agent by
the manual signature of an authorized signer, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate
by the Trustee or the Authenticating Agent upon any Debenture executed by the
Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.

 

In case any officer of the Company who shall have
signed any of the Debentures shall cease to be such officer before the
Debentures so signed shall have been authenticated and delivered by the Trustee
or the Authenticating Agent, or disposed of by the Company, such Debentures
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debentures had not ceased to be such officer of the
Company; and any Debenture may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debenture, shall be the
proper officers of the Company, although at the date of the execution of this
Indenture any such person was not such an officer.

 

Every Debenture shall be dated the date of its
authentication.

 

Exchange
and Registration of Transfer of Debentures. The Company
shall cause to be kept, at the office or agency maintained for the purpose of
registration of transfer and for exchange as provided in Section 3.2, a
register (the “Debenture Register”) for the Debentures issued hereunder
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration and transfer of all Debentures as in
this Article II provided. The Debenture Register shall be in written form
or in any other form capable of being converted into written form within a
reasonable time.

 

Debentures to be exchanged may be surrendered at the
Principal Office of the Trustee or at any office or agency to be maintained by
the Company for such purpose as provided in Section 3.2, and the Company
shall execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange therefor the Debenture or Debentures which the Securityholder making
the exchange shall be entitled to receive. Upon due 

 

9

 

presentment for
registration of transfer of any Debenture at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose
as provided in Section 3.2, the Company shall execute, the Company or the
Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. Registration
or registration of transfer of any Debenture by the Trustee or by any agent of
the Company appointed pursuant to Section 3.2, and delivery of such
Debenture, shall be deemed to complete the registration or registration of
transfer of such Debenture.

 

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

 

No service charge shall be made for any exchange or
registration of transfer of Debentures, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith.

 

The Company or the Trustee shall not be required to
exchange or register a transfer of any Debenture for a period of 15 days
next preceding the date of selection of Debentures for redemption.

 

Notwithstanding anything herein to the contrary,
Debentures may not be transferred except in compliance with the restricted
securities legend set forth below, unless otherwise determined by the Company,
upon the advice of counsel expert in securities law, in accordance with
applicable law:

 

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND
IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED
STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. 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 AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904
(AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL 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
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S 

 

10

 

RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH
THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

 

THE HOLDER OF THIS SECURITY 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 THE SECURITIES
OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH
RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES
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.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

 

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

 

Mutilated,
Destroyed, Lost or Stolen Debentures. In case any
Debenture shall become mutilated or be destroyed, lost or stolen, the Company
shall execute, and upon its written request the Trustee shall authenticate and
deliver, a new Debenture bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Debenture, or in lieu of and in
substitution for the Debenture so destroyed, lost or stolen. In every case the
applicant for a substituted Debenture shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company and the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Debenture and of the
ownership thereof.

 

The Trustee may authenticate any such substituted
Debenture and deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Debenture, the
Company may require the payment of a sum sufficient to cover any tax or other 

 

11

 

governmental charge that
may be imposed in relation thereto and any other expenses connected therewith. In
case any Debenture which has matured or is about to mature or has been called
for redemption in full shall become mutilated or be destroyed, lost or stolen,
the Company may, instead of issuing a substitute Debenture, pay or authorize
the payment of the same (without surrender thereof except in the case of a
mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them
to save each of them harmless and, in case of destruction, loss or theft,
evidence satisfactory to the Company and to the Trustee of the destruction,
loss or theft of such Debenture and of the ownership thereof.

 

Every substituted Debenture issued pursuant to the
provisions of this Section 2.6 by virtue of the fact that any such
Debenture is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be found at any time, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Debentures duly issued hereunder. All Debentures shall be held and owned upon
the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.

 

Temporary
Debentures. Pending the preparation of definitive
Debentures, the Company may execute and the Trustee shall authenticate and make
available for delivery temporary Debentures that are typed, printed or
lithographed. Temporary Debentures shall be issuable in any authorized
denomination, and substantially in the form of the definitive Debentures in
lieu of which they are issued but with such omissions, insertions and
variations as may be appropriate for temporary Debentures, all as may be
determined by the Company. Every such temporary Debenture shall be executed by
the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Debentures. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debentures and thereupon any
or all temporary Debentures may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.2, and
the Trustee or the Authenticating Agent shall authenticate and make available
for delivery in exchange for such temporary Debentures a like aggregate
principal amount of such definitive Debentures. Such exchange shall be made by
the Company at its own expense and without any charge therefor except that in
case of any such exchange involving a registration of transfer the Company may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in relation thereto. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Indenture as definitive Debentures authenticated and delivered
hereunder.

 

Payment
of Interest and Additional Interest. Interest at the
Interest Rate and any Additional Interest on any Debenture that is payable, and
is punctually paid or duly provided for, on any Interest Payment Date for
Debentures shall be paid to the Person in whose name said Debenture (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment except that interest and any
Additional Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid.

 

Each Debenture shall bear interest for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in December 2007 at a rate per annum of
6.21375%, and shall bear interest for each successive Distribution Period
beginning on or after the Interest Payment Date in December 2007 at a rate per
annum equal to the 3-Month LIBOR, determined as described in Section 2.10,
plus 1.32% (the “Coupon Rate”), applied to the principal amount thereof,
until 

 

12

 

the principal thereof
becomes due and payable, and on any overdue principal and to the extent that
payment of such interest is enforceable under applicable law (without
duplication) on any overdue installment of interest (including Additional
Interest) at the Interest Rate in effect for each applicable period compounded
quarterly. Interest shall be payable (subject to any relevant Extension Period)
quarterly in arrears on each Interest Payment Date with the first installment
of interest to be paid on the Interest Payment Date in December 2007.

 

Any interest on any Debenture, including Additional
Interest, that is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the registered holder on the relevant regular
record date by virtue of having been such holder; and such Defaulted Interest
shall be paid by the Company to the Persons in whose names such Debentures (or
their respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted Interest,
which shall be fixed in the following manner: the Company shall notify the
Trustee in writing at least 25 days prior to the date of the proposed payment
of the amount of Defaulted Interest proposed to be paid on each such Debenture
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15 nor less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the special record date therefor to be mailed,
first class postage prepaid, to each Securityholder at its address as it
appears in the Debenture Register, not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Persons in whose names such Debentures (or their
respective Predecessor Securities) are registered on such special record date
and shall be no longer payable.

 

The Company may make payment of any Defaulted Interest
on any Debentures in any other lawful manner after notice given by the Company
to the Trustee of the proposed payment method; provided, however,
the Trustee in its sole discretion deems such payment method to be practical.

 

Any interest (including Additional Interest) scheduled
to become payable on an Interest Payment Date occurring during an Extension
Period shall not be Defaulted Interest and shall be payable on such other date
as may be specified in the terms of such Debentures.

 

The term “regular record date” as used in this Section
shall mean the close of business on the 15th Business Day preceding the
applicable Interest Payment Date.

 

Subject to the foregoing provisions of this Section,
each Debenture delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by such other
Debenture.

 

Cancellation
of Debentures Paid, etc. All Debentures surrendered for
the purpose of payment, redemption, exchange or registration of transfer, shall,
if surrendered to the Company or any paying agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee or any
Authenticating Agent, shall be promptly canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. All Debentures canceled by any Authenticating
Agent shall be delivered to the Trustee. The Trustee shall destroy all canceled
Debentures 

 

13

 

unless the Company
otherwise directs the Trustee in writing. If the Company shall acquire any of
the Debentures, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Debentures unless and
until the same are surrendered to the Trustee for cancellation.

 

Computation
of Interest. The amount of interest payable for each
Distribution Period will be calculated by applying the Interest Rate to the
principal amount outstanding at the commencement of the Distribution Period on
the basis of the actual number of days in the Distribution Period concerned
divided by 360. All percentages resulting from any calculations on the
Debentures will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).

 

“3-Month LIBOR” means the London interbank
offered interest rate for three-month, U.S. dollar deposits determined by the
Trustee in the following order of priority:

 

(1)           the
rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on Reuters Page LIBOR01 as of 11:00 a.m.
(London time) on the related Determination Date (as defined below). “Reuters
Page LIBOR01” means the display designated as “LIBOR01” on Reuters or such
other page as may replace Reuters Page LIBOR01 on that service or such other
service or services as may be nominated by the British Bankers’ Association as
the information vendor for the purpose of displaying London interbank offered rates
for U.S. dollar deposits;

 

(2)           if
such rate cannot be identified on the related Determination Date, the Trustee
will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations;

 

(3)           if
fewer than two such quotations are provided as requested in clause (2)
above, the Trustee will request four major New York City banks to provide such
banks’ offered quotations (expressed as percentages per annum) to leading
European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on
such Determination Date. If at least two such quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations; and

 

(4)           if
fewer than two such quotations are provided as requested in clause (3)
above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period.

 

If the rate for U.S. dollar deposits having a three-month
maturity that initially appears on Reuters Page LIBOR01 as of 11:00 a.m.
(London time) on the related Determination Date is superseded on the Reuters
Page LIBOR01 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

 

(b)           The
Interest Rate for any Distribution Period will at no time be higher than the
maximum rate then permitted by New York law as the same may be modified by
United States law.

 

14

 

“Determination Date” means the date that is two
London Banking Days (i.e., a business day in which dealings in deposits in U.S.
dollars are transacted in the London interbank market) preceding the particular
Distribution Period for which a Coupon Rate is being determined.

 

The Trustee shall notify the Company, the
Institutional Trustee and any securities exchange or interdealer quotation
system on which the Capital Securities are listed, of the Coupon Rate and the
Determination Date for each Distribution Period, in each case as soon as
practicable after the determination thereof but in no event later than the
thirtieth (30th) day of the relevant Distribution Period. Failure to notify the
Company, the Institutional Trustee or any securities exchange or interdealer
quotation system, or any defect in said notice, shall not affect the obligation
of the Company to make payment on the Debentures at the applicable Coupon Rate.
Any error in the calculation of the Coupon Rate by the Trustee may be corrected
at any time by notice delivered as above provided. Upon the request of a holder
of a Debenture, the Trustee shall provide the Coupon Rate then in effect and,
if determined, the Coupon Rate for the next Distribution Period.

 

Subject to the corrective rights set forth above, all
certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions relating to the payment and calculation of interest on the
Debentures and distributions on the Capital Securities by the Trustee or the
Institutional Trustee will (in the absence of willful default, bad faith and
manifest error) be final, conclusive and binding on the Trust, the Company and
all of the holders of the Debentures and the Capital Securities, and no
liability shall (in the absence of willful default, bad faith or manifest
error) attach to the Trustee or the Institutional Trustee in connection with
the exercise or non-exercise by either of them or their respective powers,
duties and discretion.

 

Extension
of Interest Payment Period. So long as no Acceleration
Event of Default has occurred and is continuing, the Company shall have the
right, from time to time, and without causing an Event of Default, to defer
payments of interest on the Debentures by extending the interest payment period
on the Debentures at any time and from time to time during the term of the
Debentures, for up to 20 consecutive quarterly periods (each such extended
interest payment period, an “Extension Period”), during which Extension
Period no interest (including Additional Interest) shall be due and payable
(except any Additional Sums that may be due and payable). No Extension Period
may end on a date other than an Interest Payment Date. During an Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Interest Rate
in effect for such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as “Additional
Interest”). At the end of any such Extension Period the Company shall pay
all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date; provided  further,
however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate to (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s or such Affiliate’s capital stock (other
than payments of dividends or distributions to the Company or payments of
dividends from direct or indirect subsidiaries of the Company to their parent
corporations, which also shall be direct or indirect subsidiaries of the
Company) or make any guarantee payments with respect to the foregoing or
(ii) make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in
all respects with or junior in interest to the Debentures (other than, with
respect to clauses (i) or (ii) above, (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Company in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital 

 

15

 

stock) as consideration
in an acquisition transaction entered into prior to the applicable Extension
Period, (b) as a result of any exchange or conversion of any class or
series of the Company’s capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company’s capital stock or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s capital stock, (c) the purchase of fractional interests in
shares of the Company’s capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholders’
rights plan, or the issuance of rights, stock or other property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant
thereto, (e) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith,
(f) payments of principal or interest on debt securities or payments of
cash dividends or distributions on any capital stock issued by an Affiliate
that is not, in whole or in part, a subsidiary of the Company (or any
redemptions, repurchases or liquidation payments on such stock or securities),
or (g) payments under the Capital Securities Guarantee). Prior to the
termination of any Extension Period, the Company may further extend such
period, provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject
to the foregoing requirements. No interest or Additional Interest shall be due
and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest to the extent permitted by
applicable law. The Company must give the Trustee notice of its election to
begin or extend an Extension Period by the close of business at least 15
Business Days prior to the Interest Payment Date with respect to which interest
on the Debentures would have been payable except for the election to begin or
extend such Extension Period. The Trustee shall give notice of the Company’s
election to begin a new Extension Period to the Securityholders.

 

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

 

PARTICULAR COVENANTS OF THE COMPANY

 

Payment
of Principal, Premium and Interest; Agreed Treatment of the Debentures.

 

The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest and any Additional Interest
and other payments on the Debentures at the place, at the respective times and
in the manner provided in this Indenture and the Debentures. Each installment
of interest on the Debentures may be paid (i) by mailing checks for such
interest payable to the order of the holders of Debentures entitled thereto as
they appear on the registry books of the Company if a request for a wire
transfer has not been received by the Company or (ii) by wire transfer to
any account with a banking institution located in the United States designated
in writing by such Person to the paying agent no later than the related record
date. Notwithstanding the foregoing, so long as the holder of this Debenture is
the Institutional Trustee, the payment of the principal of and 

 

16

 

interest on this
Debenture will be made in immediately available funds at such place and to such
account as may be designated by the Institutional Trustee.

 

The Company will treat the Debentures as indebtedness,
and the amounts payable in respect of the principal amount of such Debentures
as interest, for all United States federal income tax purposes. All payments in
respect of such Debentures will be made free and clear of United States
withholding tax to any beneficial owner thereof that has provided an Internal
Revenue Service Form W8 BEN (or any substitute or successor form) establishing
its non-United States status for United States federal income tax purposes.

 

As of the date of this Indenture, the Company has no
present intention to exercise its right under 0 to defer payments of interest
on the Debentures by commencing an Extension Period.

 

As of the date of this Indenture, the Company believes
that the likelihood that it would exercise its right under 0 to defer payments
of interest on the Debentures by commencing an Extension Period at any time
during which the Debentures are outstanding is remote because of the restrictions
that would be imposed on the Company’s ability to declare or pay dividends or
distributions on, or to redeem, purchase or make a liquidation payment with
respect to, any of its outstanding equity and on the Company’s ability to make
any payments of principal of or interest on, or repurchase or redeem, any of
its debt securities that rank pari passu in
all respects with (or junior in interest to) the Debentures.

 

Offices
for Notices and Payments, etc. So long as any of the
Debentures remain outstanding, the Company will maintain in Wilmington,
Delaware, an office or agency where the Debentures may be presented for
payment, an office or agency where the Debentures may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by 0, such
office or agency for all of the above purposes shall be the office or agency of
the Trustee. In case the Company shall fail to maintain any such office or
agency in Wilmington, Delaware, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the Principal Office of the Trustee.

 

In addition to any such office or agency, the Company
may from time to time designate one or more offices or agencies outside
Wilmington, Delaware, where the Debentures may be presented for registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in Wilmington, Delaware, for
the purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.

 

Appointments
to Fill Vacancies in Trustee’s Office. The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 6.9, a Trustee, so that there
shall at all times be a Trustee hereunder.

 

Provision
as to Paying Agent.

 

If the Company
shall appoint a paying agent other than the Trustee, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provision of this
Section 3.4,

 

17

 

that it will hold
all sums held by it as such agent for the payment of the principal of and
premium, if any, or interest, if any, on the Debentures (whether such sums have
been paid to it by the Company or by any other obligor on the Debentures) in
trust for the benefit of the holders of the Debentures;

 

that it will give
the Trustee prompt written notice of any failure by the Company (or by any
other obligor on the Debentures) to make any payment of the principal of and
premium, if any, or interest, if any, on the Debentures when the same shall be
due and payable; and

 

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

 

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

 

Whenever the Company shall have one or more paying
agents for the Debentures, it will, on or prior to each due date of the
principal of and premium, if any, or interest, if any, on the Debentures,
deposit with a paying agent a sum sufficient to pay the principal, premium,
interest or other payments so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto and (unless such paying agent is
the Trustee) the Company shall promptly notify the Trustee in writing of its
action or failure to act.

 

Anything in this Section 3.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Debentures, or for any other
reason, pay, or direct any paying agent to pay to the Trustee all sums held in
trust by the Company or any such paying agent, such sums to be held by the
Trustee upon the trusts herein contained.

 

Anything in this Section 3.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this
Section 3.4 is subject to Sections 12.3 and 12.4.

 

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

 

Additional
Sums. If and for so long as the Trust is the holder of
all Debentures and the Trust is required to pay any additional taxes (including
withholding taxes), duties, assessments or other governmental charges as a
result of a Tax Event, the Company will pay such additional amounts (“Additional
Sums”) on the Debentures as shall be required so that the net amounts
received and retained by the Trust after paying taxes (including withholding
taxes), duties, assessments or other governmental charges will be equal to the
amounts the Trust would have received if no such taxes, duties, assessments or
other governmental charges had been imposed. Whenever in this Indenture or the
Debentures there is a 

 

18

 

reference in any context
to the payment of principal of or interest on the Debentures, such mention
shall be deemed to include mention of payments of the Additional Sums provided
for in this paragraph to the extent that, in such context, Additional Sums are,
were or would be payable in respect thereof pursuant to the provisions of this
paragraph and express mention of the payment of Additional Sums (if applicable)
in any provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made; provided,
however, that the deferral of the payment of interest during an
Extension Period pursuant to Section 2.11 shall not defer the payment of
any Additional Sums that may be due and payable.

 

Compliance
with Consolidation Provisions. The Company will not,
while any of the Debentures remain outstanding, consolidate with, or merge
into, or merge into itself, or sell or convey all or substantially all of its
property to any other Person unless the provisions of Article XI hereof
are complied with.

 

Limitation
on Dividends. If Debentures are initially issued to the
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held
by such Trust) and (i) there shall have occurred and be continuing an Event
of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee, or
(iii) the Company shall have given notice of its election to defer
payments of interest on the Debentures by extending the interest payment period
as provided herein and such period, or any extension thereof, shall be
continuing, then the Company shall not, and shall not allow any Affiliate of
the Company to, (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Company’s capital stock or its Affiliates’ capital stock (other than
payments of dividends or distributions to the Company or payments of dividends
from direct or indirect subsidiaries of the Company to their parent
corporations, which also shall be direct or indirect subsidiaries of the
Company) or make any guarantee payments with respect to the foregoing or
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
that rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (x)
and (y) above,  (1) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, if any, (2) as a result of any
exchange or conversion of any class or series of the Company’s capital stock
(or any capital stock of a subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock,
(3) the purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (4) any declaration of
a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other property under any stockholders’ rights plan, or the
redemption or repurchase of rights pursuant thereto, (5) any dividend in
the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights
is the same stock as that on which the dividend is being paid or ranks pari
passu with or junior to such stock and any cash payments in lieu of fractional
shares issued in connection therewith, (6) payments of principal or
interest on debt securities or payments of cash dividends or distributions on
any capital stock issued by an Affiliate that is not, in whole or in part, a
subsidiary of the Company (or any redemptions, repurchases or liquidation
payments on such stock or securities), or (7) payments under the Capital
Securities Guarantee).

 

19

 

Covenants
as to the Trust. For so long as the Trust Securities
remain outstanding, the Company shall maintain 100% ownership of the Common
Securities; provided, however, that any permitted successor of
the Company under this Indenture may succeed to the Company’s ownership of such
Common Securities. The Company, as owner of the Common Securities, shall,
except in connection with a distribution of Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, cause the Trust 
(a) to remain a statutory trust, (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes,
and (c) to cause each holder of Trust Securities to be treated as owning
an undivided beneficial interest in the Debentures.

 

Additional
Junior Indebtedness. The Company shall not, and it shall
not cause or permit any Subsidiary of the Company to, incur, issue or be
obligated on any Additional Junior Indebtedness, either directly or indirectly,
by way of guarantee, suretyship or otherwise, other than Additional Junior
Indebtedness (i) that, by its terms, is expressly stated to be either
junior and subordinate or pari passu in
all respects to the Debentures, and (ii) of which the Company has notified
(and, if then required under the applicable guidelines of the regulating
entity, has received approval from) the Federal Reserve, if the Company is a
bank holding company, or the OTS, if the Company is a savings and loan holding
company.

