Document:

Exhibit 10.11

 

1ST PACIFIC BANK OF CALIFORNIA,

as Issuer

 

INDENTURE

Dated as of March 31, 2005

 

WILMINGTON TRUST COMPANY,

as Trustee

 

FLOATING RATE JUNIOR SUBORDINATED DEBENTURES

DUE 2020

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I. DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. DEBENTURES

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Authentication and Dating

  	
   

  	
  5

  
	
  Section 2.2.

  	
  Form of Trustee’s Certificate of Authentication

  	
   

  	
  5

  
	
  Section 2.3.

  	
  Form and Denomination of Debentures

  	
   

  	
  6

  
	
  Section 2.4.

  	
  Execution of Debentures

  	
   

  	
  6

  
	
  Section 2.5.

  	
  Exchange and Registration of Transfer of Debentures

  	
   

  	
  6

  
	
  Section 2.6.

  	
  Mutilated, Destroyed, Lost or Stolen Debentures

  	
   

  	
  8

  
	
  Section 2.7.

  	
  Temporary Debentures

  	
   

  	
  9

  
	
  Section 2.8.

  	
  Payment of Interest and Additional Interest

  	
   

  	
  9

  
	
  Section 2.9.

  	
  Cancellation of Debentures Paid, etc

  	
   

  	
  11

  
	
  Section 2.10.

  	
  Computation of Interest Rate

  	
   

  	
  11

  
	
  Section 2.11.

  	
  CUSIP Numbers

  	
   

  	
  12

  
	
  Section 2.12.

  	
  Regulation S Compliance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. PARTICULAR COVENANTS OF THE BANK

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

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

  	
   

  	
  12

  
	
  Section 3.2.

  	
  Offices for Notices and Payments, etc

  	
   

  	
  13

  
	
  Section 3.3.

  	
  Appointments to Fill Vacancies in Trustee’s Office

  	
   

  	
  13

  
	
  Section 3.4.

  	
  Provision as to Paying Agent

  	
   

  	
  13

  
	
  Section 3.5.

  	
  Certificate to Trustee

  	
   

  	
  14

  
	
  Section 3.6.

  	
  Compliance with Consolidation Provisions

  	
   

  	
  14

  
	
  Section 3.7.

  	
  Limitation on Dividends

  	
   

  	
  14

  
	
  Section 3.8.

  	
  Federal Regulatory Approval Required

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Securityholders’ Lists

  	
   

  	
  15

  
	
  Section 4.2.

  	
  Preservation and Disclosure of Lists

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Events of Default

  	
   

  	
  16

  
	
  Section 5.2.

  	
  Acceleration of Maturity; Rescission and Annulment

  	
   

  	
  17

  
	
  Section 5.3.

  	
  Defaults

  	
   

  	
  17

  
	
  Section 5.4.

  	
  Trustee May File Proof of Claims

  	
   

  	
  18

  
	
  Section 5.5.

  	
  Application of Moneys Collected by Trustee

  	
   

  	
  19

  
	
  Section 5.6.

  	
  Proceedings by Securityholders

  	
   

  	
  19

  
	
  Section 5.7.

  	
  Proceedings by Trustee

  	
   

  	
  20

  
	
  Section 5.8.

  	
  Remedies Cumulative and Continuing; Delay or
  Omission Not a Waiver

  	
   

  	
  20

  

 

 i
 

 

 

	
  Section 5.9.

  	
  Direction of Proceedings and Waiver of Defaults by
  Majority of Securityholders

  	
   

  	
  20

  
	
  Section 5.10.

  	
  Notice of Defaults

  	
   

  	
  21

  
	
  Section 5.11.

  	
  Undertaking to Pay Costs

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. CONCERNING THE TRUSTEE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Duties and Responsibilities of Trustee

  	
   

  	
  21

  
	
  Section 6.2.

  	
  Reliance on Documents, Opinions, etc

  	
   

  	
  22

  
	
  Section 6.3.

  	
  No Responsibility for Recitals, etc

  	
   

  	
  23

  
	
  Section 6.4.

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

  	
   

  	
  23

  
	
  Section 6.5.

  	
  Moneys to be Held in Trust

  	
   

  	
  23

  
	
  Section 6.6.

  	
  Compensation and Expenses of Trustee

  	
   

  	
  24

  
	
  Section 6.7.