 

Subsidiary;
Insured Depository Institution. So long as any of the Debentures remain outstanding, at least one
operating Subsidiary of the Company shall be an insured depository institution,
as such term is defined in Section 3(c)(2) of the Federal Deposit Insurance
Act, as amended.

 

SECURITYHOLDERS’ LISTS AND REPORTS

BY THE COMPANY AND THE TRUSTEE

 

Securityholders’
Lists. The Company covenants and agrees that it will
furnish or cause to be furnished to the Trustee:

 

on each regular record date for the Debentures, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Securityholders of the Debentures as of such record date; and

 

at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;

 

except that no such lists
need be furnished under this Section 4.1 so long as the Trustee is in
possession thereof by reason of its acting as Debenture registrar.

 

Preservation
and Disclosure of Lists.

 

The Trustee shall
preserve, in as current a form as is reasonably practicable, all information as
to the names and addresses of the holders of Debentures (1) contained in
the most recent list furnished to it as provided in Section 4.1 or
(2) received by it in the capacity of Debentures registrar (if so acting)
hereunder. The Trustee may destroy any list furnished to it as provided in
Section 4.1 upon receipt of a new list so furnished.

 

In case three or more holders of Debentures
(hereinafter referred to as “applicants”) apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Debenture for a period of at least 6 months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Debentures with respect to their 

 

20

 

rights under this
Indenture or under such Debentures and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then
the Trustee shall within 5 Business Days after the receipt of such application,
at its election, either:

 

afford such
applicants access to the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.2,
or

 

inform such
applicants as to the approximate number of holders of Debentures whose names
and addresses appear in the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.2,
and as to the approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.

 

If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Securityholder whose name and address
appear in the information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.2 a copy of
the form of proxy or other communication which is specified in such request
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender, the Trustee shall mail
to such applicants and file with the Securities and Exchange Commission, if
permitted or required by applicable law, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
all Debentures, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If said
Commission, as permitted or required by applicable law, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, said Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.

 

Each and every holder of Debentures, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable by
reason of the disclosure of any such information as to the names and addresses of
the holders of Debentures in accordance with the provisions of
subsection (b) of this Section 4.2, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
said subsection (b).

 

Reports
by the Company. The Company shall furnish to the holders
of the Capital Securities and to prospective purchasers of the Capital
Securities, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act.

 

The Company shall furnish to (i) Wilmington Trust
Company, with a copy to FTN Financial Capital Markets and Keefe,
Bruyette & Woods, Inc., and (ii) any beneficial owner of the
Capital Securities reasonably identified to the Company, a completed quarterly
report in the form attached hereto as Exhibit C, which report shall
be so furnished by the Company not later than 50 days after the end of each of
the first three fiscal quarters of each fiscal year of the Company and not
later than 100 days after the end of each fiscal year of the Company along with
a copy of the Company’s most recently filed (1) FR Y-9C filed with the
Federal Reserve if the Company is a bank holding company, (2) FR Y-9SP
filed with the Federal Reserve if the Company is a small bank holding company
or (3) H-(b)11 filed with the OTS if the Company is a savings and loan
holding company.

 

21

 

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

UPON AN EVENT OF DEFAULT

 

Events of
Default. “Event
of Default,” wherever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

the Company defaults in the payment of any interest
upon any Debenture, including any Additional Interest in respect thereof,
following the nonpayment of any such interest for twenty or more consecutive
Distribution Periods; or

 

the Company defaults in the payment of all or any part
of the principal of (or premium, if any, on) any Debentures as and when the
same shall become due and payable either at maturity, upon redemption, by
declaration of acceleration or otherwise; or

 

the Company defaults in the performance of, or
breaches, any of its covenants or agreements in this Indenture or in the terms
of the Debentures established as contemplated in this Indenture (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Debentures, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or

 

a court of competent jurisdiction shall enter a decree
or order for relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or

 

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

 

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

 

If an Acceleration Event of Default occurs and is
continuing with respect to the Debentures, then, and in each and every such
case, unless the principal of the Debentures shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding hereunder, by notice in writing
to the Company (and to the Trustee if given by Securityholders), may declare
the entire principal of the Debentures and the interest accrued thereon, if
any, to be due and payable immediately, and upon any such declaration the same
shall become 

 

22

 

immediately due and
payable. If an Event of Default under Section 5.1(b) or (c) occurs and is
continuing with respect to the Debentures, then, and in each and every such
case, unless the principal of the Debentures shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding hereunder, by notice in
writing to the Company (and to the Trustee if given by Securityholders), may
proceed to remedy the default or breach thereunder by such appropriate judicial
proceedings as the Trustee or such holders shall deem most effectual to remedy
the defaulted covenant or enforce the provisions of this Indenture so breached,
either by suit in equity or by action at law, for damages or otherwise.

 

The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Debentures shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Debentures
and the principal of and premium, if any, on the Debentures which shall have
become due otherwise than by acceleration (with interest upon such principal
and premium, if any, and Additional Interest) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other amounts
due to the Trustee pursuant to Section 6.6, if any, and (ii) all
Events of Default under this Indenture, other than the non-payment of the
principal of or premium, if any, on Debentures which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein — then and in every such case the holders of a majority in
aggregate principal amount of the Debentures then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults and rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.

 

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

 

Payment
of Debentures on Default; Suit Therefor. The Company
covenants that upon the occurrence of an Event of Default pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee, the Company will
pay to the Trustee, for the benefit of the holders of the Debentures the whole
amount that then shall have become due and payable on all Debentures for principal
and premium, if any, or interest, or both, as the case may be, with Additional
Interest accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the
Trust or a trustee of such Trust, without duplication of any other amounts paid
by the Trust or a trustee in respect thereof); and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including a reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any other amounts due to the Trustee under
Section 6.6. In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debentures and collect in the manner provided by law out of the
property of the Company or any other obligor on such Debentures wherever
situated the moneys adjudged or decreed to be payable.

 

23

 

In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other obligor on the
Debentures under Bankruptcy Law, or in case a receiver or trustee shall have
been appointed for the property of the Company or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or other
obligor upon the Debentures, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Debentures shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.2, shall be
entitled and empowered, by intervention in such proceedings or otherwise,

 

(i)            to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Debentures,

 

(ii)           in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all other amounts due to the Trustee under
Section 6.6), and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Debentures, or
to the creditors or property of the Company or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Debentures in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings or
Person performing similar functions in comparable proceedings,

 

(iii)          to collect and receive any moneys or other
property payable or deliverable on any such claims, and

 

(iv)          to
distribute the same after the deduction of its charges and expenses.

 

Any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other amounts due to
the Trustee under Section 6.6.

 

Nothing herein contained shall be construed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.

 

All rights of action and of asserting claims under
this Indenture, or under any of the Debentures, may be enforced by the Trustee
without the possession of any of the Debentures, or the production thereof at
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures.

 

In any proceedings brought by the Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to represent
all the holders of the Debentures, and it shall not be necessary to make any
holders of the Debentures parties to any such proceedings.

 

24

 

Application
of Moneys Collected by Trustee. Any moneys collected by
the Trustee pursuant to this Article V shall be applied in the following
order, at the date or dates fixed by the Trustee for the distribution of such
moneys, upon presentation of the several Debentures in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:

 

First:  To the
payment of costs and expenses incurred by, and reasonable fees of, the Trustee,
its agents, attorneys and counsel, and of all other amounts due to the Trustee
under Section 6.6;

 

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

 

Third:  To the
payment of the amounts then due and unpaid upon Debentures for principal (and
premium, if any), and interest on the Debentures, in respect of which or for
the benefit of which money has been collected, ratably, without preference or
priority of any kind, according to the amounts due on such Debentures
(including Additional Interest); and

 

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

 

Proceedings
by Securityholders. No holder of any Debenture shall have
any right to institute any suit, action or proceeding for any remedy hereunder,
unless such holder previously shall have given to the Trustee written notice of
an Event of Default with respect to the Debentures and unless the holders of
not less than 25% in aggregate principal amount of the Debentures then
outstanding shall have given the Trustee a written request to institute such
action, suit or proceeding and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and liabilities
to be incurred thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action, suit or proceeding.

 

Notwithstanding any other provisions in this
Indenture, however, the right of any holder of any Debenture to receive payment
of the principal of, premium, if any, and interest, on such Debenture when due,
or to institute suit for the enforcement of any such payment, shall not be
impaired or affected without the consent of such holder and by accepting a
Debenture hereunder it is expressly understood, intended and covenanted by the
taker and holder of every Debenture with every other such taker and holder and
the Trustee, that no one or more holders of Debentures shall have any right in
any manner whatsoever by virtue or by availing itself of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any
other Debentures, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Debentures. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

 

Proceedings
by Trustee. In case of an Event of Default hereunder the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.

 

Remedies
Cumulative and Continuing; Delay or Omission Not a Waiver. Except
as otherwise provided in Section 2.6, all powers and remedies given by
this Article V to the Trustee or to the Securityholders shall, to the
extent permitted by law, be deemed cumulative and not exclusive of any 

 

25

 

other powers and remedies
available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture or otherwise established
with respect to the Debentures, and no delay or omission of the Trustee or of
any holder of any of the Debentures to exercise any right, remedy or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right, remedy or power, or shall be construed to be a waiver of
any such default or an acquiescence therein; and, subject to the provisions of
Section 5.4, every power and remedy given by this Article V or by law
to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee (in accordance with
its duties under Section 6.1) or by the Securityholders.

 

Direction
of Proceedings and Waiver of Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the Debentures
affected (voting as one class) at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to such Debentures; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the
right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if a Responsible Officer of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.

 

The holders of a majority in aggregate principal
amount of the Debentures at the time outstanding may on behalf of the holders
of all of the Debentures waive (or modify any previously granted waiver of) any
past default or Event of Default, and its consequences, except a default
(a) in the payment of principal of, premium, if any, or interest on any of
the Debentures, (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each
Debenture affected, or (c) in respect of the covenants contained in Section 3.9;
provided, however, that if the Debentures are held by the Trust
or a trustee of such trust, such waiver or modification to such waiver shall
not be effective until the holders of a majority in Liquidation Amount of Trust
Securities of the Trust shall have consented to such waiver or modification to
such waiver, provided, further, that if the consent of the holder
of each outstanding Debenture is required, such waiver shall not be effective
until each holder of the Trust Securities of the Trust shall have consented to
such waiver. Upon any such waiver, the default covered thereby shall be deemed
to be cured for all purposes of this Indenture and the Company, the Trustee and
the holders of the Debentures shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section, said default or Event of Default shall for
all purposes of the Debentures and this Indenture be deemed to have been cured
and to be not continuing.

 

Notice of
Defaults. The Trustee shall, within 90 days after
the actual knowledge by a Responsible Officer of the Trustee of the occurrence
of a default with respect to the Debentures, mail to all Securityholders, as
the names and addresses of such holders appear upon the Debenture Register,
notice of all defaults with respect to the Debentures known to the Trustee,
unless such defaults shall have been cured before the giving of such notice
(the term “defaults” for the purpose of this Section 5.8 being hereby
defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section 5.1, not including periods of grace, if any, provided for
therein); provided, however, that, except in the case of default
in the payment of the principal of, premium, if any, or interest on any of the
Debentures, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders.

 

26

 

Undertaking
to Pay Costs. All parties to this Indenture agree, and
each holder of any Debenture by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the
provisions of this Section 5.9 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding in the aggregate more than 10% in principal amount of
the Debentures outstanding, or to any suit instituted by any Securityholder for
the enforcement of the payment of the principal of (or premium, if any) or
interest on any Debenture against the Company on or after the same shall have
become due and payable.

 

CONCERNING THE TRUSTEE

 

Duties
and Responsibilities of Trustee. With respect to the
holders of Debentures issued hereunder, the Trustee, prior to the occurrence of
an Event of Default with respect to the Debentures and after the curing or
waiving of all Events of Default which may have occurred, with respect to the
Debentures, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants shall be
read into this Indenture against the Trustee. In case an Event of Default with
respect to the Debentures has occurred (which has not been cured or waived),
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

 

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

 

prior to the occurrence of an Event of Default with respect
to Debentures and after the curing or waiving of all Events of Default which
may have occurred

 

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

 

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

 

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

 

the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.7, relating to the
time, 

 

27

 

method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.

 

None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is ground for believing that
the repayment of such funds or liability is not assured to it under the terms
of this Indenture or indemnity satisfactory to the Trustee against such risk is
not reasonably assured to it.

 

Reliance on Documents, Opinions, etc. Except as
otherwise provided in Section 6.1: 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

with the exceptions of defaults under Sections 5.1(a)
or (b), the Trustee shall not be charged with knowledge of any Default or Event
of Default with respect to the Debentures unless a written notice of such
Default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on the Debentures or by any holder of the Debentures.

 

No
Responsibility for Recitals, etc. The recitals contained
herein and in the Debentures (except in the certificate of authentication of
the Trustee or the Authenticating Agent) shall be taken as the statements of
the Company, and the Trustee and the Authenticating Agent assume no
responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating
Agent shall not be accountable for the use or application by the Company of any
Debentures or the proceeds of any Debentures authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.

 

Trustee,
Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
Debentures. The Trustee or any Authenticating Agent or
any paying agent or any transfer agent or any Debenture registrar, in its
individual or any other capacity, may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating
Agent, paying agent, transfer agent or Debenture registrar.

 

Moneys to
be Held in Trust. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent
shall, until used or applied as herein provided, be held in trust for the
purpose for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee and any paying agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company. So long as no Event of
Default shall have occurred and be continuing, all interest allowed on any such
moneys shall be paid from time to time upon the written order of the Company,
signed by the Chairman of the Board of Directors, the Chief Executive Officer,
the President, a Managing Director, a Vice President, the Treasurer or an
Assistant Treasurer of the Company.

 

Compensation
and Expenses of Trustee. The Company covenants and agrees
to pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or willful misconduct. For purposes of
clarification, this Section 6.6 does not contemplate the payment by the
Company of acceptance or annual administration fees owing to the Trustee
pursuant to the services to be provided by the Trustee under this Indenture or
the fees and expenses of the Trustee’s counsel in connection with the closing
of the transactions contemplated by this Indenture. The Company also covenants
to indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or willful
misconduct on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim of liability. The obligations of
the Company under this Section 6.6 to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional
indebtedness shall be secured by a lien prior to that of the Debentures upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the holders of particular Debentures.

 

29

 

Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses or renders
services in connection with an Event of Default specified in
Section 5.1(d), (e) or (f), the expenses (including the reasonable charges
and expenses of its counsel) and the compensation for the services are intended
to constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.

 

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

 

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

 

Officers’
Certificate as Evidence. Except as otherwise provided in
Sections 6.1 and 6.2, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers’ Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or willful misconduct on the part of the Trustee, shall
be full warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.

 

Eligibility
of Trustee. The Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia or a
corporation or other Person authorized under such laws to exercise corporate
trust powers, having (or whose obligations under this Indenture are guaranteed
by an affiliate having) a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000.00) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 6.8 the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent records of condition so published.

 

The Company may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control with the
Company, serve as Trustee.

 

In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.8, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.9.

 

If the Trustee has or shall acquire any “conflicting
interest” within the meaning of § 310(b) of the Trust Indenture Act of 1939,
the Trustee shall either eliminate such interest or resign, to the extent and
in the manner described by this Indenture.

 

Resignation
or Removal of Trustee
The Trustee, or any trustee or trustees hereafter appointed, may at any time
resign by giving written notice of such resignation to the Company and by
mailing notice thereof, at the Company’s expense, to the holders of the
Debentures at their addresses as they shall appear on the Debenture Register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed by
order of its Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor

 

30

 

Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of resignation to the affected
Securityholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Securityholder
who has been a bona fide holder of a Debenture or Debentures for at least six
months may, subject to the provisions of Section 5.9, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor Trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Trustee.

 

In case at any time any of the following shall occur —

 

the Trustee shall
fail to comply with the provisions of Section 6.8 after written request
therefor by the Company or by any Securityholder who has been a bona fide
holder of a Debenture or Debentures for at least 6 months, or

 

the Trustee shall
cease to be eligible in accordance with the provisions of Section 6.8 and
shall fail to resign after written request therefor by the Company or by any
such Securityholder, or

 

the Trustee shall
become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any such
case, the Company may remove the Trustee and appoint a successor Trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor Trustee, or, subject to the provisions of
Section 5.9, any Securityholder who has been a bona fide holder of a
Debenture or Debentures for at least 6 months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint successor Trustee.

 

Upon prior written notice to the Company and the
Trustee, the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor Trustee, which shall be deemed appointed as successor
Trustee unless within 10 Business Days after such nomination the Company
objects thereto, in which case, or in the case of a failure by such holders to
nominate a successor Trustee, the Trustee so removed or any Securityholder,
upon the terms and conditions and otherwise as in subsection (a) of this
Section 6.9 provided, may petition any court of competent jurisdiction for
an appointment of a successor.

 

Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
Trustee as provided in Section 6.10.

 

Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.9 shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations with respect to the
Debentures of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Company or of the successor Trustee, the Trustee ceasing to act shall, upon 

 

31

 

payment of any
amounts then due it pursuant to the provisions of Section 6.6, execute and
deliver an instrument transferring to such successor Trustee all the rights and
powers of the Trustee so ceasing to act and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee thereunder. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor Trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 6.6.

 

If a successor Trustee is appointed, the Company, the
retiring Trustee and the successor Trustee shall execute and deliver an
indenture supplemental hereto which shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debentures as to which
the predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee.

 

No successor Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Trustee shall be eligible under the provisions of Section 6.8.

 

In no event shall a retiring Trustee be liable for the
acts or omissions of any successor Trustee hereunder.

 

Upon acceptance of appointment by a successor Trustee
as provided in this Section 6.10, the Company shall mail notice of the
succession of such Trustee hereunder to the holders of Debentures at their
addresses as they shall appear on the Debenture Register. If the Company fails
to mail such notice within 10 Business Days after the acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Company.

 

Succession by Merger, etc. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided such corporation shall be otherwise eligible and
qualified under this Article.

 

In case at the time such successor to the Trustee
shall succeed to the trusts created by this Indenture any of the Debentures
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee,
and deliver such Debentures so authenticated; and in case at that time any of
the Debentures shall not have been authenticated, any successor to the Trustee
may authenticate such Debentures either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debentures
or in this Indenture provided that the certificate of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Debentures in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.

 

Authenticating Agents. There
may be one or more Authenticating Agents appointed by the Trustee upon the
request of the Company with power to act on its behalf and subject to its
direction in the authentication and delivery of Debentures issued upon exchange
or registration of transfer thereof as fully 

 

32

 

to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Debentures; provided, however, that
the Trustee shall have no liability to the Company for any acts or omissions of
the Authenticating Agent with respect to the authentication and delivery of
Debentures. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any
state or territory thereof or of the District of Columbia authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
at least $50,000,000.00 and being subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually pursuant to law or
the requirements of such authority, then for the purposes of this
Section 6.12 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.

 

Any corporation into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.12
without the execution or filing of any paper or any further act on the part of
the parties hereto or such Authenticating Agent.

 

Any Authenticating Agent may at any time resign by
giving written notice of resignation to the Trustee and to the Company. The
Trustee may at any time terminate the agency of any Authenticating Agent with
respect to the Debentures by giving written notice of termination to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any Authenticating
Agent shall cease to be eligible under this Section 6.12, the Trustee may,
and upon the request of the Company shall, promptly appoint a successor
Authenticating Agent eligible under this Section 6.12, shall give written
notice of such appointment to the Company and shall mail notice of such
appointment to all holders of Debentures as the names and addresses of such
holders appear on the Debenture Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities with respect to the Debentures of
its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.

 

The Company agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.

 

CONCERNING THE SECURITYHOLDERS

 

Action by Securityholders. Whenever
in this Indenture it is provided that the holders of a specified percentage in
aggregate principal amount of the Debentures may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar
tenor executed by such Securityholders in person or by agent or proxy appointed
in writing, or (b) by the record of such holders of Debentures voting in
favor thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or 

 

33

 

instruments and
any such record of such a meeting of such Securityholders or (d) by any
other method the Trustee deems satisfactory.

 

If the Company shall solicit from the Securityholders
any request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, the Company may, at its option, as evidenced
by an Officers’ Certificate, fix in advance a record date for such Debentures
for the determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other action or revocation of the same may be given before
or after the record date, but only the Securityholders of record at the close
of business on the record date shall be deemed to be Securityholders for the
purposes of determining whether Securityholders of the requisite proportion of
outstanding Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, and for that purpose the outstanding Debentures shall
be computed as of the record date; provided, however, that no
such authorization, agreement or consent by such Securityholders on the record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than 6 months after the record date.

 

Proof of Execution by Securityholders.
Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debentures shall be proved by the Debenture
Register or by a certificate of the Debenture registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.

 

The record of any Securityholders’ meeting shall be
proved in the manner provided in Section 8.6.

 

Who Are Deemed Absolute Owners. Prior
to due presentment for registration of transfer of any Debenture, the Company,
the Trustee, any Authenticating Agent, any paying agent, any transfer agent and
any Debenture registrar may deem the Person in whose name such Debenture shall
be registered upon the Debenture Register to be, and may treat him as, the
absolute owner of such Debenture (whether or not such Debenture shall be
overdue) for the purpose of receiving payment of or on account of the principal
of, premium, if any, and interest on such Debenture and for all other purposes;
and neither the Company nor the Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any Debenture registrar shall be
affected by any notice to the contrary. All such payments so made to any holder
for the time being or upon his order shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Debenture.

 

Debentures Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate principal
amount of Debentures have concurred in any direction, consent or waiver under
this Indenture, Debentures which are owned by the Company or any other obligor
on the Debentures or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or
any other obligor on the Debentures shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, however,
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Debentures which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Debentures so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.4 if the
pledgee shall establish to the satisfaction of the Trustee the pledgee’s right
to vote such Debentures and that the pledgee is not the Company or any such
other obligor or Person directly or indirectly controlling or controlled by or
under 

 

34

 

direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.

 

Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.1, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action, any holder (in cases where no record
date has been set pursuant to Section 7.1) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.1) of a Debenture (or any Debenture issued in whole or in part
in exchange or substitution therefor) the serial number of which is shown by
the evidence to be included in the Debentures the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in
Section 7.2, revoke such action so far as concerns such Debenture (or so
far as concerns the principal amount represented by any exchanged or
substituted Debenture). Except as aforesaid any such action taken by the holder
of any Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of such Debenture, and of any Debenture issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debenture or any Debenture issued in exchange or substitution therefor.

 

SECURITYHOLDERS’ MEETINGS

 

Purposes of Meetings. A
meeting of Securityholders may be called at any time and from time to time
pursuant to the provisions of this Article VIII for any of the following
purposes:

 

to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to any of the provisions of
Article V;

 

to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;

 

to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section 9.2;
or

 

to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount of such
Debentures under any other provision of this Indenture or under applicable law.

 

Call of Meetings by Trustee. The
Trustee may at any time call a meeting of Securityholders to take any action
specified in Section 8.1, to be held at such time and at such place as the
Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Debentures affected at their addresses as they shall appear on the Debentures
Register and, if the Company is not a holder of Debentures, to the Company. Such
notice shall be mailed not less than 20 nor more than 180 days prior to
the date fixed for the meeting.

 

Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a Board Resolution, or the
holders of at least 10% in aggregate principal amount of the Debentures, as the
case may be, then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 20 days after receipt of
such request, then 

 

35

 

the Company or such
Securityholders may determine the time and the place for such meeting and may
call such meeting to take any action authorized in Section 8.1, by mailing
notice thereof as provided in Section 8.2.

 

Qualifications for Voting. To
be entitled to vote at any meeting of Securityholders a Person shall
(a) be a holder of one or more Debentures with respect to which the
meeting is being held or (b) a Person appointed by an instrument in
writing as proxy by a holder of one or more such Debentures. The only Persons
who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

 

Regulations. Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Securityholders, in
regard to proof of the holding of Debentures and of the appointment of proxies,
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall think fit.

 

The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Securityholders as provided in Section 8.3, in
which case the Company or the Securityholders calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by majority vote of
the meeting.

 

Subject to the provisions of Section 7.4, at any
meeting each holder of Debentures with respect to which such meeting is being
held or proxy therefor shall be entitled to one vote for each $1,000.00
principal amount of Debentures held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Debenture challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman of the meeting shall have no right
to vote other than by virtue of Debentures held by him or instruments in
writing as aforesaid duly designating him as the Person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 8.2 or 8.3 may be adjourned from time to time by
a majority of those present, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.

 

Voting. The vote upon any
resolution submitted to any meeting of holders of Debentures with respect to
which such meeting is being held shall be by written ballots on which shall be
subscribed the signatures of such holders or of their representatives by proxy
and the serial number or numbers of the Debentures held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 8.2. The record shall show the serial
numbers of the Debentures voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.

 

Any record so signed and verified shall be conclusive
evidence of the matters therein stated.

 

36

 

Quorum; Actions. The Persons
entitled to vote a majority in principal amount of the Debentures then
outstanding shall constitute a quorum for a meeting of Securityholders; provided,
however, that if any action is to be taken at such meeting with respect
to a consent, waiver, request, demand, notice, authorization, direction or
other action which may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding, the Persons
holding or representing such specified percentage in principal amount of the
Debentures then outstanding will constitute a quorum. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the
meeting shall, if convened at the request of Securityholders, be dissolved. In
any other case the meeting may be adjourned for a period of not less than
10 days as determined by the permanent chairman of the meeting prior to
the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the permanent chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided in
Section 8.2, except that such notice need be given only once not less than
5 days prior to the date on which the meeting is scheduled to be reconvened. Notice
of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Debentures then
outstanding which shall constitute a quorum.

 

Except as limited by the provisos in the first
paragraph of Section 9.2, any resolution presented to a meeting or
adjourned meeting duly reconvened at which a quorum is present as aforesaid may
be adopted by the affirmative vote of the holders of a majority in principal
amount of the Debentures then outstanding; provided, however,
that, except as limited by the provisos in the first paragraph of
Section 9.2, any resolution with respect to any consent, waiver, request,
demand, notice, authorization, direction or other action which this Indenture
expressly provides may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid only by the affirmative vote of the holders of a
not less than such specified percentage in principal amount of the Debentures
then outstanding.

 

Any resolution passed or decision taken at any meeting
of holders of Debentures duly held in accordance with this Section shall be
binding on all the Securityholders, whether or not present or represented at
the meeting.

 

SUPPLEMENTAL INDENTURES

 

Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto, without the consent of the
Securityholders, for one or more of the following purposes:

 

to evidence the succession of another Person to the
Company, or successive successions, and the assumption by the successor Person
of the covenants, agreements and obligations of the Company, pursuant to
Article XI hereof;

 

to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of
Debentures as the Board of Directors shall consider to be for the protection of
the holders of such Debentures, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional covenants, restrictions
or conditions a default or an Event of Default permitting the enforcement of
all or any of the several remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such additional
covenant restriction or condition such supplemental indenture may provide for a
particular period of grace after default (which period may be 

 

37

 

shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default;

 

to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters
or questions arising under this Indenture; provided that any such action
shall not materially adversely affect the interests of the holders of the
Debentures;

 

to add to, delete from, or revise the terms of
Debentures, including, without limitation, any terms relating to the issuance,
exchange, registration or transfer of Debentures, including to provide for
transfer procedures and restrictions substantially similar to those applicable
to the Capital Securities as required by Section 2.5 (for purposes of
assuring that no registration of Debentures is required under the Securities
Act); provided, however, that any such action shall not adversely
affect the interests of the holders of the Debentures then outstanding (it
being understood, for purposes of this proviso, that transfer restrictions on
Debentures substantially similar to those that were applicable to Capital
Securities shall not be deemed to materially adversely affect the holders of
the Debentures);

 

to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Debentures and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee;

 

to make any change (other than as elsewhere provided
in this paragraph) that does not adversely affect the rights of any
Securityholder in any material respect; or

 

to provide for the issuance of and establish the form
and terms and conditions of the Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or the Debentures, or to add to the rights of the holders of Debentures.

 

The Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the
provisions of this Section 9.1 may be executed by the Company and the
Trustee without the consent of the holders of any of the Debentures at the time
outstanding, notwithstanding any of the provisions of Section 9.2.

 

Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided
in Section 7.1) of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding affected by such
supplemental indenture (voting as a class), the Company, when authorized by a
Board Resolution, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the holders of the Debentures; provided, however,
that no such supplemental indenture shall without the consent of the holders of
each Debenture then outstanding and affected thereby (i) change the fixed
maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of 

 

38

 

repayment, if any,
at the option of the holder, or (ii) reduce the aforesaid percentage of
Debentures the holders of which are required to consent to any such supplemental
indenture; provided  further, however, that if the
Debentures are held by a trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental indenture;
provided  further, however, that if the consent of the
Securityholder of each outstanding Debenture is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities
shall have consented to such supplemental indenture.

 

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

 

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

 

It shall not be necessary for the consent of the
Securityholders under this Section 9.2 to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.

 

Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions
of this Article IX, this Indenture shall be and be deemed to be modified
and amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debentures shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

 

Notation on Debentures. Debentures
authenticated and delivered after the execution of any supplemental indenture
pursuant to the provisions of this Article IX may bear a notation as to
any matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors of the Company, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Debentures then outstanding.

 

Evidence of Compliance of Supplemental Indenture
to be Furnished to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, shall, in addition to the documents
required by Section 14.6, receive an Officers’ Certificate and an Opinion
of Counsel as conclusive evidence that any supplemental indenture executed
pursuant hereto complies with the requirements of this Article IX. The
Trustee shall receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article IX is authorized
or permitted by, and conforms to, the terms of this Article IX and that it
is proper for the Trustee under the provisions of this Article IX to join
in the execution thereof.

 

39

 

REDEMPTION OF SECURITIES

 

Optional Redemption. The
Company shall have the right (subject to the receipt by the Company of prior
approval (i) if the Company is a bank holding company, from the Federal
Reserve, if then required under applicable capital guidelines or policies of
the Federal Reserve or (ii) if the Company is a savings and loan holding
company, from the OTS, if then required under applicable capital guidelines or
policies of the OTS) to redeem the Debentures, in whole or in part, but in all
cases in a principal amount with integral multiples of $1,000.00, on any Interest
Payment Date on or after the Interest Payment Date in December 2012 (the “Redemption
Date”), at the Redemption Price.

 

Special Event Redemption. If
a Special Event shall occur and be continuing, the Company shall have the right
(subject to the receipt by the Company of prior approval (i) if the
Company is a bank holding company, from the Federal Reserve, if then required
under applicable capital guidelines or policies of the Federal Reserve or
(ii) if the Company is a savings and loan holding company, from the OTS,
if then required under applicable capital guidelines or policies of the OTS) to
redeem the Debentures in whole, but not in part, at any Interest Payment Date,
within 120 days following the occurrence of such Special Event (the “Special
Redemption Date”) at the Special Redemption Price.

 

Notice of Redemption; Selection of Debentures.
In case the Company shall desire to exercise the right to redeem all, or,
as the case may be, any part of the Debentures, it shall cause to be mailed a
notice of such redemption at least 30 and not more than 60 days prior to
the Redemption Date or the Special Redemption Date to the holders of Debentures
so to be redeemed as a whole or in part at their last addresses as the same
appear on the Debenture Register. Such mailing shall be by first class mail. The
notice if mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Debenture designated for redemption as a whole or in part shall
not affect the validity of the proceedings for the redemption of any other
Debenture.

 

Each such notice of redemption shall specify the CUSIP
number, if any, of the Debentures to be redeemed, the Redemption Date or the
Special Redemption Date, as applicable, the Redemption Price or the Special
Redemption Price, as applicable, at which Debentures are to be redeemed, the
place or places of payment, that payment will be made upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. If less than all the Debentures are to be redeemed the notice of
redemption shall specify the numbers of the Debentures to be redeemed. In case
the Debentures are to be redeemed in part only, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon surrender of such
Debenture, a new Debenture or Debentures in principal amount equal to the
unredeemed portion thereof will be issued.

 

Prior to 10:00 a.m. New York City time on the
Redemption Date or Special Redemption Date, as applicable, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the Redemption Date or the Special Redemption Date, as
applicable, all the Debentures so called for redemption at the appropriate
Redemption Price or Special Redemption Price.

 

If all, or less than all, the Debentures are to be
redeemed, the Company will give the Trustee notice not less than 45 nor more
than 60 days, respectively, prior to the Redemption Date or Special
Redemption Date, as applicable, as to the aggregate principal amount of
Debentures to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debentures or
portions thereof (in integral multiples of $1,000.00) to be redeemed.

 

40

 

Payment of Debentures Called for Redemption.
If notice of redemption has been given as provided in Section 10.3,
the Debentures or portions of Debentures with respect to which such notice has
been given shall become due and payable on the Redemption Date or Special
Redemption Date, as applicable, and at the place or places stated in such
notice at the applicable Redemption Price or Special Redemption Price and on
and after said date (unless the Company shall default in the payment of such
Debentures at the Redemption Price or Special Redemption Price, as applicable)
interest on the Debentures or portions of Debentures so called for redemption
shall cease to accrue. On presentation and surrender of such Debentures at a
place of payment specified in said notice, such Debentures or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
Redemption Price or Special Redemption Price.

 

Upon presentation of any Debenture redeemed in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Debenture or Debentures of authorized denominations, in principal amount
equal to the unredeemed portion of the Debenture so presented.

 

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in the Debentures shall prevent any
consolidation or merger of the Company with or into any other Person (whether
or not affiliated with the Company) or successive consolidations or mergers in
which the Company or its successor or successors shall be a party or parties,
or shall prevent any sale, conveyance, transfer or other disposition of the
property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company, or its successor or successors) authorized to acquire and
operate the same; provided, however, that the Company hereby
covenants and agrees that, upon any such consolidation, merger (where the Company
is not the surviving corporation), sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of (and premium, if
any) and interest on all of the Debentures in accordance with their terms,
according to their tenor, and the due and punctual performance and observance
of all the covenants and conditions of this Indenture to be kept or performed
by the Company, shall be expressly assumed by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee by
the entity formed by such consolidation, or into which the Company shall have
been merged, or by the entity which shall have acquired such property.

 

Successor Entity to be Substituted.
In case of any such consolidation, merger, sale, conveyance, transfer or
other disposition and upon the assumption by the successor entity, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the principal of and
premium, if any, and interest on all of the Debentures and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor entity
shall succeed to and be substituted for the Company, with the same effect as if
it had been named herein as the Company, and thereupon the predecessor entity
shall be relieved of any further liability or obligation hereunder or upon the
Debentures. Such successor entity thereupon may cause to be signed, and may
issue in its own name, any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor entity
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee or the Authenticating Agent shall
authenticate and deliver any Debentures which previously shall have been signed
and delivered by the officers of the Company, to the Trustee or the
Authenticating Agent for authentication, and any Debentures which such
successor entity thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the 

 

41

 

Debentures so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debentures theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Debentures had been issued at
the date of the execution hereof.

 

Opinion of Counsel to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
receive, in addition to the Opinion of Counsel required by Section 9.5, an
Opinion of Counsel as conclusive evidence that any consolidation, merger, sale,
conveyance, transfer or other disposition, and any assumption, permitted or
required by the terms of this Article XI complies with the provisions of
this Article XI.

 

SATISFACTION AND DISCHARGE OF INDENTURE

 

Discharge of Indenture. When

 

(a)           the
Company shall deliver to the Trustee for cancellation all Debentures
theretofore authenticated (other than any Debentures which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.6) and not theretofore canceled, or

 

(b)           all
the Debentures not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within 1 year or are to be called for redemption within 1 year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds,
which shall be immediately due and payable, sufficient to pay at maturity or
upon redemption all of the Debentures (other than any Debentures which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.6) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date, as the case
may be, but excluding, however, the amount of any moneys for the payment of
principal of, and premium, if any, or interest on the Debentures
(1) theretofore repaid to the Company in accordance with the provisions of
Section 12.4, or (2) paid to any state or to the District of Columbia
pursuant to its unclaimed property or similar laws,

 

and if in the case of
either clause (a) or clause (b) the Company shall also pay or cause
to be paid all other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect except for the provisions of
Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter,
Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the
Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with, and at
the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture. The Company
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Trustee in connection with this Indenture or the
Debentures.

 

Deposited Moneys to be Held in Trust by Trustee.
Subject to the provisions of Section 12.4, all moneys deposited with
the Trustee pursuant to Section 12.1 shall be held in trust in a
non-interest bearing account and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Debentures for the payment of which
such moneys have been deposited with the Trustee, of all sums due and to become
due thereon for principal, and premium, if any, and interest.

 

42

 

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

 

Return of Unclaimed Moneys. Any
moneys deposited with or paid to the Trustee or any paying agent for payment of
the principal of, and premium, if any, or interest on Debentures and not
applied but remaining unclaimed by the holders of Debentures for 2 years after
the date upon which the principal of, and premium, if any, or interest on such
Debentures, as the case may be, shall have become due and payable, shall,
subject to applicable escheatment laws, be repaid to the Company by the Trustee
or such paying agent on written demand; and the holder of any of the Debentures
shall thereafter look only to the Company for any payment which such holder may
be entitled to collect, and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease.

 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS

 

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

 

MISCELLANEOUS PROVISIONS

 

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

 

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

 

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

 

Addresses for Notices, etc. Any
notice, consent, direction, request, authorization, waiver or demand which by
any provision of this Indenture is required or permitted to be given, made,
furnished or served by the Trustee or by the Securityholders on or to the
Company may be given or served in writing by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company, with the Trustee for the purpose) to
the Company, 209 North Bridge Street, Elkin, North Carolina  28621, Attention:  Edwin E. Laws. Any notice, consent,
direction, request, authorization, waiver or demand by any Securityholder or
the Company to or upon the 

 

43

 

Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the office of the Trustee, addressed to the Trustee, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware  19890-1600, Attention:  Corporate Trust Administration. Any notice,
consent, direction, request, authorization, waiver or demand on or to any
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the address set forth in the Debenture
Register.

 

Governing Law. This Indenture
and each Debenture shall be deemed to be a contract made under the law of the
State of New York, and for all purposes shall be governed by and construed in
accordance with the law of said State, without regard to conflict of laws
principles thereof.

 

Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers’ Certificate stating that in the opinion of the
signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

 

Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that,
in the opinion of such person, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (4) a statement as
to whether or not in the opinion of such person, such condition or covenant has
been complied with.

 

Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.

 

Execution in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument.

 

Separability. In case any
one or more of the provisions contained in this Indenture or in the Debentures
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

 

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

 

Acknowledgment of Rights. The
Company agrees that, with respect to any Debentures held by the Trust or the
Institutional Trustee of the Trust, if the Institutional Trustee of the Trust
fails to enforce its rights under this Indenture as the holder of Debentures
held as the assets of such Trust after the holders 

 

44

 

of a majority in
Liquidation Amount of the Capital Securities of such Trust have so directed
such Institutional Trustee, a holder of record of such Capital Securities may,
to the fullest extent permitted by law, institute legal proceedings directly
against the Company to enforce such Institutional Trustee’s rights under this
Indenture without first instituting any legal proceedings against such trustee
or any other Person. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest (or premium, if any) or principal on the Debentures on
the date such interest (or premium, if any) or principal is otherwise payable
(or in the case of redemption, on the redemption date), the Company agrees that
a holder of record of Capital Securities of the Trust may directly institute a
proceeding against the Company for enforcement of payment to such holder
directly of the principal of (or premium, if any) or interest on the Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder on or after the respective due date
specified in the Debentures.

 

SUBORDINATION OF DEBENTURES

 

Agreement to Subordinate. The
Company covenants and agrees, and each holder of Debentures by such
Securityholder’s acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued subject to the provisions of this Article XV;
and each holder of a Debenture, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.

 

The payment by the Company of the principal of, and
premium, if any, and interest on all Debentures shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred; provided,
however, that the Debentures shall rank pari
passu in all material respects with any current indebtedness,
liabilities or obligations of the Company, or any Subsidiary of the Company,
under debt securities (or guarantees in respect of debt securities) issued to
any trust, or a trustee of a trust, partnership or other entity affiliated with
the Company that is, directly or indirectly, a finance subsidiary (as such term
is defined in Rule 3a-5 under the Investment Company Act of 1940) or other
financing vehicle of the Company or any Subsidiary of the Company in connection
with the issuance by that entity of preferred securities or other securities
that are eligible to qualify for Tier 1 capital treatment (or its then
equivalent) for purposes of the capital adequacy guidelines of the Federal
Reserve, as then in effect and applicable to the Company.

 

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

 

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

 

In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.2, such payment shall, subject to
Section 15.7, be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment 

 

45

 

of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.

 

Liquidation, Dissolution, Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company,
on account of the principal (and premium, if any) or interest on the Debentures.
Upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article XV, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Securityholders
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money’s worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.