  	
  Officers’ Certificate as Evidence

  	
   

  	
  24

  
	
  Section 6.8.

  	
  Eligibility of Trustee

  	
   

  	
  24

  
	
  Section 6.9.

  	
  Resignation or Removal of Trustee

  	
   

  	
  25

  
	
  Section 6.10.

  	
  Acceptance by Successor Trustee

  	
   

  	
  26

  
	
  Section 6.11.

  	
  Succession by Merger, etc

  	
   

  	
  27

  
	
  Section 6.12.

  	
  Authenticating Agents

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. CONCERNING THE SECURITYHOLDERS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Action by Securityholders

  	
   

  	
  28

  
	
  Section 7.2.

  	
  Proof of Execution by Securityholders

  	
   

  	
  28

  
	
  Section 7.3.

  	
  Who Are Deemed Absolute Owners

  	
   

  	
  29

  
	
  Section 7.4.

  	
  Debentures Owned by Bank Deemed Not Outstanding

  	
   

  	
  29

  
	
  Section 7.5.

  	
  Revocation of Consents; Future Holders Bound

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII. SECURITYHOLDERS’ MEETINGS

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Purposes of Meetings

  	
   

  	
  29

  
	
  Section 8.2.

  	
  Call of Meetings by Trustee

  	
   

  	
  30

  
	
  Section 8.3.

  	
  Call of Meetings by Bank or Securityholders

  	
   

  	
  30

  
	
  Section 8.4.

  	
  Qualifications for Voting

  	
   

  	
  30

  
	
  Section 8.5.

  	
  Regulations

  	
   

  	
  30

  
	
  Section 8.6.

  	
  Voting

  	
   

  	
  31

  
	
  Section 8.7.

  	
  Quorum; Actions

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX. SUPPLEMENTAL INDENTURES

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Supplemental Indentures without Consent of
  Securityholders

  	
   

  	
  32

  
	
  Section 9.2.

  	
  Supplemental Indentures with Consent of
  Securityholders

  	
   

  	
  33

  
	
  Section 9.3.

  	
  Effect of Supplemental Indentures

  	
   

  	
  33

  
	
  Section 9.4.

  	
  Notation on Debentures

  	
   

  	
  34

  
	
  Section 9.5.

  	
  Evidence of Compliance of Supplemental Indenture to
  be Furnished to Trustee

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. REDEMPTION OF SECURITIES

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Optional Redemption

  	
   

  	
  34

  
	
  Section 10.2.

  	
  Notice of Redemption; Selection of Debentures

  	
   

  	
  34

  
	
  Section 10.3.

  	
  Payment of Debentures Called for Redemption

  	
   

  	
  35

  

 

 ii
 

 

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

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Bank May Consolidate, etc., on Certain Terms

  	
   

  	
  35

  
	
  Section 11.2.

  	
  Successor Entity to be Substituted

  	
   

  	
  35

  
	
  Section 11.3.

  	
  Opinion of Counsel to be Given to Trustee

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Discharge of Indenture

  	
   

  	
  36

  
	
  Section 12.2.

  	
  Deposited Moneys to be Held in Trust by Trustee

  	
   

  	
  37

  
	
  Section 12.3.

  	
  Paying Agent to Repay Moneys Held

  	
   

  	
  37

  
	
  Section 12.4.

  	
  Return of Unclaimed Moneys

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Indenture and Debentures Solely Corporate
  Obligations

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV. MISCELLANEOUS PROVISIONS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  Successors

  	
   

  	
  37

  
	
  Section 14.2.

  	
  Official Acts by Successor Entity

  	
   

  	
  37

  
	
  Section 14.3.

  	
  Surrender of Bank Powers

  	
   

  	
  37

  
	
  Section 14.4.

  	
  Addresses for Notices, etc

  	
   

  	
  38

  
	
  Section 14.5.

  	
  Governing Law

  	
   

  	
  38

  
	
  Section 14.6.

  	
  Evidence of Compliance with Conditions Precedent

  	
   

  	
  38

  
	
  Section 14.7.

  	
  Table of Contents, Headings, etc

  	
   

  	
  38

  
	
  Section 14.8.

  	
  Execution in Counterparts

  	
   

  	
  38

  
	
  Section 14.9.

  	
  Separability

  	
   

  	
  38

  
	
  Section 14.10.