 

In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness,
remaining unpaid to the extent necessary to pay such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.

 

For purposes of this Article XV, the words “cash,
property or securities” shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Debentures to the payment of all Senior Indebtedness,
that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon
the terms and conditions provided for in Article XI of this Indenture
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article XI of this Indenture. Nothing in Section 15.2 or in
this Section shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 6.6 of this Indenture.

 

46

 

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

 

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

 

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

 

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

 

Notice by the Company. The
Company shall give prompt written notice to a Responsible Officer of the
Trustee at the Principal Office of the Trustee of any fact known to the Company
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article XV. Notwithstanding
the provisions of this Article XV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Debentures pursuant to the provisions of this
Article XV, unless and until a Responsible Officer of the Trustee at the
Principal Office of the Trustee shall have received written notice thereof from
the Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Article VI of this Indenture, shall be
entitled 

 

47

 

in all respects to
assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section at
least 2 Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within 2 Business Days prior
to such date.

 

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

 

Rights of the Trustee; Holders of Senior
Indebtedness. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XV in
respect of any Senior Indebtedness at any time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.

 

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

 

Nothing in this Article XV shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 6.6.

 

Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.

 

Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this
Article XV or the obligations hereunder of the holders of the Debentures
to the holders of such Senior Indebtedness, do any one or more of the
following:  (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any 

 

48

 

instrument evidencing the
same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against the
Company, and any other Person.

 

Signatures appear on the
following page

 

49

 

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.

 

	
   

  	
  YADKIN VALLEY
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Edwin
  E. Laws

  
	
   

  	
   

  	
    Name:
  Edwin E. Laws

  
	
   

  	
   

  	
    Title:
  Chief Financial Officer

  

 

 

	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ W.
  Thomas Morris, II

  
	
   

  	
   

  	
    Name: W. Thomas Morris, II

  
	
   

  	
   

  	
    Title:
  Assistant Vice President

  

 

50

 

EXHIBIT A

 

FORM OF FLOATING RATE JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURE

 

[FORM OF FACE OF SECURITY]

 

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND
IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED
STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. 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 AND ANY APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A
NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR
RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF
SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL 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 (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT
IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.

 

THE HOLDER OF THIS SECURITY 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 THE
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE
FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY 

 

A-1

 

SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THE SECURITIES 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.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER.

 

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

 

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

 

Floating Rate Junior
Subordinated Deferrable Interest Debenture

 

of

 

Yadkin Valley Financial
Corporation

 

November 1, 2007

 

Yadkin Valley Financial Corporation, a North Carolina
corporation (the “Company” which term includes any successor Person under the
Indenture hereinafter referred to), for value received promises to pay to
Wilmington Trust Company, not in its individual capacity but solely as
Institutional Trustee for Yadkin Valley Statutory Trust I (the “Holder”)
or registered assigns, the principal sum of twenty-five million seven hundred
seventy-four thousand dollars ($25,774,000.00) on December 15, 2037, and
to pay interest on said principal sum from November 1, 2007, or from the
most recent Interest Payment Date (as defined below) to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 15, June 15, September 15 and
December 15 of each year or if such day is not a Business Day, then the
next succeeding Business Day (each such date, an “Interest Payment Date”) (it
being understood that interest accrues for any such non-Business Day),
commencing on the Interest Payment Date in December 2007, at an annual rate
equal to 6.21375% beginning on (and including) the date of original issuance
and ending on (but excluding) the Interest Payment Date in December 2007 and at
an annual rate for each successive period beginning on (and including) the
Interest Payment Date in December 2007, and each succeeding Interest Payment
Date, and ending on (but excluding) the next succeeding Interest Payment Date
(each a “Distribution Period”), equal to 3-Month LIBOR, determined as described
below, plus 1.32% (the “Coupon Rate”), applied to the principal amount hereof,
until the principal hereof is paid or duly provided for or made available for
payment, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable 

 

A-2

 

under applicable law) on
any overdue installment of interest (including Additional Interest) at the
Interest Rate in effect for each applicable period, compounded quarterly, from
the dates such amounts are due until they are paid or made available for
payment. The amount of interest payable for any period will be computed on the
basis of the actual number of days in the Distribution Period concerned divided
by 360. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such interest installment, which shall be fifteen Business Days prior to
the day on which the relevant Interest Payment Date occurs. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such regular record date and may be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date.

 

“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the related
Determination Date (“Reuters Page LIBOR01” means the display designated as “LIBOR01”
on Reuters or such other page as may replace Reuters Page LIBOR01 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will
request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two
such quotations are provided as requested in clause (ii) above, the Trustee
will request four major New York City banks to provide such banks’ offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on Reuters
Page LIBOR01 as of 11:00 a.m. (London time) on the related Determination Date
is superseded on the Reuters Page LIBOR01 by a corrected rate by 12:00 noon
(London time) on such Determination Date, then the corrected rate as so
substituted on the applicable page will be the applicable 3-Month LIBOR for
such Determination Date. As used herein, “Determination Date” means the date
that is two London Banking Days (i.e., a business day in which dealings in
deposits in U.S. dollars are transacted in the London interbank market) preceding
the commencement of the relevant Distribution Period.

 

The Interest Rate for any Distribution Period will at
no time be higher than the maximum rate then permitted by New York law as the
same may be modified by United States law.

 

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

 

A-3

 

The principal of and interest on this Debenture shall
be payable at the office or agency of the Trustee (or other paying agent
appointed by the Company) maintained for that purpose in any coin or currency
of the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that
payment of interest may be made by check mailed to the registered holder at
such address as shall appear in the Debenture Register if a request for a wire
transfer by such holder has not been received by the Company or by wire
transfer to an account appropriately designated by the holder hereof. Notwithstanding
the foregoing, so long as the holder of this Debenture is the Institutional
Trustee, the payment of the principal of and interest on this Debenture will be
made in immediately available funds at such place and to such account as may be
designated by the Trustee.

 

So long as no Acceleration Event of Default has
occurred and is continuing, the Company shall have the right, from time to
time, and without causing an Event of Default, to defer payments of interest on
the Debentures by extending the interest payment period on the Debentures at
any time and from time to time during the term of the Debentures, for up to
20 consecutive quarterly periods (each such extended interest payment
period, an “Extension Period”), during which Extension Period no interest
(including Additional Interest) shall be due and payable (except any Additional
Sums that may be due and payable). No Extension Period may end on a date other
than an Interest Payment Date. During an Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest
will accrue at an annual rate equal to the Interest Rate in effect for such
Extension Period, compounded quarterly from the date such interest would have
been payable were it not for the Extension Period, to the extent permitted by
law (such interest referred to herein as “Additional Interest”). At the end of
any such Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date; provided
further, however, that during any such Extension Period, the Company
shall not and shall not permit any Affiliate to engage in any of the activities
or transactions described on the reverse side hereof and in the Indenture. Prior
to the termination of any Extension Period, the Company may further extend such
period, provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject
to the foregoing requirements. No interest or Additional Interest shall be due
and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest. The Company must give the
Trustee notice of its election to begin or extend an Extension Period by the
close of business at least 15 Business Days prior to the Interest Payment Date
with respect to which interest on the Debentures would have been payable except
for the election to begin or extend such Extension Period.

 

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

 

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

 

A-4

 

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

 

A-5

 

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

 

	
   

  	
  YADKIN VALLEY
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

CERTIFICATE OF
AUTHENTICATION

 

This is one of the Debentures referred to in the
within-mentioned Indenture.

 

	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  
				

 

A-6

 

[FORM OF REVERSE
OF DEBENTURE]

 

This Debenture is one of the floating rate junior
subordinated deferrable interest debentures of the Company, all issued or to be
issued under and pursuant to the Indenture dated as of November 1, 2007
(the “Indenture”), duly executed and delivered between the Company and the
Trustee, to which Indenture reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Debentures. The Debentures are
limited in aggregate principal amount as specified in the Indenture.

 

Upon the occurrence and continuation of a Special
Event prior to the Interest Payment Date in December 2012, the Company shall
have the right to redeem the Debentures in whole, but not in part, at any
Interest Payment Date, within 120 days following the occurrence of such Special
Event, at the Special Redemption Price.

 

In addition, the Company shall have the right to
redeem the Debentures, in whole or in part, but in all cases in a principal
amount with integral multiples of $1,000.00, on any Interest Payment Date on or
after the Interest Payment Date in December 2012, at the Redemption Price.

 

Prior to 10:00 a.m. New York City time on the
Redemption Date or Special Redemption Date, as applicable, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the Redemption Date or the Special Redemption Date, as
applicable, all the Debentures so called for redemption at the appropriate
Redemption Price or Special Redemption Price.

 

If all, or less than all, the Debentures are to be
redeemed, the Company will give the Trustee notice not less than 45 nor more
than 60 days, respectively, prior to the Redemption Date or Special
Redemption Date, as applicable, as to the aggregate principal amount of
Debentures to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debentures or
portions thereof (in integral multiples of $1,000.00) to be redeemed.

 

Notwithstanding the foregoing, any redemption of
Debentures by the Company shall be subject to the receipt of any and all
required regulatory approvals.

 

In case an Acceleration Event of Default shall have
occurred and be continuing, upon demand of the Trustee, the principal of all of
the Debentures shall become due and payable in the manner, with the effect and
subject to the conditions provided in the Indenture.

 

The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Debentures at the time
outstanding, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debentures; provided, however,
that no such supplemental indenture shall without the consent of the holders of
each Debenture then outstanding and affected thereby (i) change the fixed
maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of repayment, if any, at the option of the holder, or (ii) reduce
the aforesaid percentage of Debentures the holders of which are required to
consent to any such supplemental indenture.

 

A-7

 

The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debentures at the
time outstanding on behalf of the holders of all of the Debentures to waive (or
modify any previously granted waiver of) any past default or Event of Default,
and its consequences, except a default (a) in the payment of principal of,
premium, if any, or interest on any of the Debentures, (b) in respect of
covenants or provisions hereof or of the Indenture which cannot be modified or
amended without the consent of the holder of each Debenture affected, or
(c) in respect of the covenants contained in Section 3.9 of the
Indenture; provided, however, that if the Debentures are held by
the Trust or a trustee of such trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities of the Trust shall have consented to such waiver or
modification to such waiver, provided, further, that if the
consent of the holder of each outstanding Debenture is required, such waiver
shall not be effective until each holder of the Trust Securities of the Trust
shall have consented to such waiver. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of the Indenture and the
Company, the Trustee and the holders of the Debentures shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by the Indenture, said default or
Event of Default shall for all purposes of the Debentures and the Indenture be
deemed to have been cured and to be not continuing.

 

No reference herein to the Indenture and no provision
of this Debenture or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest, including Additional Interest, on this Debenture
at the time and place and at the rate and in the money herein prescribed.

 

The Company has agreed that if Debentures are
initially issued to the Trust or a trustee of such Trust in connection with the
issuance of Trust Securities by the Trust (regardless of whether Debentures
continue to be held by such Trust) and (i) there shall have occurred and
be continuing an Event of Default, (ii) the Company shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee, or (iii) the Company shall have given notice of its election to
defer payments of interest on the Debentures by extending the interest payment
period as provided herein and such Extension Period, or any extension thereof,
shall be continuing, then the Company shall not, and shall not allow any
Affiliate of the Company to, (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s capital stock or its Affiliates’ capital
stock (other than payments of dividends or distributions to the Company or
payments of dividends from direct or indirect subsidiaries of the Company to
their parent corporations, which also shall be direct or indirect subsidiaries
of the Company) or make any guarantee payments with respect to the foregoing or
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
that rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (x)
and (y) above,  (1) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, if any, (2) as a result of any
exchange or conversion of any class or series of the Company’s capital stock
(or any capital stock of a subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock,
(3) the purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (4) any declaration of
a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other 

 

A-8

 

property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant
thereto, (5) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is
being paid or ranks pari passu with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, (6) payments of principal or interest on
debt securities or payments of cash dividends or distributions on any capital
stock issued by an Affiliate that is not, in whole or in part, a subsidiary of
the Company (or any redemptions, repurchases or liquidation payments on such
stock or securities), or (7) payments under the Capital Securities
Guarantee).

 

The Debentures are issuable only in registered,
certificated form without coupons and in minimum denominations of $100,000.00
and any multiple of $1,000.00 in excess thereof. As provided in the Indenture
and subject to the transfer restrictions and limitations as may be contained
herein and therein from time to time, this Debenture is transferable by the
holder hereof on the Debenture Register of the Company. Upon due presentment
for registration of transfer of any Debenture at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose
as provided in Section 3.2 of the Indenture, the Company shall execute,
the Company or the Trustee shall register and the Trustee or the Authenticating
Agent shall authenticate and make available for delivery in the name of the
transferee or transferees a new Debenture for a like aggregate principal amount.
All Debentures presented for registration of transfer or for exchange or
payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to, the Company and
the Trustee or the Authenticating Agent duly executed by the holder or his
attorney duly authorized in writing. No service charge shall be made for any
exchange or registration of transfer of Debentures, but the Company or the
Trustee may require payment of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in connection therewith.

 

Prior to due presentment for registration of transfer
of any Debenture, the Company, the Trustee, any Authenticating Agent, any
paying agent, any transfer agent and any Debenture registrar may deem the
Person in whose name such Debenture shall be registered upon the Debenture
Register to be, and may treat him as, the absolute owner of such Debenture
(whether or not such Debenture shall be overdue) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and interest on
such Debenture and for all other purposes; and neither the Company nor the
Trustee nor any Authenticating Agent nor any paying agent nor any transfer
agent nor any Debenture registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being or upon
his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.

 

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

 

Capitalized terms used and not defined in this
Debenture shall have the meanings assigned in the Indenture dated as of the
date of original issuance of this Debenture between the Trustee and the
Company.

 

A-9

 

THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

 

A-10

 

EXHIBIT B

 

FORM OF CERTIFICATE
TO TRUSTEE

 

Pursuant to Section 3.5 of the Indenture between
Yadkin Valley Financial Corporation, as the Company (the “Company”), and
Wilmington Trust Company, as Trustee, dated as of November 1, 2007 (the “Indenture”),
the undersigned hereby certifies as follows:

 

1.             In
my capacity as an officer of the Company, I would normally have knowledge of
any default by the Company during the last fiscal year in the performance of
any covenants of the Company contained in the Indenture.

 

2.             [To
my knowledge, the Company is not in default in the performance of any covenants
contained in the Indenture.

 

or, alternatively:

 

I am aware of the default(s) in the performance of
covenants in the Indentures, as specified below.]

 

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

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate.

 

Date:

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  

 

B-1

 

EXHIBIT C

 

FORM OF
QUARTERLY REPORT

 

Wilmington Trust
Company

1100 N. Market
Street

Wilmington,
Delaware  19890

Attention:
Corporate Trust Administration - PreTSL

 

BANK HOLDING
COMPANY

As of [March 31,
June 30, September 30 or December 31], 20  

 

	
  Tier 1 to Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on
  Average Assets (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Interest
  Margin (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Efficiency Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  	
   

  

 

*A table
describing the quarterly report calculation procedures is provided on page C-2

 

** To annualize
Return on Average Assets and Net Interest Margin do the following:

1st
Quarter-multiply income statement item by 4, then divide by balance sheet
item(s)

2nd
Quarter-multiply income statement item by 2, then divide by balance sheet
item(s)

3rd
Quarter-divide income statement item by 3, then multiply by 4, then divide by
balance sheet item(s)

4th
Quarter-should already be an annual number

NO ADJUSTMENT
SHOULD BE MADE TO BALANCE SHEET ITEMS

 

	
  cc:

  	
  FTN Financial Capital
  Markets

  	
  Keefe, Bruyette
  & Woods, Inc.

  
	
   

  	
  845 Crossover
  Lane, Suite 150

  	
  787 7th Avenue,
  4th Floor

  
	
   

  	
  Memphis,
  Tennessee 38117

  	
  New York, New
  York 10019

  
	
   

  	
  Attention:
  Structured Finance Group

  	
  Attention:
  Mitchell Kleinman, General Counsel

  

 

C-1

 

Financial Definitions

 

 

	
  Report Item

  	
   

  	
  Description of Calculation

  
	
  “Tier 1 Capital” to Risk Weighted Assets

  	
   

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

  
	
  Ratio of Double Leverage

  	
   

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

  
	
  Non-Performing Assets to Loans and OREO

  	
   

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

  
	
  Ratio of Reserves to Non-Performing Loans

  	
   

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

  
	
  Ratio of Net Charge-Offs to Loans

  	
   

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

  
	
  Return on Assets

  	
   

  	
  Net Income as a percentage of Assets.

  
	
  Net Interest Margin

  	
   

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

  
	
  Efficiency Ratio

  	
   

  	
  (Noninterest Expense)/ (Net Interest Income Fully
  Taxable Equivalent, if available, plus Noninterest Income)

  
	
  Ratio of Loans to Assets

  	
   

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

  
	
  Ratio of Loans to Deposits

  	
   

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

  
	
  Total Assets

  	
   

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

  
	
  Net Income

  	
   

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

  

 

C-2Exhibit
10.1

 

 

 

AMENDED
AND RESTATED DECLARATION

OF TRUST

 

by and
among

 

WILMINGTON
TRUST COMPANY,

as
Delaware Trustee,

 

WILMINGTON
TRUST COMPANY,

as
Institutional Trustee,

 

YADKIN
VALLEY FINANCIAL CORPORATION,

as
Sponsor,

 

and

 

WILLIAM A.
LONG, EDWIN E. LAWS and

JULIE A.
MASON,

as
Administrators,

 

Dated as
of November 1, 2007

 

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I INTERPRETATION AND DEFINITIONS

  	
  1

  
	
  Section 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II ORGANIZATION

  	
  7

  
	
  Section 2.1.

  	
  Name

  	
  7

  
	
  Section 2.2.

  	
  Office

  	
  7

  
	
  Section 2.3.

  	
  Purpose

  	
  7

  
	
  Section 2.4.

  	
  Authority

  	
  8

  
	
  Section 2.5.

  	
  Title to
  Property of the Trust

  	
  8

  
	
  Section 2.6.

  	
  Powers and
  Duties of the Trustees and the Administrators

  	
  8

  
	
  Section 2.7.

  	
  Prohibition of
  Actions by the Trust and the Institutional Trustee

  	
  11

  
	
  Section 2.8.

  	
  Powers and
  Duties of the Institutional Trustee

  	
  12

  
	
  Section 2.9.

  	
  Certain Duties
  and Responsibilities of the Trustees and Administrators

  	
  13

  
	
  Section 2.10.

  	
  Certain Rights
  of Institutional Trustee

  	
  14

  
	
  Section 2.11.

  	
  Delaware Trustee

  	
  16

  
	
  Section 2.12.

  	
  Execution of
  Documents

  	
  16

  
	
  Section 2.13.

  	
  Not Responsible
  for Recitals or Issuance of Securities

  	
  16

  
	
  Section 2.14.

  	
  Duration of
  Trust

  	
  17

  
	
  Section 2.15.

  	
  Mergers

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE III SPONSOR

  	
  18

  
	
  Section 3.1.

  	
  Sponsor’s
  Purchase of Common Securities

  	
  18

  
	
  Section 3.2.

  	
  Responsibilities
  of the Sponsor

  	
  18

  
	
  Section 3.3.

  	
  Expenses

  	
  18

  
	
  Section 3.4.

  	
  Right to Proceed

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

  	
  19

  
	
  Section 4.1.

  	
  Number of
  Trustees

  	
  19

  
	
  Section 4.2.

  	
  Delaware
  Trustee; Eligibility

  	
  19

  
	
  Section 4.3.

  	
  Institutional
  Trustee; Eligibility

  	
  20

  
	
  Section 4.4.

  	
  Administrators

  	
  20

  
	
  Section 4.5.

  	
  Appointment,
  Removal and Resignation of Trustees and Administrators

  	
  20

  
	
  Section 4.6.

  	
  Vacancies Among
  Trustees

  	
  22

  
	
  Section 4.7.

  	
  Effect of
  Vacancies

  	
  22

  
	
  Section 4.8.

  	
  Meetings of the
  Trustees and the Administrators

  	
  22

  
	
  Section 4.9.

  	
  Delegation of
  Power

  	
  22

  
	
  Section 4.10.

  	
  Conversion,
  Consolidation or Succession to Business

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE V DISTRIBUTIONS

  	
  23

  
	
  Section 5.1.

  	
  Distributions

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI ISSUANCE OF SECURITIES

  	
  23

  
	
  Section 6.1.

  	
  General
  Provisions Regarding Securities

  	
  23

  
	
  Section 6.2.

  	
  Paying Agent,
  Transfer Agent and Registrar

  	
  24

  
	
  Section 6.3.

  	
  Form and Dating

  	
  24

  
	
  Section 6.4.

  	
  Mutilated,
  Destroyed, Lost or Stolen Certificates

  	
  25

  
	
  Section 6.5.

  	
  Temporary
  Securities

  	
  25

  

 

i

 

	
  Section 6.6.

  	
  Cancellation

  	
  25

  
	
  Section 6.7.

  	
  Rights of
  Holders; Waivers of Past Defaults

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST

  	
  27

  
	
  Section 7.1.

  	
  Dissolution and
  Termination of Trust

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TRANSFER OF INTERESTS

  	
  28

  
	
  Section 8.1.

  	
  General

  	
  28

  
	
  Section 8.2.

  	
  Transfer
  Procedures and Restrictions

  	
  28

  
	
  Section 8.3.

  	
  Deemed Security
  Holders

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
  INSTITUTIONAL TRUSTEE OR OTHERS

  	
  31

  
	
  Section 9.1.

  	
  Liability

  	
  31

  
	
  Section 9.2.

  	
  Exculpation

  	
  31

  
	
  Section 9.3.

  	
  Fiduciary Duty

  	
  31

  
	
  Section 9.4.

  	
  Indemnification

  	
  32

  
	
  Section 9.5.

  	
  Outside
  Businesses

  	
  34

  
	
  Section 9.6.

  	
  Compensation;
  Fee

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE X ACCOUNTING

  	
  34

  
	
  Section 10.1.

  	
  Fiscal Year

  	
  34

  
	
  Section 10.2.

  	
  Certain
  Accounting Matters

  	
  35

  
	
  Section 10.3.

  	
  Banking

  	
  35

  
	
  Section 10.4.

  	
  Withholding

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI AMENDMENTS AND MEETINGS

  	
  36

  
	
  Section 11.1.

  	
  Amendments

  	
  36

  
	
  Section 11.2.

  	
  Meetings of the
  Holders of Securities; Action by Written Consent

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE
  TRUSTEE

  	
  38

  
	
  Section 12.1.

  	
  Representations
  and Warranties of Institutional Trustee

  	
  38

  
	
  Section 12.2.

  	
  Representations
  of the Delaware Trustee

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
  39

  
	
  Section 13.1.

  	
  Notices

  	
  39

  
	
  Section 13.2.

  	
  Governing Law

  	
  40

  
	
  Section 13.3.

  	
  Intention of the
  Parties

  	
  41

  
	
  Section 13.4.

  	
  Headings

  	
  41

  
	
  Section 13.5.

  	
  Successors and
  Assigns

  	
  41

  
	
  Section 13.6.

  	
  Partial
  Enforceability

  	
  41

  
	
  Section 13.7.

  	
  Counterparts

  	
  41

  

 

	
  Annex I

  	
  Terms of
  Securities

  
	
  Exhibit A-1

  	
  Form of Capital
  Security Certificate

  
	
  Exhibit A-2

  	
  Form of Common
  Security Certificate

  
	
  Exhibit B

  	
  Specimen of
  Initial Debenture

  
	
  Exhibit C

  	
  Placement
  Agreement

  

 

ii

 

AMENDED
AND RESTATED

 

DECLARATION
OF TRUST

 

OF

 

YADKIN
VALLEY STATUTORY TRUST I

 

November 1,
2007

 

AMENDED AND RESTATED DECLARATION OF TRUST (“Declaration”)
dated and effective as of November 1, 2007, by the Trustees (as defined
herein), the Administrators (as defined herein), the Sponsor (as defined
herein) and by the holders, from time to time, of undivided beneficial
interests in the Trust (as defined herein) to be issued pursuant to this
Declaration;

 

WHEREAS, the Trustees, the Administrators and the
Sponsor established Yadkin Valley Statutory Trust I (the “Trust”),
a statutory trust under the Statutory Trust Act (as defined herein) pursuant to
a Declaration of Trust dated as of October 30, 2007 (the “Original
Declaration”), and a Certificate of Trust filed with the Secretary of State
of the State of Delaware on October 30, 2007, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain debentures of the Debenture Issuer (as defined herein);

 

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

 

WHEREAS, 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, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration. The
parties hereto hereby agree as follows:

 

INTERPRETATION AND DEFINITIONS

 

Definitions.

 

Unless the context otherwise requires:

 

Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them in
this 0;

 

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

 

all references to “the Declaration” or “this
Declaration” are to this Declaration as modified, supplemented or amended from
time to time;

 

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; and

 

1

 

a reference to the singular includes the plural and
vice versa.

 

“Acceleration Event of Default” has the meaning
set forth in the Indenture.

 

“Additional Interest” has the meaning set forth
in the Indenture.

 

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

 

“Administrators” means each of William A.
Long, Edwin E. Laws and Julie A. Mason, solely in such Person’s
capacity as Administrator of the Trust created and continued hereunder and not
in such Person’s individual capacity, or such Administrator’s successor in
interest in such capacity, or any successor appointed as herein provided.

 

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

 

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

 

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

 

(a)           a
court having jurisdiction in the premises shall enter 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
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of its affairs and such decree or
order shall remain unstayed and in effect for a period of 90 consecutive
days; or

 

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

 

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

 

“Capital Securities” has the meaning set forth
in paragraph 1(a) of Annex I.

 

“Capital Security Certificate” means a
definitive Certificate in fully registered form 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.

 

“Closing Date” has the meaning set forth in the
Placement Agreement.

 

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

 

“Common Securities” has the meaning set forth
in paragraph 1(b) of Annex I.

 

2

 

“Common Security Certificate” means a
definitive Certificate in fully registered form 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 at the date of execution of this Declaration is
located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware  19890-1600, Attn: Corporate
Trust Administration.

 

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

 

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

 

“Creditor” has the meaning set forth in
Section 3.3.

 

“Debenture Issuer” means Yadkin Valley
Financial Corporation, a North Carolina corporation, in its capacity as issuer
of the Debentures under the Indenture.

 

“Debenture Trustee” means Wilmington Trust
Company, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.

 

“Debentures” means the Floating Rate Junior
Subordinated Deferrable Interest Debentures due 2037 to be issued by the
Debenture Issuer under the Indenture.

 

“Defaulted Interest” has the meaning set forth
in the Indenture.

 

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

 

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

 

“Direct Action” has the meaning set forth in 0.

 

“Distribution” means a distribution payable to
Holders of Securities in accordance with 0.

 

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

 

“Distribution Period” means (i) with
respect to the Distribution paid on the first Distribution Payment Date, the
period beginning on (and including) the date of original issuance and ending on
(but excluding) the Distribution Payment Date in December 2007 and
(ii) thereafter, with respect to a Distribution paid on each successive Distribution
Payment Date, the period beginning on (and including) the preceding
Distribution Payment Date and ending on (but excluding) such current
Distribution Payment Date.

 

“Distribution Rate” means, for the Distribution
Period beginning on (and including) the date of original issuance and ending on
(but excluding) the Distribution Payment Date in December 2007, the rate per
annum of 6.21375%, and for each Distribution Period beginning on or after the
Distribution Payment Date in December 2007, the Coupon Rate for such
Distribution Period.

 

3

 

“Event of Default” means any one of the
following events (whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

(a)           the
occurrence of an Indenture Event of Default; or

 

(b)           default
by the Trust in the payment of any Redemption Price or Special Redemption Price
of any Security when it becomes due and payable; or

 

(c)           default
in the performance, or breach, in any material respect, of any covenant or
warranty of the Institutional Trustee in this Declaration (other than those
specified in clause (a) or (b) above) and continuation of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail to the Institutional Trustee and to the Sponsor by the
Holders of at least 25% in aggregate liquidation amount of the outstanding
Capital Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or

 

(d)           the
occurrence of a Bankruptcy Event with respect to the Institutional Trustee if a
successor Institutional Trustee has not been appointed within 90 days
thereof.

 

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

 

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

 

“Fiduciary Indemnified Person” shall mean 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 Delaware Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee or Delaware Trustee.

 

“Fiscal Year” has the meaning set forth in 0.

 

“Guarantee” means the guarantee agreement to be
dated as of the Closing Date, of the Sponsor in respect of the Capital
Securities.

 

“Holder” means a Person in whose name a
Certificate representing a Security is registered, such Person being a
beneficial owner within the meaning of the 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, as such Indenture and any supplemental indenture may be amended,
supplemented or otherwise modified from time to time.

 

“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 0.

 

“Interest” means any interest due on the
Debentures including any Additional Interest and Defaulted Interest.

 

4

 

“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.

 

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

 

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

 

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

 

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

 

“Officers’ Certificates” means, with respect to
any Person, a certificate signed by two Authorized Officers of such Person. Any
Officers’ Certificate delivered with respect to compliance with a condition or
covenant providing for it in this Declaration shall include:

 

(a)           a
statement that each officer signing the 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 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.

 

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

 

“Paying Agent” has the meaning specified in 0.

 

“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 in the form
of Exhibit C.

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

“Registrar” has the meaning set forth in 0.

 

“Relevant Trustee” has the meaning set forth in
0.

 

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

 

“Restricted Securities Legend” has the meaning
set forth in 0.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Sponsor” means Yadkin Valley Financial
Corporation, a North Carolina corporation, or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.

 

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

 

“Successor Entity” has the meaning set forth in
0.

 

“Successor Delaware Trustee” has the meaning
set forth in 0.

 

“Successor Institutional Trustee” has the
meaning set forth in 0.

 

“Successor Securities” has the meaning set
forth in 0.

 

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

 

6

 

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

 

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

 

“3-Month LIBOR” has the meaning set forth in
paragraph 4(a) of Annex I.

 

“Transfer Agent” has the meaning set forth in
0.

 

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

 

“Trust 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.

 

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

 

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

 

ORGANIZATION

 

Name. The Trust is named “Yadkin
Valley Statutory Trust I,” as such name may be modified from time to time
by the Administrators following written notice to the Holders of the Securities.
The Trust’s activities may be conducted under the name of the Trust or any
other name deemed advisable by the Administrators.

 

Office. The address of the
principal office of the Trust is c/o Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware  19890-1600. On at least 10 Business Days
written notice to the Holders of the Securities, the Administrators may
designate another principal office, which shall be in a state of the United
States or in the District of Columbia.

 

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 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 necessary or incidental thereto. 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.

 

7

 

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 in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration. The Administrators shall have only those ministerial duties
set forth herein with respect to accomplishing the purposes of the Trust and
are not intended to be trustees or fiduciaries with respect to the Trust or the
Holders. The Institutional Trustee shall have the right, but shall not be
obligated except as provided in 0, to perform those duties assigned to the
Administrators.

 

Title to Property of the Trust. Except
as provided in 0 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.

 

Powers and Duties of the Trustees and the
Administrators. The Trustees and the Administrators shall
conduct the affairs of the Trust in accordance with the terms of this
Declaration. Subject to the limitations set forth in paragraph (b) of this
Section, and in accordance with the following provisions (i) and (ii), the
Trustees and the Administrators shall have the authority to enter into all
transactions and agreements determined by the Institutional Trustee 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:

 

Each Administrator shall have the power and authority
to act on behalf of the Trust with respect to the following matters:

 

the issuance and sale of the Securities;

 

to cause the Trust to enter into, and to execute and
deliver 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;

 

ensuring compliance with the Securities Act,
applicable state securities or blue sky laws;

 

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;

 

the consent to the appointment of a Paying Agent,
Transfer Agent and Registrar in accordance with this Declaration, which consent
shall not be unreasonably withheld or delayed;

 

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

 

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

 

8

 

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;

 

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

 

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

 

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

 

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

 

the establishment of the Property Account;

 

the receipt of the Debentures;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

to take all action that may be necessary 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.

 

The Institutional Trustee shall have the power and
authority to act on behalf of the Trust with respect to any of the duties,
liabilities, powers or the authority of the Administrators set forth in
Section 2.6(a)(i)(D), (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.

 

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 reasonably be
expected (x) to cause the Trust to fail or cease to qualify as a “grantor trust”
for United States federal income tax purposes or (y) to require the trust to
register as an Investment Company under the Investment Company Act,
(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.

 

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):

 

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

 

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 advice to the
Administrators 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;

 

the negotiation of the terms of, and the execution and
delivery of, the Placement Agreement providing for the sale of the Capital
Securities; and

 

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

 

Notwithstanding anything herein to the contrary, the
Administrators 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 the Trust will not (i) be deemed to be
an Investment Company required to be registered under the Investment Company
Act, and (ii) fail to be classified as a “grantor trust” for United States
federal income tax purposes. The Administrators and the Holders of a 

 

10

 

Majority in liquidation
amount of the Common Securities shall not take any action inconsistent with the
treatment of the Debentures as indebtedness of the Debenture Issuer for United
States federal income tax purposes. In this connection, the 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, the
Certificate of Trust or this Declaration, as amended from time to time, that
each of the Administrators and the Holders of a Majority in liquidation amount
of the Common Securities determines in their discretion to be necessary or
desirable for such purposes.

 

All expenses incurred by the Administrators or the
Trustees pursuant to this 0 shall be reimbursed by the Sponsor, and the
Trustees and the Administrators shall have no obligations with respect to such
expenses (for purposes of clarification, this Section 2.6(e) does not
contemplate the payment by the Sponsor of acceptance or annual administration
fees owing to the Trustees under this Declaration or the fees and expenses of
the Trustees’ counsel in connection with the closing of the transactions
contemplated by this Declaration).

 

The assets of the Trust shall consist of the Trust
Property.

 

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 and the Administrators for
the benefit of the Trust in accordance with this Declaration.

 

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.

 

Prohibition of Actions by the Trust and the
Institutional Trustee. 

 

The Trust shall not, and the Institutional Trustee
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 shall cause the Trust not to:

 

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;

 

acquire any assets other than as expressly provided
herein;

 

possess Trust Property for other than a Trust purpose;

 

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

 

possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way whatsoever
other than as expressly provided herein;

 

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

 

11

 

carry on any “trade or business” as that phrase is
used in the Code; or

 

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

 

Powers and Duties of the Institutional Trustee. 

 

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 and the Holders of the Securities. 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 0. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures have
been executed and delivered.

 

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

 

The Institutional Trustee shall:

 

establish and maintain a segregated non-interest
bearing trust account (the “Property Account”) 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, or cause the Paying Agent to make payments,
to the Holders of the Capital Securities and Holders of the Common Securities
from the Property Account in accordance with 0. Funds in the Property Account
shall be held uninvested until disbursed in accordance with this Declaration;

 

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

 

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.

 

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

 

12

 

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 no Holder of the
Common Securities may exercise such right of subrogation so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.

 

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

 

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; or

 

a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with 0.

 

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

 

The Institutional Trustee must exercise the powers set
forth in this 0 in a manner that is consistent with the purposes and functions
of the Trust set out in 0, and the Institutional Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in 0.

 

Certain Duties and Responsibilities of the
Trustees and Administrators. 

 

The Institutional Trustee, before the occurrence of
any Event of Default and after the curing or waiving of all such Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Institutional Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
0), 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.

 

The duties and responsibilities of the Trustees and
the Administrators shall be as provided by this Declaration. Notwithstanding
the foregoing, no provision of this Declaration shall require any Trustee or
Administrator to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers if it shall have reasonable
grounds to believe that repayment of such funds or adequate protection against
such risk of liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Declaration relating to the
conduct or affecting the liability of or affording protection to the Trustees
or Administrators shall be subject to the provisions of this Article. Nothing
in this Declaration shall be construed to relieve an Administrator or a Trustee
from liability for its own negligent act, its own negligent failure to act, or
its own willful misconduct. To the extent that, at law or in equity, a Trustee
or an Administrator has duties and liabilities relating to the Trust or to the
Holders, such Trustee or such Administrator shall not be liable to the Trust or
to any Holder for such Trustee’s or such 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 Trustee 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.

 

13

 

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 0 does not limit the liability of the Trustees expressly
set forth elsewhere in this Declaration.

 

The Institutional Trustee shall not be liable for its
own acts or omissions hereunder except as a result of its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

 

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

 

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;

 

the Institutional Trustee’s sole duty with respect to
the custody, safekeeping 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 fiduciary accounts
generally, subject to the protections and limitations on liability afforded to
the Institutional Trustee under this Declaration;

 

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 0 and except to the
extent otherwise required by law; and

 

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.

 

Certain Rights of Institutional   Trustee. Subject to the provisions of 0:

 

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

 

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, 

 

14

 

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 written instructions 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 shall be instructed in
writing, in which event the Institutional Trustee shall have no liability
except for its own negligence or willful misconduct;

 

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

 

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

 

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;

 

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;

 

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 0 shall be taken to
relieve the Institutional Trustee, subject to 0, upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to
Section 6.7), to 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;

 

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;

 

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;

 

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 

 

15

 

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

 

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;

 

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;

 

the Institutional Trustee shall not be charged with
knowledge of an Event of Default unless a Responsible Officer of the
Institutional Trustee obtains actual knowledge of such event or the
Institutional Trustee receives written notice of such event from any Holder,
the Sponsor or the Debenture Trustee;

 

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

 

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.

 

Delaware Trustee. Notwithstanding
any other provision of this Declaration other than 0, 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 0, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
§ 3807 of the Statutory Trust Act.

 

Execution of Documents. Unless
otherwise determined in writing by the Institutional Trustee, and except as
otherwise required by the Statutory Trust Act, the Institutional Trustee, or
any one or more of the Administrators, as the case may be, is authorized to
execute on behalf of the Trust any documents that the Trustees or the
Administrators, as the case may be, have the power and authority to execute
pursuant to 0.

 

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.

 

16

 

Duration of Trust. The
Trust, unless earlier dissolved pursuant to the provisions of Article VII
hereof, shall be in existence for 35 years from the Closing Date.

 

Mergers. 

 

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 body, except as
described in 0 and 0 and except in connection with the liquidation of the Trust
and the distribution of the Debentures to Holders of Securities pursuant to
Section 7.1(a)(iv) of the Declaration or Section 4 of Annex I.

 

The Trust may, with the consent of the Institutional
Trustee and without the consent of the Holders of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any state; provided that:

 

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

 

expressly assumes all of the obligations of the Trust
under the Securities; or

 

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;

 

the Sponsor expressly appoints a trustee of the Successor
Entity that possesses substantially the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;

 

such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in any
material respect;

 

the Institutional Trustee receives written
confirmation from Moody’s Investor Services, Inc. and any other nationally
recognized statistical rating organization that rates securities issued by the
initial purchaser of the Capital Securities that it will not reduce or withdraw
the rating of any such securities because of such merger, conversion,
consolidation, amalgamation or replacement;

 

such Successor Entity has a purpose substantially
identical to that of the Trust;

 

prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:

 

such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in any
material respect;

 

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

 

17

 

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

 

the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent provided
by the Guarantee;

 

the Sponsor owns 100% of the common securities of any
Successor Entity; and

 

prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officers’
Certificate of the Administrators and an opinion of counsel, each to the effect
that all conditions precedent under this 0 to such transaction have been
satisfied.

 

Notwithstanding 0, the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.

 

SPONSOR

 

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.

 

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

 

to determine the States in which to take appropriate
action to qualify the Trust or to qualify or register for sale all or part of the
Capital Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States, to protect the limited liability of the
Holders of the Capital Securities or to enable the Trust to effect the purposes
for which it was created; and

 

to negotiate the terms of and/or execute on behalf of
the Trust, the Placement Agreement and other related agreements providing for
the sale of the Capital Securities.

 

Expenses. In connection with
the offering, sale and issuance of the Debentures to the Trust and in
connection with the sale of the Securities by the Trust, the Sponsor, in its
capacity as Debenture Issuer, shall:

 

pay all reasonable costs and expenses owing to the
Debenture Trustee pursuant to Section 6.6 of the Indenture;

 

be responsible for and shall pay all debts and
obligations (other than with respect to the Securities) and all costs and
expenses of the Trust, the offering, sale and issuance of the Securities 

 

18

(including fees to
the placement agents in connection therewith), the costs and expenses
(including reasonable counsel fees and expenses) of the Institutional Trustee
and the Administrators, the costs and expenses relating to the operation of the
Trust, including, without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, Paying Agents, Registrars,
Transfer Agents, duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets and the enforcement by the
Institutional Trustee of the rights of the Holders (for purposes of clarification,
this Section 3.3(b) does not contemplate the payment by the Sponsor of
acceptance or annual administration fees owing to the Trustees pursuant to the
services to be provided by the Trustees under this Declaration or the fees and
expenses of the Trustees’ counsel in connection with the closing of the
transactions contemplated by this Declaration); and

 

pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.