  	
  Assignment

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV. SUBORDINATION OF DEBENTURES

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
  Agreement to Subordinate

  	
   

  	
  39

  
	
  Section 15.2.

  	
  Default on Senior Indebtedness

  	
   

  	
  39

  
	
  Section 15.3.

  	
  Liquidation, Dissolution, Bankruptcy

  	
   

  	
  39

  
	
  Section 15.4.

  	
  Subrogation

  	
   

  	
  40

  
	
  Section 15.5.

  	
  Trustee to Effectuate Subordination

  	
   

  	
  41

  
	
  Section 15.6.

  	
  Notice by the Bank

  	
   

  	
  41

  
	
  Section 15.7.

  	
  Rights of the Trustee; Holders of Senior
  Indebtedness

  	
   

  	
  42

  
	
  Section 15.8.

  	
  Subordination May Not Be Impaired

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Floating Rate Junior Subordinated Debenture

  	
   

  	
   

  
					

 

 iii

THIS
INDENTURE, dated as of March 31, 2005, between 1st Pacific Bank of California,
a member bank organized under the laws of California (the “Bank”), and
Wilmington Trust Company, a Delaware banking corporation, as debenture trustee
(the “Trustee”).

WITNESSETH:

WHEREAS,
for its lawful corporate purposes, the Bank has duly authorized the issuance of
its Floating Rate Junior Subordinated Debentures due 2020 (the “Debentures”)
under this Indenture to provide, among other things, for the execution and
authentication, delivery and administration thereof, and the Bank 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 Bank 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:

ARTICLE I.

DEFINITIONS

Section 1.1.           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.

“Additional
Interest” means interest, if any, that shall accrue on any interest on the
Debentures the payment of which has not been made on the applicable Interest
Payment Date and which shall accrue at the Interest Rate, compounded quarterly
(to the extent permitted by law).

“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.

“Bank” means 1st
Pacific Bank of California, a member bank organized under the laws of
California and, subject to the provisions of Article XI, shall include its
successors and assigns.

“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 Bank.

 1
 

“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Bank 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.

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

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

“Debenture” or “Debentures”
means a Temporary Debenture or a Permanent Debenture, as applicable.

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

“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.

“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 June 2005
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.

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

“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.

“FDIC”
means the Federal Deposit Insurance Corporation and any successor federal
agency that is primarily responsible for insuring the deposit accounts of banks
or supervising state banks that are not members of the Federal Reserve.

“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 and state member banks.

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

“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, commencing in June 2005.

“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 June 2005 the rate per annum of 4.90%, and for each Distribution Period
beginning on or after the Interest Payment Date in June 2005, the Coupon Rate
for such Distribution Period.

 2
 

“Maturity Date” means June 15, 2020.

“Member
Bank Securities Laws” means the federal laws applicable to state nonmember
banks (12 U.S.C. 221 et seq.), as amended from time to time or any successor
legislation, and the regulations promulgated thereunder, including 12 C.F.R.
Part 208.

“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 Bank, 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 Bank, 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.

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 Bank) or shall have been set aside and
segregated in trust by the Bank (if the Bank 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

(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 Bank 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.

 3
 

“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.

“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
Bank or the Trustee for that purpose in accordance with the terms hereof.

“Senior
Indebtedness” means, with respect to the Bank, all claims (including post
default interest in the case of liquidation of the Bank) against the Bank,
incurred, assumed or guaranteed by the Bank, having the same priority as the
Bank’s obligations to its depositors, its obligations under bankers’
acceptances and letters of credit, and its obligations to any other creditors
(including its obligations to the Federal Reserve, FDIC, and any rights acquired
by the FDIC as a result of loans made by the FDIC to the Bank or the purchase
or guarantee of any of its assets by the FDIC pursuant to the provisions of 12
USC §1823(c), (d) or (e)), whether now outstanding or hereafter incurred, or
any higher priority, and the principal, premium, if any, and interest in
respect thereof, whether incurred on or prior to the date of this Indenture or
thereafter incurred.  Notwithstanding the
foregoing, “Senior Indebtedness” shall not include Debentures issued pursuant
to this Indenture or obligations with respect to which 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.  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.

“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.

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

“Telerate Page 3750” has the meaning set forth in Section 2.10.

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

 4
 

ARTICLE II.