 

The Sponsor’s obligations under this Section 3.3
shall be for the benefit of, and shall be enforceable by, any Person to whom
such debts, obligations, costs, expenses and taxes are owed (a “Creditor”)
whether or not such Creditor has received notice hereof. Any such Creditor may
enforce the Sponsor’s obligations under this Section 3.3 directly against
the Sponsor and the Sponsor irrevocably waives any right or remedy to require
that any such Creditor take any action against the Trust or any other Person
before proceeding against the Sponsor. The Sponsor agrees to execute such
additional agreements as may be necessary or desirable in order to give full
effect to the provisions of this Section 3.3.

 

Right to Proceed. The
Sponsor acknowledges the rights of Holders to institute a Direct Action as set
forth in 0 hereto.

 

INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

 

Number of Trustees. The
number of Trustees shall initially be two, and;

 

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

 

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 0; and there shall always be
one Trustee who shall be the Institutional Trustee, and such Trustee may also
serve as Delaware Trustee if it meets the applicable requirements, in which
case 0 shall have no application to such entity in its capacity as
Institutional Trustee.

 

Delaware Trustee; Eligibility.

 

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

 

a natural person at least 21 years of age who is a
resident of the State of Delaware; or

 

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.

 

19

 

The initial Delaware Trustee shall be Wilmington Trust
Company.

 

Institutional Trustee; Eligibility.

 

There shall at all times be one Trustee which shall:

 

not be an Affiliate of the Sponsor;

 

not offer or provide credit or credit enhancement to
the Trust; and

 

be a banking corporation or trust company organized
and doing business under the laws of the United States of America or any state
thereof or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000.00), and subject to supervision or
examination by Federal, state, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to
above, then for the purposes of this 0, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.

 

If at any time the Institutional Trustee shall cease
to be eligible to so act under 0, the Institutional Trustee shall immediately
resign in the manner and with the effect set forth in 0.

 

If the Institutional Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act of
1939, as amended, the Institutional Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
this Declaration.

 

The initial Institutional Trustee shall be Wilmington
Trust Company.

 

Administrators. Each
Administrator shall be a U.S. Person, 21 years of age or older and authorized
to bind the Sponsor. The initial Administrators shall be William A. Long,
Edwin E. Laws and Julie A. Mason. 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.

 

Appointment, Removal and Resignation of Trustees
and Administrators.

 

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 0.

 

Subject to 00, a Relevant Trustee may resign at any
time by giving written notice thereof to the Holders of the Securities and by
appointing a successor Relevant Trustee. Upon the resignation of the
Institutional Trustee, the Institutional Trustee shall appoint a successor by
requesting from at least three Persons meeting the eligibility requirements
their expenses and charges to serve as the successor Institutional Trustee on a
form provided by the Administrators, and selecting the Person who agrees to the
lowest expense and charges (the “Successor Institutional Trustee”). If the
instrument of acceptance by the successor Relevant Trustee required by this 0
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 

 

20

 

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 0.

 

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 0. If
an Event of Default shall have occurred and be continuing, the Institutional
Trustee or the Delaware Trustee, or both of them, may be removed by the act of
the Holders of a Majority in liquidation amount of the Capital Securities,
delivered to the Relevant Trustee (in its individual capacity and on behalf of
the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities, by act of the Holders of a Majority in liquidation amount of the
Capital Securities then outstanding delivered to the Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of this 0. 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 0 within 30 days after delivery of an
instrument of removal, the Relevant Trustee or any Holder who has been a Holder
of the Securities for at least six months may, on behalf of himself and all
others similarly situated, petition any federal, state or District of Columbia
court of competent jurisdiction for the appointment of a successor Relevant
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a successor Relevant Trustee or Trustees.

 

The Institutional Trustee shall give notice of each
resignation and each removal of a Trustee and each appointment of a successor
Trustee to all Holders 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.

 

Notwithstanding the foregoing or any other provision
of this Declaration, in the event a Delaware Trustee who is a natural person
dies or is adjudged by a court to have become incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
Institutional Trustee following the procedures in this 0 (with the successor
being a Person who satisfies the eligibility requirement for a Delaware Trustee
set forth in this Declaration) (the “Successor Delaware Trustee”).

 

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 

 

21

 

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.

 

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.

 

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.

 

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.

 

Vacancies Among Trustees. If
a Trustee ceases to hold office for any reason and the number of Trustees is
not reduced pursuant to 0, 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 0.

 

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 0, 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.

 

Meetings of the Trustees and the Administrators.
Meetings of the Administrators shall be held from time to time upon the
call of an Administrator. Regular meetings of the Administrators may be held in
person in the United States or by telephone, at a place (if applicable) and
time fixed by resolution of the Administrators. Notice of any in-person
meetings of the Trustees with the Administrators or meetings of 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 with the Administrators or meetings of 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
the 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 grounds
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Trustees or the
Administrators, as the case may be, may be taken at a meeting by vote of a
majority of the Trustees or the Administrators present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Trustees or the Administrators. Meetings of the Trustees and the Administrators
together shall be held from time to time upon the call of any Trustee or an
Administrator.

 

Delegation of Power. 

 

Any Administrator may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
that is a U.S. Person his or her power for the purpose of executing any
documents contemplated in 0; and

 

22

 

the Administrators shall have power to delegate from
time to time to such of their number the doing of such things and the execution
of such instruments either in the name of the Trust or the names of the
Administrators or otherwise as the Administrators 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.

 

Conversion, Consolidation or Succession to
Business. Any Person into which the Institutional Trustee
or the Delaware Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee 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 shall be
the successor of the Institutional Trustee or the Delaware Trustee hereunder,
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 0.

 

DISTRIBUTIONS

 

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 or any principal on the Debentures held by the
Institutional Trustee, the Institutional Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a “Distribution”)
of such amounts to Holders.

 

ISSUANCE OF SECURITIES

 

General Provisions Regarding Securities. 

 

The Administrators shall, on behalf of the Trust,
issue one series of capital securities substantially in the form of
Exhibit A-1 representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Annex I and one series of
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Annex I. The 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 to, 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 as set forth in Annex I.

 

The Certificates shall be signed on behalf of the
Trust by one or more Administrators. Such signature shall be the facsimile or
manual signature of any Administrator. In case any Administrator of the Trust
who shall have signed any of the Securities shall cease to be such
Administrator before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Administrator, and any
Certificate may be signed on behalf of the Trust by such persons 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 facsimile or manual signature of an Authorized
Officer of the Institutional Trustee. Such signature shall be conclusive
evidence that the Capital Security has been authenticated 

 

23

 

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.

 

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.

 

Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and, except as provided in Section 9.1(b) with respect to the
Common Securities, non-assessable.

 

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.

 

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

 

Form and Dating. 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 Securities may have letters, numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the
Trust is subject if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Sponsor). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibit A-1
to the Institutional Trustee in writing. Each Capital Security shall be dated
on or before 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 $100,000.00 and any multiple of $1,000.00
in excess thereof.

 

The Capital Securities are being offered and sold by
the Trust pursuant to the Placement Agreement in definitive, registered form
without coupons and with the Restricted Securities Legend.

 

24

 

Mutilated, Destroyed, Lost or Stolen Certificates.

 

If:

 

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

 

there shall be delivered to the Registrar, the
Administrators and the Institutional Trustee such security or indemnity as may
be required by them to keep each of them harmless;

 

then, in the absence of
notice that such Certificate shall have been acquired by a protected 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 0, 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.

 

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 the 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.

 

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

 

Rights of Holders; Waivers of Past Defaults. 

 

The legal title to the Trust Property is vested
exclusively in the Institutional Trustee (in its capacity as such) in
accordance with 0, and the Holders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Trust
conferred by their Securities and they shall have no right to call for any
partition or division of property, profits or rights of the Trust except as
described below. The Securities shall be personal property giving only the
rights specifically set forth therein and in this Declaration. The Securities
shall have no preemptive or similar rights.

 

For so long as any Capital Securities remain
outstanding, if upon an Acceleration Event of Default, the Debenture Trustee
fails or the holders of not less than 25% in principal amount of the
outstanding Debentures fail to declare the principal of all of the Debentures
to be immediately due and payable, the Holders of 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.

 

25

 

At any time after a declaration of acceleration with
respect to the Debentures has been made and before a judgment or decree for
payment of the money due has been obtained by the Debenture Trustee as provided
in the Indenture, if the Institutional Trustee, subject to the provisions
hereof, fails to annul any such declaration and waive such default, the Holders
of 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:

 

the Debenture Issuer has paid or deposited with the
Debenture Trustee a sum sufficient to pay

 

all overdue installments of interest on all of the
Debentures,

 

any accrued Additional Interest on all of the
Debentures,

 

the principal of (and premium, if any, on) any Debentures
that have become due otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne by the Debentures,
and

 

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

 

all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that has become
due solely by such acceleration, have been cured or waived as provided in
Section 5.7 of the Indenture.

 

The Holders of at least a Majority in liquidation
amount of the Capital Securities may, on behalf of the Holders of all the
Capital Securities, waive any past default under the Indenture or any Indenture
Event of Default, except a default or Indenture Event of Default in the payment
of principal or interest on the Debentures (unless such default or Indenture
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 under the Indenture or
an Indenture Event of Default in respect of a covenant or provision that under
the Indenture cannot be modified or amended without the consent of the holder
of each outstanding Debenture. No such rescission shall affect any subsequent
default or impair any right consequent thereon.

 

Upon receipt by the Institutional Trustee of written
notice declaring such an acceleration, or rescission and annulment thereof, by
Holders of any part of the Capital Securities, a record date shall be
established for determining Holders of outstanding Capital Securities entitled to
join in such notice, which record date shall be at the close of business on the
day the Institutional Trustee receives such notice. The Holders on such record
date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that unless such declaration of
acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be
canceled and of no further effect. Nothing in this paragraph shall prevent a
Holder, or a proxy of a Holder, from giving, after expiration of such 90-day
period, a new written notice of declaration of acceleration, or rescission and
annulment thereof, as the case may be, that is identical to a written notice
that has been canceled pursuant to the proviso to the preceding sentence, in
which event a new record date shall be established pursuant to the provisions
of this 0.

 

26

 

Except as otherwise provided in paragraphs (a)
and (b) of this 0, the Holders of at least a Majority in liquidation amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default and its consequences. Upon
such waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.

 

DISSOLUTION AND TERMINATION OF TRUST

 

Dissolution and Termination of Trust.

 

The Trust shall dissolve on the first to occur of:

 

unless earlier dissolved, on December 15, 2042,
the expiration of the term of the Trust;

 

upon a Bankruptcy Event with respect to the Sponsor,
the Trust or the Debenture Issuer;

 

upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor (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) 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;

 

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

 

upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor, the Trust or the Debenture
Issuer;

 

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

 

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

 

As soon as is practicable after the occurrence of an
event referred to in 0(a), and after satisfaction of liabilities to creditors
of the Trust as required by applicable law, including of the Statutory Trust
Act, and subject to the terms set forth in Annex I, the Institutional
Trustee shall terminate the Trust by filing a certificate of cancellation with
the Secretary of State of the State of Delaware.

 

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

 

27

 

TRANSFER OF INTERESTS

 

General. 

 

Subject to 00, where Capital Securities are presented
to the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Capital Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfer and exchanges, the Trust shall issue and the
Institutional Trustee shall authenticate Capital Securities at the Registrar’s
request.

 

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, and to the
fullest extent permitted by applicable law, the Sponsor shall maintain 100%
ownership of the Common Securities; provided, however, that any
permitted successor of the Sponsor, in its capacity as Debenture Issuer, under
the Indenture that is a U.S. Person may succeed to the Sponsor’s ownership of
the Common Securities.

 

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 Securities. To the fullest extent permitted
by applicable law, any transfer or purported transfer of any Security not made
in accordance with this Declaration shall be null and void and will be deemed
to be of no legal effect whatsoever and any such transferee shall be deemed not
to be the holder of such Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.

 

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 of the same tenor to be
issued in the name of the designated transferee or transferees. 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 0. 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.

 

The Trust shall not be required (i) to issue,
register the transfer of, or exchange any Securities during a period beginning
at the opening of business fifteen 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.

 

Transfer Procedures and Restrictions. 

 

The Capital Securities shall bear the Restricted
Securities Legend, which shall not be removed unless there is delivered to the
Trust such satisfactory evidence, which may include an opinion of counsel
satisfactory to the Institutional Trustee, as may be reasonably required by the
Trust, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply 

 

28

 

with the
provisions of the Securities Act. Upon provision of such satisfactory evidence,
the Institutional Trustee, at the written direction of the Trust, shall authenticate
and deliver Capital Securities that do not bear the legend.

 

Except as permitted by 0(a), each Capital Security
shall bear a legend (the “Restricted Securities Legend”) in
substantially the following form and a Capital Security shall not be transferred
except in compliance with such legend, unless otherwise determined by the
Sponsor, upon the advice of counsel expert in securities law, in accordance
with applicable law:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. 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 AND ANY APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR
THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A,
(D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL 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 (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE SPONSOR’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.

 

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”) 

 

29

 

(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 THE SECURITIES
OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES 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.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN
$100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

 

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

 

To permit registrations of transfers and exchanges,
the Trust shall execute and the Institutional Trustee shall authenticate
Capital Securities at the Registrar’s request.

 

Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such indemnity as the
Registrar or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.

 

All Capital Securities 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 Capital Securities surrendered upon such registration of
transfer or exchange.

 

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.

 

30

 

LIMITATION OF LIABILITY OF

HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

 

Liability.  

 

Except as expressly set forth in this Declaration, the
Guarantee and the terms of the Securities, the Sponsor shall not be:

 

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; or

 

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

 

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.

 

Pursuant to the Statutory Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

 

Exculpation. 

 

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

 

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.

 

Fiduciary Duty.  

 

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, are agreed by the parties hereto to replace such other
duties and liabilities of the Indemnified Person.

 

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

 

31

 

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

 

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.

 

Indemnification.  

 

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

 

The Sponsor shall indemnify, to the full extent
permitted by law, any Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor arising out of or
in connection with the acceptance or administration of this Declaration by
reason of the fact that he is or was an Indemnified Person against expenses
(including reasonable attorneys’ fees and expenses) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust; provided, however,
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 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 shall deem proper.

 

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 (a)
and (b) of this 0, or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys’ fees and expenses) actually and reasonably incurred by
him in connection therewith.

 

Any indemnification of an Administrator under
paragraphs (a) and (b) of this 0 (unless ordered by a court) shall be made
by the Sponsor only as authorized in the specific case upon a determination
that indemnification of the Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in
paragraphs (a) and (b). Such determination shall be made (i) by the
Administrators by a majority vote of a Quorum consisting of such Administrators
who were not parties to such action, suit or proceeding, (ii) if such a
Quorum is not obtainable, or, even if obtainable, if 

 

32

 

a Quorum of disinterested
Administrators so directs, by independent legal counsel in a written opinion,
or (iii) by the Common Security Holder of the Trust.

 

To the fullest extent permitted by law, expenses
(including reasonable 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 (a) and (b) of this 0 shall
be paid by the Sponsor in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Sponsor as authorized in this
0. Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrators by
a majority vote of a Quorum of disinterested Administrators, (ii) 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
(iii) 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 Indemnified Person 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 his conduct was
unlawful. In no event shall any advance be made in instances where the
Administrators, independent legal counsel or the Common Security Holder
reasonably determine that such Indemnified Person deliberately breached his
duty to the Trust or its Common or Capital Security Holders.

 

The Trustees, at the sole cost and expense of the
Sponsor, retain the right to representation by counsel of their own choosing in
any action, suit or any other proceeding for which they are indemnified under
paragraphs (a) and (b) of this 0, without affecting their right to
indemnification hereunder or waiving any rights afforded to it under this
Declaration or applicable law.

 

The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this 0 shall not
be deemed exclusive of any other rights to which those seeking indemnification
and advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this 0 is in effect. Any repeal or modification of
this 0 shall not affect any rights or obligations then existing.

 

The Sponsor or the Trust may purchase and maintain
insurance on behalf of any Person who is or was an Indemnified Person against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this 0.

 

For purposes of this 0, 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 0 with respect to the resulting or surviving entity as he would have
with respect to such constituent entity if its separate existence had
continued.

 

The indemnification and advancement of expenses
provided by, or granted pursuant to, this 0 shall, unless otherwise provided
when authorized or ratified, (i) 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 

 

33

 

Person; and
(ii) survive the termination or expiration of this Declaration or the
earlier removal or resignation of an Indemnified Person.

 

Outside Businesses. Any Covered
Person, the Sponsor, the Delaware Trustee and the Institutional Trustee 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.

 

Compensation; Fee.The
Sponsor agrees:

 

to pay to the Trustees from time to time such
compensation for all services rendered by them hereunder as the parties shall
agree 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

 

except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses, disbursements
and advances incurred or made by the Trustees in accordance with any provision
of this Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct.

 

For purposes of clarification, this Section 9.6
does not contemplate the payment by the Sponsor of acceptance or annual
administration fees owing to the Trustees under this Declaration or the fees
and expenses of the Trustees’ counsel in connection with the closing of the
transactions contemplated by this Declaration.

 

The provisions of this 0 shall survive the dissolution
of the Trust and the termination of this Declaration and the removal or
resignation of any Trustee.

 

No Trustee may claim any lien or charge on any
property of the Trust as a result of any amount due pursuant to this 0.

 

ACCOUNTING

 

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

 

34

 

Certain Accounting Matters. 

 

At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of the
Trust in the United States, as defined for purposes of Treasury Regulations
section 301.7701-7, full books of account, records and supporting documents,
which shall reflect in reasonable detail each transaction of the Trust. The
books of account shall be maintained, at the Sponsor’s expense, in accordance
with generally accepted accounting principles, consistently applied. The books
of account and the records of the Trust shall be examined by and reported upon
(either separately or as part of the Sponsor’s regularly prepared consolidated
financial report) as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.

 

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.

 

The Administrators, at the Sponsor’s expense, shall
cause to be duly prepared at the principal office of the Sponsor in the United
States, as ‘United States’ is defined in Section 7701(a)(9) of the Code
(or at the principal office of the Trust if the Sponsor has no such principal
office in the United States), 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.

 

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

 

Withholding. The
Institutional Trustee or any Paying Agent and the Administrators shall comply
with all withholding requirements under United States federal, state and local
law. The Institutional Trustee or any Paying Agent shall request, and each
Holder shall provide to the Institutional Trustee or any Paying Agent, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to the Holder, and any representations and forms as
shall reasonably be requested by the Institutional Trustee or any Paying Agent
to assist it in determining the extent of, and in fulfilling, its withholding
obligations. The Administrators shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly established
by a Holder, shall remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Institutional Trustee or any
Paying Agent is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a Distribution in the amount of the withholding to the
Holder. 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.

 

35

 

AMENDMENTS AND MEETINGS

 

Amendments. 

 

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

 

Notwithstanding any other provision of this
Article XI, an amendment may be made, and any such purported amendment shall
be valid and effective only if:

 

the Institutional Trustee shall have first received

 

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

 

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

 

the result of such amendment would not be to

 

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

 

cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act.

 

Except as provided in 0(d), (e) or (h), no amendment
shall be made, and any such purported amendment shall be void and ineffective,
unless the Holders of a Majority in liquidation amount of the Capital
Securities shall have consented to such amendment.

 

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

 

Sections 9.1(b) and 9.1(c) and this 0 shall not
be amended without the consent of all of the Holders of the Securities.

 

Article III shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Common
Securities.

 

The rights of the Holders of the Capital Securities
under Article IV to appoint and remove Trustees shall not be amended
without the consent of the Holders of a Majority in liquidation amount of the
Capital Securities.

 

36

 

This Declaration may be amended by the Institutional
Trustee and the Holders of a Majority in liquidation amount of the Common
Securities without the consent of the Holders of the Capital Securities to:

 

cure any ambiguity;

 

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

 

add to the covenants, restrictions or obligations of
the Sponsor; or

 

modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary 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
(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 rights, 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 in any material respect the powers,
preferences or special rights of Holders of Capital Securities.

 

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

 

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 or the terms
of the Securities. The Administrators shall call a meeting of the Holders of
such class if directed to do so by the Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Administrators one or more calls in a writing stating that the signing
Holders of the Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of the
Securities calling a meeting shall specify in writing the Certificates held by the
Holders of the Securities exercising the right to call a meeting and only those
Securities represented by such Certificates shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.