DEBENTURES

Section 2.1.           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 $5,000,000.00 may be executed and delivered
by the Bank to the Trustee for authentication, and the Trustee, upon receipt of
a written authentication order from the Bank, shall thereupon authenticate and
make available for delivery said Debentures to or upon the written order of the
Bank, 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 Bank 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)           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 Bank, as the
case may be; and

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

(1)
          that such Debentures, when
authenticated and delivered by the Trustee and issued by the Bank 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 Bank,
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

(2)
          that all laws and requirements
in respect of the execution and delivery by the Bank 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.

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

 5
 

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

	
  WILMINGTON TRUST COMPANY, as
  Trustee

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  
			

 

Section 2.3.           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 $500,000.00 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
$500,000.00 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.

Section 2.4.           Execution
of Debentures.  The Debentures shall be signed in the name
and on behalf of the Bank 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 Bank 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 Bank 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 Bank, 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 Bank; and any Debenture may be signed on
behalf of the Bank by such Persons as, at the actual date of the execution of
such Debenture, shall be the proper officers of the Bank, 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.

Section 2.5.           Exchange
and Registration of Transfer of Debentures. 
The Bank 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 Bank
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 Bank for such purpose as provided
in Section 3.2, and the Bank shall execute, the Bank 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 presentment for registration of

 6
 

transfer of any Debenture at
the Principal Office of the Trustee or at any office or agency of the Bank
maintained for such purpose as provided in Section 3.2, the Bank shall execute,
the Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank, upon the advice of counsel expert in
securities law, in accordance with applicable law:

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

THIS OBLIGATION IS
SUBORDINATED TO CLAIMS OF DEPOSITORS, IS UNSECURED, AND IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BANK.

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 (INCLUDING 12 U.S.C. 221 ET SEQ. AND 12 C.F.R. PART 208
PROMULGATED THEREUNDER (THE “MEMBER BANK SECURITIES LAWS”)) AND 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 OTHER
APPLICABLE SECURITIES LAW, INCLUDING THE MEMBER BANK SECURITIES LAWS.  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO
THE BANK, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER, AS APPLICABLE, THE SECURITIES ACT OR THE MEMBER BANK
SECURITIES LAWS, (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

 7
 

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 THE MEMBER BANK SECURITIES LAWS, OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF, AS APPLICABLE, THE SECURITIES ACT OR THE MEMBER BANK SECURITIES LAWS,
SUBJECT TO THE BANK’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 BANK.

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 $500,000.00 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 $500,000.00 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.

Section 2.6.           Mutilated,
Destroyed, Lost or Stolen Debentures. 
In case any
Debenture shall become mutilated or be destroyed, lost or stolen, the Bank
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 Bank 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 Bank

 8
 

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 Bank.  Upon the issuance of any substituted
Debenture, the Bank may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses connected therewith. 
In case any 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 Bank 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 Bank 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 Bank 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 Bank, 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.

Section 2.7.           Temporary
Debentures.  Pending the preparation of definitive
Debentures, the Bank 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 Bank.  Every such temporary Debenture shall be
executed by the Bank 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 Bank 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 Bank
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 Bank at its own expense and without any charge therefor
except that in case of any such exchange involving a registration of transfer
the Bank 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.

Section 2.8.           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.

 9
 

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 June 2005 at a rate per annum of 4.90%, and shall bear interest for
each successive Distribution Period beginning on or after the Interest Payment
Date in June 2005 at a rate per annum equal to the 3-Month LIBOR, determined as
described in Section 2.10, plus 1.78% (the “Coupon Rate”), applied to
the principal amount thereof, until 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 quarterly in
arrears on each Interest Payment Date with the first installment of interest to
be paid on the Interest Payment Date in June 2005.

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 Bank
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 Bank 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 Bank 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 Bank of
such special record date and, in the name and at the expense of the Bank, 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
Bank may make payment of any Defaulted Interest on any Debentures in any other
lawful manner after notice given by the Bank to the Trustee of the proposed
payment method; provided, however, the Trustee in its sole
discretion deems such payment method to be practical.

The
Bank shall not pay any interest on the Debentures while it remains in default
in the payment of any assessment due to the FDIC or the Federal Reserve; provided,
that, if such default is due to a dispute between the Bank and the FDIC or the
Federal Reserve over the amount of such assessment, this limitation shall not
apply, if the Bank deposits security satisfactory to the FDIC or the Federal
Reserve for payment upon final determination of the issue.