 

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

 

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, 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 in
liquidation amount 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 

 

37

 

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;

 

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

 

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

 

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE
DELAWARE TRUSTEE

 

Representations and Warranties of Institutional
Trustee. The 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:

 

the Institutional Trustee is a Delaware banking
corporation with trust powers, duly organized and validly existing under the
laws of the State of Delaware with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;

 

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

 

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

 

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

 

38

 

Representations of the 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:

 

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

 

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);

 

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

 

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

 

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

 

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

 

MISCELLANEOUS

 

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:

 

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):

 

Yadkin Valley Statutory Trust I

c/o Yadkin Valley Financial Corporation

209 North Bridge Street

Elkin, North Carolina 
28621

Attention: 
Edwin E. Laws

Telecopy: 
336-835-8858

 

39

 

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

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 
19890-1600

Attention: 
Corporate Trust Administration

Telecopy: 
302-636-4140

 

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

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 
19890-1600

Attention: 
Corporate Trust Administration

Telecopy: 
302-636-4140

 

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):

 

Yadkin Valley Financial Corporation

209 North Bridge Street

Elkin, North Carolina 
28621

Attention: 
Edwin E. Laws

Telecopy: 
336-835-8858

 

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.

 

Governing Law. This
Declaration and the rights of the parties hereunder shall be governed by and
interpreted in accordance with the law of the State of Delaware and all rights
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; provided, however, that there shall not be applicable
to the Trust, the Trustees or this Declaration any provision of the laws
(statutory or common) of the State of Delaware pertaining to trusts that relate
to or regulate, in a manner inconsistent with the terms hereof (a) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (b) affirmative requirements to
post bonds for trustees, officers, agents or employees of a trust, (c) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (d) fees
or other sums payable to trustees, officers, agents or employees of a trust,
(e) the allocation of receipts and expenditures to income or principal, or
(f) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding or investing trust assets.

 

40

 

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.

 

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.

 

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.

 

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.

 

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.

 

Signatures appear on the
following page

 

41

 

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

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  as Delaware
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ W. Thomas
  Morris, II

  	
   

  
	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
  Title: Assistant
  Vice President

  
						

 

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  as Institutional
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ W. Thomas
  Morris, II

  	
   

  
	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
  Title: Assistant
  Vice President

  
						

 

 

	
   

  	
  YADKIN VALLEY
  FINANCIAL CORPORATION, as 

  Sponsor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Edwin E.
  Laws

  	
   

  
	
   

  	
   

  	
  Name: Edwin E.
  Laws

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
						

 

	
   

  	
  ADMINISTRATORS
  OF YADKIN VALLEY 

  STATUTORY TRUST I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ William A.
  Long

  	
   

  
	
   

  	
   

  	
  Administrator

  
						

 

 

	
   

  	
  By:

  	
   

  	
  /s/ Edwin E.
  Laws

  	
   

  
	
   

  	
   

  	
  Administrator

  
						

 

 

	
   

  	
  By:

  	
   

  	
  /s/ Julie Mason

  	
   

  
	
   

  	
   

  	
  Administrator

  
						

 

42

 

ANNEX I

 

TERMS OF
SECURITIES

 

Pursuant to 0 of the Amended and Restated Declaration
of Trust, dated as of November 1, 2007 (as amended from time to time, the “Declaration”),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Capital Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration):

 

1.                                       Designation
and Number.

 

(a)                                  25,000
Floating Rate Capital Securities of Yadkin Valley Statutory Trust I (the “Trust”),
with an aggregate stated liquidation amount with respect to the assets of the
Trust of twenty-five million dollars ($25,000,000.00) and a stated liquidation
amount with respect to the assets of the Trust of $1,000.00 per Capital
Security, are hereby designated for the purposes of identification only as the “Capital
Securities”. The Capital Security Certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with
such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.

 

(b)                                 774
Floating Rate Common Securities of the Trust (the “Common Securities”)
will be evidenced by Common Security Certificates substantially in the form of
Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.

 

2.                                       Distributions.

 

(a)                                  Distributions
will be payable on each Security for the Distribution Period beginning on (and
including) the date of original issuance and ending on (but excluding) the
Distribution Payment Date in December 2007 at a rate per annum of 6.21375% and
shall bear interest for each successive Distribution Period beginning on (and
including) the Distribution Payment Date in December 2007, and each succeeding
Distribution Payment Date, and ending on (but excluding) the next succeeding
Distribution Payment Date at a rate per annum equal to the 3-Month LIBOR,
determined as described below, plus 1.32% (the “Coupon Rate”), applied
to the stated liquidation amount thereof, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Distributions
in arrears will bear interest thereon compounded quarterly at the applicable
Distribution Rate (to the extent permitted by law). Distributions, as used
herein, include cash distributions and any such compounded distributions unless
otherwise noted. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds available therefor. The amount of the
Distribution payable for any Distribution Period will be calculated by applying
the Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such number by the
actual number of days in the Distribution Period concerned divided by 360. All
percentages resulting from any calculations on the Capital Securities will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all
dollar amounts used in or resulting from such calculation will be rounded to
the nearest cent (with one-half cent being rounded upward)).

 

(b)                                 Distributions
on the Securities will be cumulative, will accrue from the date of original
issuance, and will be payable, subject to extension of distribution payment
periods as described herein, quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year, or if such
day is not a Business Day, then the next succeeding Business Day (each a “Distribution
Payment Date”) 

 

I-1

 

(it being understood that
interest accrues for any such non-Business Day), commencing on the Distribution
Payment Date in December 2007 when, as and if available for payment. The
Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures, so long as no Acceleration Event of Default has
occurred and is continuing, by extending the payment period on the Debentures
for up to 20 consecutive quarterly periods (each an “Extension Period”)
at any time and from time to time, subject to the conditions described below,
during which Extension Period no interest shall be due and payable. During any
Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded
quarterly from the date such interest would have been payable were it not for
the Extension Period, to the extent permitted by law (such interest referred to
herein as “Additional Interest”). No Extension Period may end on a date
other than a Distribution Payment Date. At the end of any such Extension
Period, the Debenture Issuer shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date and provided
further, however, that during any such Extension Period, the
Debenture Issuer and its Affiliates shall not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Debenture Issuer’s or its Affiliates’
capital stock (other than payments of dividends or distributions to the
Debenture Issuer or payments of dividends from direct or indirect subsidiaries
of the Debenture Issuer to their parent corporations, which also shall be
direct or indirect subsidiaries of the Debenture Issuer) or make any guarantee
payments with respect to the foregoing, or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Debenture Issuer or any Affiliate that rank pari passu in all respects with or junior in interest
to the Debentures (other than, with respect to clauses (i) and (ii) above,
(a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Debenture Issuer in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Debenture Issuer (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as
a result of any exchange or conversion of any class or series of the Debenture
Issuer’s capital stock (or any capital stock of a subsidiary of the Debenture
Issuer) for any class or series of the Debenture Issuer’s capital stock or of
any class or series of the Debenture Issuer’s indebtedness for any class or
series of the Debenture Issuer’s capital stock, (c) the purchase of
fractional interests in shares of the Debenture Issuer’s capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholders’ rights plan, or the issuance of rights, stock
or other property under any stockholders’ rights plan, or the redemption or
repurchase of rights pursuant thereto, (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, (f) payments of principal or interest on
debt securities or payments of cash dividends or distributions on any capital
stock issued by an Affiliate that is not, in whole or in part, a subsidiary of
the Debenture Issuer (or any redemptions, repurchases or liquidation payments
on such stock or securities), or (g) payments under the Capital Securities
Guarantee). Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period, provided that such period together with
all such previous and further consecutive extensions thereof shall not exceed
20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a
new Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be

 

I-2

 

deferred for a period
equal to the Extension Period. If Distributions are deferred, the Distributions
due shall be paid on the date that the related Extension Period terminates to
Holders of the Securities as they appear on the books and records of the Trust
on the record date immediately preceding such date. Distributions on the
Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust’s
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.

 

(c)                                  Distributions
on the Securities will be payable to the Holders thereof as they appear on the
books and records of the Trust on the relevant record dates. The relevant
record dates shall be fifteen days before the relevant Distribution Payment
Date. Distributions payable on any Securities that are not punctually paid on
any Distribution Payment Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, as the case may be, when due
(taking into account any Extension Period), will cease to be payable to the
Person in whose name such Securities are registered on the relevant record
date, and such defaulted Distribution will instead be payable to the Person in
whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture.

 

(d)                                 In
the event that there is any money or other property held by or for the Trust
that is not accounted for hereunder, such property shall be distributed Pro
Rata (as defined herein) among the Holders of the Securities.

 

3.                                       Liquidation
Distribution Upon Dissolution. In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust (each a “Liquidation”)
other than in connection with a redemption of the Debentures, the Holders of
the Securities will be entitled to receive out of the assets of the Trust
available for distribution to Holders of the Securities, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Debenture Issuer), distributions equal to the aggregate of the stated
liquidation amount of $1,000.00 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the “Liquidation
Distribution”), unless in connection with such Liquidation, the Debentures
in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of such Securities, with an interest rate equal to the
Distribution Rate of, and bearing accrued and unpaid interest in an amount
equal to the accrued and unpaid Distributions on, and having the same record
date as, such Securities, after paying or making reasonable provision to pay
all claims and obligations of the Trust in accordance with the Statutory Trust
Act, shall be distributed on a Pro Rata basis to the Holders of the Securities
in exchange for such Securities.

 

The Sponsor, as the Holder of all of the Common
Securities, has the right at any time to dissolve the Trust (including, without
limitation, upon the occurrence of a Special Event), subject to the receipt by
the Debenture Issuer of prior approval from the Board of Governors of the
Federal Reserve System, or its designated district bank, as applicable, and any
successor federal agency that is primarily responsible for regulating the activities
of the Sponsor (the “Federal Reserve”), if the Sponsor is a bank holding
company, or from the Office of Thrift Supervision and any successor federal
agency that is primarily responsible for regulating the activities of Sponsor,
(the “OTS”) if the Sponsor is a savings and loan holding company, in
either case if then required under applicable capital guidelines or policies of
the Federal Reserve or OTS, as applicable, and, after satisfaction of
liabilities to creditors of the Trust, cause the Debentures to be distributed
to the Holders of the Securities on a Pro Rata basis in accordance with the
aggregate stated liquidation amount thereof.

 

If a Liquidation of the Trust occurs as described in
clause (i), (ii), (iii) or (v) in 0 of the Declaration, the Trust shall be
liquidated by the Institutional Trustee as expeditiously as it determines to 

 

I-3

 

be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined
by the Institutional Trustee not to be practical, in which event such Holders
will be entitled to receive out of the assets of the Trust available for
distribution to the Holders, after satisfaction of liabilities of creditors of
the Trust to the extent not satisfied by the Debenture Issuer, an amount equal
to the Liquidation Distribution. An early Liquidation of the Trust pursuant to
clause (iv) of 0 of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

 

If, upon any such Liquidation the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on such Capital Securities shall be paid
to the Holders of the Trust Securities on a Pro Rata basis, except that if an
Event of Default has occurred and is continuing, the Capital Securities shall
have a preference over the Common Securities with regard to such distributions.

 

After the date for any distribution of the Debentures
upon dissolution of the Trust (i) the Securities of the Trust will be
deemed to be no longer outstanding, (ii) upon surrender of a Holder’s
Securities certificate, such Holder of the Securities will receive a
certificate representing the Debentures to be delivered upon such distribution,
(iii) any certificates representing the Securities still outstanding will
be deemed to represent undivided beneficial interests in such of the Debentures
as have an aggregate principal amount equal to the aggregate stated liquidation
amount with an interest rate identical to the Distribution Rate of, and bearing
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissuance (and until such certificates are so
surrendered, no payments of interest or principal shall be made to Holders of
Securities in respect of any payments due and payable under the Debentures; provided,
however that such failure to pay shall not be deemed to be an Event of
Default and shall not entitle the Holder to the benefits of the Guarantee), and
(iv) all rights of Holders of Securities under the Declaration shall
cease, except the right of such Holders to receive Debentures upon surrender of
certificates representing such Securities.

 

4.                                       Redemption
and Distribution.

 

(a)                                  The
Debentures will mature on December 15, 2037. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, at any Distribution
Payment Date on or after the Distribution Payment Date in December 2012, at the
Redemption Price. In addition, the Debentures may be redeemed by the Debenture
Issuer at the Special Redemption Price, in whole but not in part, at any
Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days following the occurrence of such Special Event at
the Special Redemption Price, upon not less than 30 nor more than
60 days’ notice to holders of such Debentures so long as such Special
Event is continuing. In each case, the right of the Debenture Issuer to redeem
the Debentures is subject to the Debenture Issuer having received prior
approval from the Federal Reserve (if the Debenture Issuer is a bank holding
company) or prior approval from the OTS (if the Debenture Issuer is a savings
and loan holding company), in each case if then required under applicable
capital guidelines or policies of the applicable federal agency.

 

“3-Month LIBOR” means the London interbank
offered interest rate for three-month, U.S. dollar deposits determined by the
Debenture Trustee in the following order of priority:

 

(1)                                  the
rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on Reuters Page LIBOR01 as of 11:00 a.m.
(London time) on the related Determination Date (as defined below). “Reuters
Page LIBOR01” means the display 

 

I-4

 

designated as “LIBOR01” on Reuters or such other page
as may replace Reuters Page LIBOR01 on that service or such other service or
services as may be nominated by the British Bankers’ Association as the
information vendor for the purpose of displaying London interbank offered rates
for U.S. dollar deposits;

 

(2)                                  if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations;

 

(3)                                  if
fewer than two such quotations are provided as requested in clause (2)
above, the Debenture Trustee will request four major New York City banks to
provide such banks’ offered quotations (expressed as percentages per annum) to
leading European banks for loans in U.S. dollars as of 11:00 a.m. (London
time) on such Determination Date. If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; and

 

(4)                                  if
fewer than two such quotations are provided as requested in clause (3)
above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period.

 

If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Reuters Page LIBOR01 as of
11:00 a.m. (London time) on the related Determination Date is superseded
on the Reuters Page LIBOR01 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date.

 

The Distribution Rate for any Distribution Period will
at no time be higher than the maximum rate then permitted by New York law as
the same may be modified by United States law.

 

“Capital Treatment Event” means the receipt by
the Debenture Issuer and the Trust of an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of any amendment to,
or change (including any announced prospective change) in, the laws, rules or
regulations of the United States or any political subdivision thereof or
therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of original issuance of the
Debentures, there is more than an insubstantial risk that the Sponsor will not,
within 90 days of the date of such opinion, be entitled to treat an amount
equal to the aggregate liquidation amount of the Capital Securities as “Tier 1
Capital” (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Sponsor (or if the Sponsor is not a bank holding company or otherwise is not
subject to the Federal Reserve’s risk-based capital adequacy guidelines, such
guidelines applied to the Sponsor as if the Sponsor were subject to such
guidelines); provided, however, that the inability of the Sponsor
to treat all or any portion of the liquidation amount of the Capital Securities
as Tier l Capital shall not constitute the basis for a Capital Treatment
Event, if such inability results from the Sponsor having cumulative preferred
stock, minority interests in consolidated subsidiaries, or any other class of
security or interest which the Federal Reserve or OTS, as applicable, may now
or hereafter accord Tier 1 Capital treatment in excess of the amount which
may now or hereafter qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines; provided  further, however,
that the distribution of Debentures in connection with the Liquidation of the
Trust shall not in and of itself constitute a Capital Treatment Event unless
such Liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event.

 

I-5

 

“Determination Date” means the date that is two
London Banking Days (i.e., a business day in which dealings in deposits in U.S.
dollars are transacted in the London interbank market) preceding the particular
Distribution Period for which a Coupon Rate is being determined.

 

“Investment Company Event” means the receipt by
the Debenture Issuer and the Trust of an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion, will be considered an Investment Company that is required to be
registered under the Investment Company Act which change or prospective change
becomes effective or would become effective, as the case may be, on or after
the date of the issuance of the Debentures.

 

“Maturity Date” means December 15, 2037.

 

“Redemption Date” shall mean the date fixed for
the redemption of Capital Securities, which shall be any Distribution Payment
Date on or after the Distribution Payment Date in December 2012.

 

“Redemption Price”
means 100% of the principal amount of the Debentures being redeemed, plus
accrued and unpaid Interest on such Debentures to the Redemption Date.

 

“Special Event” means a Tax Event, an
Investment Company Event or a Capital Treatment Event.

 

“Special Redemption Date” means a date on which
a Special Event redemption occurs, which shall be a Distribution Payment Date.

 

“Special Redemption Price” means the price set
forth in the following table for any Special Redemption Date that occurs on the
date indicated below (or if such day is not a Business Day, then the next
succeeding Business Day), expressed as the percentage of the principal amount
of the Debentures being redeemed:

 

	
  Month in which Special 

  Redemption Date Occurs

  	
   

  	
  Special Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2007

  	
   

  	
  104.625

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2008

  	
   

  	
  104.300

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2008

  	
   

  	
  104.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2008

  	
   

  	
  103.650

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2008

  	
   

  	
  103.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2009

  	
   

  	
  103.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2009

  	
   

  	
  102.700

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2009

  	
   

  	
  102.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2009

  	
   

  	
  102.050

  	
  %

  

 

I-6

 

	
  March 2010

  	
   

  	
  101.700

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2010

  	
   

  	
  101.400

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2010

  	
   

  	
  101.050

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2010

  	
   

  	
  100.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2011

  	
   

  	
  100.450

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June 2011

  	
   

  	
  100.200

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2011 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

plus, in each case, accrued and unpaid Interest on
such Debentures to the Special Redemption Date.

 

“Tax Event” means the receipt by the Debenture
Issuer and the Trust of an opinion of counsel experienced in such matters to
the effect that, as a result of any amendment to or change (including any
announced prospective change) in the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement (including
any private letter ruling, technical advice memorandum, field service advice,
regulatory procedure, notice or announcement including any notice or
announcement of intent to adopt such procedures or regulations) (an “Administrative
Action”) or judicial decision interpreting or applying such laws or
regulations, regardless of whether such Administrative Action or judicial
decision is issued to or in connection with a proceeding involving the
Debenture Issuer or the Trust and whether or not subject to review or appeal,
which amendment, clarification, change, Administrative Action or decision is
enacted, promulgated or announced, in each case on or after the date of
original issuance of the Debentures, there is more than an insubstantial risk
that: (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the
Debenture Issuer on the Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust
is, or will be within 90 days of the date of such opinion, subject to more than
a de minimis amount of other taxes, duties or other governmental charges.

 

(b)                                 Upon
the repayment in full at maturity or redemption in whole or in part of the
Debentures (other than following the distribution of the Debentures to the
Holders of the Securities), the proceeds from such repayment or payment shall
concurrently be applied to redeem Pro Rata at the applicable Redemption Price
or Special Redemption Price, as applicable, Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed; provided, however, that holders of such
Securities shall be given not less than 30 nor more than 60 days’ notice of
such redemption (other than at the scheduled maturity of the Debentures).

 

(c)                                  If
fewer than all the outstanding Securities are to be so redeemed, the Common
Securities and the Capital Securities will be redeemed Pro Rata and the Capital
Securities to be redeemed will be redeemed Pro Rata from each Holder of Capital
Securities.

 

I-7

 

(d)                                 The
Trust may not redeem fewer than all the outstanding Capital Securities unless
all accrued and unpaid Distributions have been paid on all Capital Securities
for all quarterly Distribution periods terminating on or before the date of
redemption.

 

(e)                                  Redemption
or Distribution Procedures.

 

(i)                                     Notice
of any redemption of, or notice of distribution of the Debentures in exchange
for, the Securities (a “Redemption/Distribution Notice”) will be given
by the Trust by mail to each Holder of Securities to be redeemed or exchanged
not fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to
this paragraph 4(e)(i), a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of such Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of such Securities at the address of each
such Holder appearing on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to any
Holder shall affect the validity of the redemption or exchange proceedings with
respect to any other Holder.

 

(ii)                                  If
the Securities are to be redeemed and the Trust gives a Redemption/
Distribution Notice, which notice may only be issued if the Debentures are
redeemed as set out in this paragraph 4 (which notice will be
irrevocable), then, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will pay the relevant Redemption
Price or Special Redemption Price, as applicable, to the Holders of such
Securities by check mailed to the address of each such Holder appearing on the
books and records of the Trust on the Redemption Date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required then immediately prior to the close of business on the date of such
deposit Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities to
receive the applicable Redemption Price or Special Redemption Price specified
in paragraph 4(a), but without interest on such Redemption Price or
Special Redemption Price. If payment of the Redemption Price or Special
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Trust or by the Debenture Issuer as guarantor
pursuant to the Guarantee, Distributions on such Securities will continue to
accrue at the Distribution Rate from the original Redemption Date to the actual
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price or
Special Redemption Price. In the event of any redemption of the Capital
Securities issued by the Trust in part, the Trust shall not be required to
(i) issue, register the transfer of or exchange any Security during a
period beginning at the opening of business fifteen days before any selection
for redemption of the Capital Securities and ending at the close of business on
the earliest date on which the relevant notice of redemption is deemed to have
been given to all Holders of the Capital Securities to be so redeemed or
(ii) register the transfer of or exchange any Capital Securities so
selected for redemption, in whole or in part, except for the unredeemed portion
of any Capital Securities being redeemed in part.

 

(iii)                               Redemption/Distribution
Notices shall be sent by the Administrators on behalf of the Trust to
(A) in respect of the Capital Securities, the Holders thereof and
(B) in respect of the Common Securities, the Holder thereof.

 

I-8

 

(iv)                              Subject
to the foregoing and applicable law (including, without limitation, United
States federal securities laws), and provided that the acquiror is not the
Holder of the Common Securities or the obligor under the Indenture, the Sponsor
or any of its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by private
agreement.

 

5.                                       Voting
Rights - Capital Securities.

 

(a)                                  Except
as provided under paragraphs 5(b) and 7 and as otherwise required by law
and the Declaration, the Holders of the Capital Securities will have no voting
rights. The Administrators are required to call a meeting of the Holders of the
Capital Securities if directed to do so by Holders of at least 10% in
liquidation amount of the Capital Securities.

 

(b)                                 Subject
to the requirements of obtaining a tax opinion by the Institutional Trustee in
certain circumstances set forth in the last sentence of this paragraph, the
Holders of a Majority in liquidation amount of the Capital Securities, voting
separately as a class, have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) exercise the remedies
available under the Indenture as the holder of the Debentures, (ii) waive
any past default that is waivable under the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required; provided,
however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
aggregate principal amount of Debentures (a “Super Majority”) affected
thereby, the Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Capital Securities outstanding which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. If the Institutional Trustee fails to enforce its rights under the
Debentures after the Holders of a Majority in liquidation amount of such
Capital Securities have so directed the Institutional Trustee, to the fullest
extent permitted by law, a Holder of the Capital Securities may institute a
legal proceeding directly against the Debenture Issuer to enforce the
Institutional Trustee’s rights under the Debentures without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on the date the interest
or principal is payable (or in the case of redemption, the Redemption Date or
the Special Redemption Date, as applicable), then a Holder of record of the
Capital Securities may directly institute a proceeding for enforcement of payment,
on or after the respective due dates specified in the Debentures, to such
Holder directly of the principal of or interest on the Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder. The Institutional Trustee shall notify all
Holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Debentures unless (x) such
default has been cured prior to the giving of such notice or (y) the
Institutional Trustee determines in good faith that the withholding of such
notice is in the interest of the Holders of such Capital Securities, except
where the default relates to the payment of principal of or interest on any of
the Debentures. Such notice shall state that such Indenture Event of Default
also constitutes an Event of Default hereunder. Except with respect to
directing the time, method and place of conducting a proceeding for a remedy,
the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that, as a result of such
action, the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes.

 

I-9

 

In the event the consent of the Institutional Trustee,
as the holder of the Debentures, is required under the Indenture with respect
to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under
the Indenture would require the consent of a Super-Majority, the Institutional
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities outstanding which the
relevant Super-Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the Holders of the Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.

 

A waiver of an Indenture Event of Default will
constitute a waiver of the corresponding Event of Default hereunder. Any
required approval or direction of Holders of the Capital Securities may be given
at a separate meeting of Holders of the Capital Securities convened for such
purpose, at a meeting of all of the Holders of the Securities in the Trust or
pursuant to written consent. The Institutional Trustee will cause a notice of
any meeting at which Holders of the Capital Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of the Capital Securities. Each
such notice will include a statement setting forth the following information
(i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of
proxies or consents. No vote or consent of the Holders of the Capital
Securities will be required for the Trust to redeem and cancel Capital
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.

 

Notwithstanding that Holders of the Capital Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Capital Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not entitle the Holder thereof to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Capital Securities
were not outstanding.

 

In no event will Holders of the Capital Securities
have the right to vote to appoint, remove or replace the Administrators, which
voting rights are vested exclusively in the Sponsor as the Holder of all of the
Common Securities of the Trust. Under certain circumstances as more fully
described in the Declaration, Holders of Capital Securities have the right to
vote to appoint, remove or replace the Institutional Trustee and the Delaware
Trustee.

 

6.                                       Voting
Rights - Common Securities.

 

(a)                                  Except
as provided under paragraphs 6(b), 6(c) and 7 and as otherwise required by
law and the Declaration, the Common Securities will have no voting rights.

 

(b)                                 The
Holders of the Common Securities are entitled, in accordance with
Article IV of the Declaration, to vote to appoint, remove or replace any
Administrators.

 

(c)                                  Subject
to 0 of the Declaration and only after each Event of Default (if any) with
respect to the Capital Securities has been cured, waived, or otherwise
eliminated and subject to the requirements of the second to last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the Common
Securities, voting separately as a class, may direct the time, method, and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the
time, 

 

I-10

 

method, place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on the Debenture Trustee with respect
to the Debentures, (ii) waiving any past default and its consequences that
is waivable under the Indenture, or (iii) exercising any right to rescind
or annul a declaration that the principal of all the Debentures shall be due
and payable; provided, however, that, where a consent or action
under the Indenture would require a Super Majority, the Institutional Trustee
may only give such consent or take such action at the written direction of the
Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. Notwithstanding this
paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights, to the fullest extent
permitted by law, under the Declaration, any Holder of the Common Securities
may institute a legal proceeding directly against any Person to enforce the
Institutional Trustee’s rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.

 

Any approval or direction of Holders of the Common
Securities may be given at a separate meeting of Holders of the Common
Securities convened for such purpose, at a meeting of all of the Holders of the
Securities in the Trust or pursuant to written consent. The Administrators will
cause a notice of any meeting at which Holders of the Common Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of the Common Securities.
Each such notice will include a statement setting forth (i) the date of
such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.

 

No vote or consent of the Holders of the Common
Securities will be required for the Trust to redeem and cancel Common Securities
or to distribute the Debentures in accordance with the Declaration and the
terms of the Securities.

 

7.                                       Amendments
to Declaration and Indenture.

 

(a)                                  In
addition to any requirements under Section 11.1 of the Declaration, if any
proposed amendment to the Declaration provides for, or the Trustees, Sponsor or
Administrators otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
Liquidation of the Trust, other than as described in Section 7.1 of the
Declaration, then the Holders of outstanding Securities, voting together as a
single class, will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities,
affected thereby; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.

 

(b)                                 In
the event the consent of the Institutional Trustee as the holder of the
Debentures is required under the Indenture with respect to any amendment,
modification or termination of 

 

I-11

 

the Indenture or the
Debentures, the Institutional Trustee shall request the written direction of
the Holders of the Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification, or
termination as directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided, however, that where
a consent under the Indenture would require a Super Majority, the Institutional
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.

 

(c)                                  Notwithstanding
the foregoing, no amendment or modification may be made to the Declaration if
such amendment or modification would (i) cause the Trust to be classified
for purposes of United States federal income taxation as other than a grantor
trust, (ii) reduce or otherwise adversely affect the powers of the
Institutional Trustee or (iii) cause the Trust to be deemed an Investment
Company which is required to be registered under the Investment Company Act.

 

(d)                                 Notwithstanding
any provision of the Declaration, the right of any Holder of the Capital
Securities to receive payment of distributions and other payments upon
redemption or otherwise, on or after their respective due dates, or to
institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of the Capital Securities shall be entitled to such relief as can
be given either at law or equity.

 

8.                                       Pro
Rata. A reference in these terms of the Securities to any payment,
distribution or treatment as being “Pro Rata” shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities then outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of
the Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after satisfaction
of all amounts owed to the Holders of the Capital Securities, to each Holder of
the Common Securities Pro Rata according to the aggregate liquidation amount of
the Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.

 

9.                                       Ranking.
The Capital Securities rank pari passu with
and payment thereon shall be made Pro Rata with the Common Securities except
that, where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price (or Special Redemption Price) of, any
Common Security, and no other payment on account of redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions on all outstanding Capital
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price (or Special Redemption Price) the
full amount of such Redemption Price (or Special Redemption Price) on all
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds immediately available to the Institutional
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or the Redemption Price (or Special Redemption Price) of, the
Capital Securities then due and payable.

 

10.                                 Acceptance
of Guarantee and Indenture. Each Holder of the Capital Securities and the
Common Securities, by the acceptance of such Securities, agrees to the
provisions of the Guarantee, including the subordination provisions therein and
to the provisions of the Indenture.

 

I-12

 

11.                                 No
Preemptive Rights. The Holders of the Securities shall have no preemptive
or similar rights to subscribe for any additional securities.

 

12.                                 Miscellaneous.
These terms constitute a part of the Declaration. The Sponsor will provide a
copy of the Declaration, the Guarantee, and the Indenture to a Holder without
charge on written request to the Sponsor at its principal place of business.

 

I-13

 

EXHIBIT
A-1

 

FORM OF
CAPITAL SECURITY CERTIFICATE

 

[FORM OF FACE OF
SECURITY]

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. 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 AND ANY APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR
THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A,
(D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL 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 (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE SPONSOR’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.

 

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 THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THE SECURITIES 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 

 

A-1-1

 

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.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN
$100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

 

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

 

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

 

Certificate Number P-1                                                                                                                                                                                                                                                                         25,000
Capital Securities

[CUSIP NO. [       ]  **To be inserted at the request of a
subsequent transferee]

 

November 1, 2007

 

Certificate Evidencing
Floating Rate Capital Securities

 

of

 

Yadkin Valley Statutory
Trust I

 

(liquidation amount
$1,000.00 per Capital Security)

 

Yadkin Valley Statutory Trust I, a statutory
trust created under the laws of the State of Delaware (the “Trust”), hereby
certifies that First Tennessee Bank National Association is the registered
owner of capital securities of the Trust representing undivided beneficial
interests in the assets of the Trust, (liquidation amount $1,000.00 per capital
security) (the “Capital Securities”). Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of the
Trust in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of
November 1, 2007, among William A. Long, Edwin E. Laws and
Julie A. Mason, as Administrators, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Institutional Trustee, Yadkin Valley
Financial Corporation, as Sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, including the
designation of the terms of the Capital Securities as set forth in Annex I
to such amended and restated declaration as the same may be amended from time
to time (the “Declaration”). Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee, and the Indenture to the
Holder without charge upon written request to the Sponsor at its principal
place of business.

 

A-1-2

 

Upon receipt of this Security, the Holder is bound by
the Declaration and is entitled to the benefits thereunder.

 

By acceptance of this Security, the Holder agrees to
treat, for United States federal income tax purposes, the Debentures as
indebtedness and the Capital Securities as evidence of beneficial ownership in
the Debentures.

 

This Capital Security is governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to
principles of conflict of laws.

 

Signatures
appear on following page

 

A-1-3

 

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

 

 

	
   

  	
  YADKIN VALLEY
  STATUTORY TRUST I

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:
  Administrator

  

 

CERTIFICATE OF
AUTHENTICATION

 

This is one of the Capital Securities referred to in
the within-mentioned Declaration.

 

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  as the
  Institutional Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  

 

A-1-4

 

[FORM OF REVERSE OF
CAPITAL SECURITY]

 

Distributions payable on each Capital Security will be
payable at an annual rate equal to 6.21375% beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution
Payment Date in December 2007 and at an annual rate for each successive period
beginning on (and including) the Distribution Payment Date in December 2007,
and each succeeding Distribution Payment Date, and ending on (but excluding)
the next succeeding Distribution Payment Date (each a “Distribution Period”),
equal to 3-Month LIBOR, determined as described below, plus 1.32% (the “Coupon
Rate”), applied to the stated liquidation amount of $1,000.00 per Capital
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term “Distributions” as used herein includes cash
distributions and any such compounded distributions unless otherwise noted. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. As used herein, “Determination
Date” means the date that is two London Banking Days (i.e., a business day in
which dealings in deposits in U.S. dollars are transacted in the London
interbank market) preceding the commencement of the relevant Distribution
Period. The amount of the Distribution payable for any Distribution Period will
be calculated by applying the Distribution Rate to the stated liquidation
amount outstanding at the commencement of the Distribution Period and
multiplying each such number by the actual number of days in the Distribution
Period concerned divided by 360.

 

“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Debenture Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the related
Determination Date (“Reuters Page LIBOR01” means the display designated as “LIBOR01”
on Reuters or such other page as may replace Reuters Page LIBOR01 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Debenture Trustee
will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture
Trustee will request four major New York City banks to provide such banks’
offered quotations (expressed as percentages per annum) to leading European
banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S. dollar
deposits having a three-month maturity that initially appears on Reuters Page
LIBOR01 as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Reuters Page LIBOR01 by a corrected rate by 12:00 noon
(London time) on such Determination Date, then the corrected rate as so
substituted on the applicable page will be the applicable 3-Month LIBOR for
such Determination Date.

 

The Distribution Rate for any Distribution Period will
at no time be higher than the maximum rate then permitted by New York law as
the same may be modified by United States law.

 

All percentages resulting from any calculations on the
Capital Securities will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or 

 

A-1-5

 

.09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).

 

Except as otherwise described below, Distributions on
the Capital Securities will be cumulative, will accrue from the date of
original issuance and will be payable quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year or if any
such day is not a Business Day, then the next succeeding Business Day (each
such day, a “Distribution Payment Date”) (it being understood that interest
accrues for any such non-Business Day), commencing on the Distribution Payment
Date in December 2007. The Debenture Issuer has the right under the Indenture
to defer payments of interest on the Debentures, so long as no Acceleration
Event of Default has occurred and is continuing, by extending the interest
payment period on the Debentures for up to 20 consecutive quarterly periods
(each an “Extension Period”) at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate
in effect for each such Extension Period, compounded quarterly from the date
such interest would have been payable were it not for the Extension Period, to
the extent permitted by law (such interest referred to herein as “Additional
Interest”). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Capital Securities shall be deferred for
a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and
records of the Trust on the record date immediately preceding such date.
Distributions on the Securities must be paid on the dates payable (after giving
effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

 

The Capital Securities shall be redeemable as provided
in the Declaration.

 

A-1-6

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and
transfers this Capital Security Certificate to:

 

(Insert assignee’s social security or tax
identification number)

 

 

 

(Insert address and zip code of assignee) and
irrevocably appoints

 

 

 

agent to transfer this Capital Security Certificate on
the books of the Trust. The agent may substitute another to act for him or her.

 

	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
						

 

(Sign exactly as your
name appears on the other side of this Capital Security Certificate)

 

Signature Guarantee:(1)

 

(1) Signature must
be guaranteed by an “eligible guarantor institution” that is a bank,
stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

A-1-7

 

EXHIBIT A-2

 

FORM OF COMMON SECURITY
CERTIFICATE

 

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

 

THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN
COMPLIANCE WITH SECTION 8.1 OF THE DECLARATION.

 

Certificate Number C-1                                                                                                                                                                                                                                                                        774
Common Securities

 

November 1, 2007

 

Certificate Evidencing
Floating Rate Common Securities

 

of

 

Yadkin Valley Statutory
Trust I

 

Yadkin Valley Statutory Trust I, a statutory
trust created under the laws of the State of Delaware (the “Trust”), hereby
certifies that Yadkin Valley Financial Corporation (the “Holder”) is the
registered owner of common securities of the Trust representing undivided
beneficial interests in the assets of the Trust (the “Common Securities”). The
Common Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of November 1, 2007, among William A. Long, Edwin E. Laws and
Julie A. Mason, as Administrators, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Institutional Trustee, Yadkin Valley
Financial Corporation, as Sponsor, and the holders from time to time of
undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to
such amended and restated declaration, as the same may be amended from time to
time (the “Declaration”). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge upon written request to the Sponsor at its principal
place of business.

 

As set forth in the Declaration, when an Event of
Default has occurred and is continuing, the rights of Holders of Common Securities
to payment in respect of Distributions and payments upon Liquidation,
redemption or otherwise are subordinated to the rights of payment of Holders of
the Capital Securities.

 

Upon receipt of this Certificate, the Holder is bound
by the Declaration and is entitled to the benefits thereunder.

 

By acceptance of this Certificate, the Holder agrees
to treat, for United States federal income tax purposes, the Debentures as
indebtedness and the Common Securities as evidence of undivided beneficial
ownership in the Debentures.

 

This Common Security is governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to
principles of conflict of laws.

 

A-2-1

 

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

 

	
   

  	
  YADKIN VALLEY
  STATUTORY TRUST I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:
  Administrator

  

 

A-2-2

 

[FORM OF REVERSE OF
COMMON SECURITY]

 

Distributions payable on each Common Security will be
payable at an annual rate equal to 6.21375% beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution
Payment Date in December 2007 and at an annual rate for each successive period
beginning on (and including) the Distribution Payment Date in December 2007,
and each succeeding Distribution Payment Date, and ending on (but excluding)
the next succeeding Distribution Payment Date (each a “Distribution Period”),
equal to 3-Month LIBOR, determined as described
below, plus 1.32% (the “Coupon Rate”), applied to the stated liquidation amount
of $1,000.00 per Common Security, such rate being the rate of interest payable
on the Debentures to be held by the Institutional Trustee. Distributions in arrears
will bear interest thereon compounded quarterly at the Distribution Rate (to
the extent permitted by applicable law). The term “Distributions” as used
herein includes cash distributions and any such compounded distributions unless
otherwise noted. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds available therefor. As used herein, “Determination
Date” means the date that is two London Banking Days (i.e., a business day in
which dealings in deposits in U.S. dollars are transacted in the London
interbank market) preceding the commencement of the relevant Distribution
Period. The amount of the Distribution payable for any Distribution Period will
be calculated by applying the Distribution Rate to the stated liquidation
amount outstanding at the commencement of the Distribution Period and
multiplying each such number by the actual number of days in the Distribution
Period concerned divided by 360.

 

“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Debenture Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the related
Determination Date (“Reuters Page LIBOR01” means the display designated as “LIBOR01”
on Reuters or such other page as may replace Reuters Page LIBOR01 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Debenture Trustee
will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture
Trustee will request four major New York City banks to provide such banks’
offered quotations (expressed as percentages per annum) to leading European
banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on Reuters
Page LIBOR01 as of 11:00 a.m. (London time) on the related Determination Date
is superseded on the Reuters Page LIBOR01 by a corrected rate by 12:00 noon
(London time) on such Determination Date, then the corrected rate as so
substituted on the applicable page will be the applicable 3-Month LIBOR for
such Determination Date.

 

The Distribution Rate for any Distribution Period will
at no time be higher than the maximum rate then permitted by New York law as
the same may be modified by United States law.

 

All percentages resulting from any calculations on the
Common Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or 

 

A-2-3

 

.09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

 

Except as otherwise described below, Distributions on
the Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year or if any
such day is not a Business Day, then the next succeeding Business Day (each
such day, a “Distribution Payment Date”) (it being understood that interest
accrues for any such non-Business Day), commencing on the Distribution Payment
Date in December 2007. The Debenture Issuer has the right under the Indenture
to defer payments of interest on the Debentures, so long as no Acceleration
Event of Default has occurred and is continuing, by extending the interest
payment period on the Debentures for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate
in effect for each such Extension Period, compounded quarterly from the date
such interest would have been payable were it not for the Extension Period, to
the extent permitted by law (such interest referred to herein as “Additional
Interest”). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Common Securities shall be deferred for
a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and
records of the Trust on the record date immediately preceding such date.
Distributions on the Securities must be paid on the dates payable (after giving
effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.

 

The Common Securities shall be redeemable as provided
in the Declaration.

 

A-2-4

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and
transfers this Common Security Certificate to:

 

(Insert assignee’s social security or tax
identification number)

 

 

(Insert address and zip code of assignee) and
irrevocably appoints

 

 

	
   

  	
   

  	
  agent 

  
	
   

  	
  to transfer this Common
  Security Certificate on the books of the Trust. The

  agent may substitute another to act for him or her.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your
  name appears on the other side of this Common Security 

  
	
   

  	
  Certificate)

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Sign exactly as your
  name appears on the other side of this Common Security 

  
	
   

  	
  Certificate)

  
									

 

Signature Guarantee(2)

 

(2) Signature must
be guaranteed by an “eligible guarantor institution” that is a bank,
stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

A-2-5

 

EXHIBIT B

 

SPECIMEN OF INITIAL DEBENTURE

 

(See
Document No. 17)

 

B-1

 

EXHIBIT C

 

PLACEMENT AGREEMENT

 

(See
Document No. 1)

 

C-1

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