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.

 10
 

Section 2.9.           Cancellation
of Debentures Paid, etc.  All Debentures surrendered for the purpose of
payment, redemption, exchange or registration of transfer, shall, if
surrendered to the Bank 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 unless the Bank otherwise directs the Trustee in
writing.  If the Bank 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.

Section 2.10.        Computation
of Interest Rate.  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)).

(a)
          “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 Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (as defined below). 
“Telerate Page 3750” means the display designated as “Page 3750” on the
Moneyline Telerate Service or such other page as may replace Page 3750 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 Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected rate
by 12:00 noon (London time) on such Determination Date, then

 11
 

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.

(c)           “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.

(d)           The Trustee shall
notify the Bank and any securities exchange or interdealer quotation system on
which the Debentures 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 Bank or any securities exchange or interdealer
quotation system, or any defect in said notice, shall not affect the obligation
of the Bank 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.

(e)           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 by the Trustee will (in the absence
of willful default, bad faith and manifest error) be final, conclusive and
binding on the Bank and all of the holders of the Debentures, and no liability
shall (in the absence of willful default, bad faith or manifest error) attach
to the Trustee in connection with the exercise or non-exercise by either of
them or their respective powers, duties and discretion.

Section 2.11.        CUSIP
Numbers.  The Bank 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 Bank will promptly notify the Trustee in
writing of any change in the CUSIP numbers.

ARTICLE III.

PARTICULAR COVENANTS OF THE BANK

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

(a)           The Bank 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 Bank if a request for a wire transfer has
not been received by the Bank 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.

 12
 

(b)           The Bank 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.

Section 3.2.           Offices
for Notices and Payments, etc.  So long as any of the Debentures remain
outstanding, the Bank 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 Bank in respect of the Debentures or of this
Indenture may be served.  The Bank 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 Bank in a notice to
the Trustee, or specified as contemplated by Section 2.5, such office or agency
for all of the above purposes shall be the office or agency of the
Trustee.  In case the Bank 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 Bank 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 Bank may from time to time
rescind such designation, as the Bank may deem desirable or expedient; provided,
however, that no such designation or rescission shall in any manner
relieve the Bank of its obligation to maintain any such office or agency in
Wilmington, Delaware, for the purposes above mentioned.  The Bank will give to the Trustee prompt
written notice of any such designation or rescission thereof.

Section 3.3.           Appointments
to Fill Vacancies in Trustee’s Office. 
The Bank,
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.

Section 3.4.           Provision
as to Paying Agent.

(a)           If the Bank 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,

(1)
          that it will hold all sums held
by it as such agent for the payment of the principal of and premium, if any, or
interest, if any, on the Debentures (whether such sums have been paid to it by
the Bank or by any other obligor on the Debentures) in trust for the benefit of
the holders of the Debentures;

(2)
          that it will give the Trustee
prompt written notice of any failure by the Bank (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

(3)
          that it will, at any time during
the continuance of any Event of Default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by such paying
agent.

 13
 

(b)           If the Bank 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 Bank (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 Bank 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 Bank shall promptly notify the Trustee in
writing of its action or failure to act.

(c)           Anything in this
Section 3.4 to the contrary notwithstanding, the Bank 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 Bank or any such paying agent, such
sums to be held by the Trustee upon the trusts herein contained.

(d)
          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.

Section 3.5.           Certificate
to Trustee.  The Bank 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 Bank they would
normally have knowledge of any default during such fiscal year by the Bank 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.

Section 3.6.           Compliance
with Consolidation Provisions.  The Bank 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.

Section 3.7.           Limitation
on Dividends.  If there shall have occurred and be
continuing an Event of Default, then the Bank shall not, and shall not allow
any Affiliate of the Bank 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 Bank’s capital stock or its Affiliates’ capital stock (other
than payments of dividends or distributions to the Bank) 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 Bank 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 Bank 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 Bank (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Event of Default, (2) as a result of any exchange or
conversion of any class or series of the Bank’s capital stock (or any capital
stock of a subsidiary of the Bank) for any class or series of the Bank’s
capital stock or of any class or series of the Bank’s indebtedness for any
class or series of the Bank’s capital stock, (3) the purchase of fractional
interests in shares of the Bank’s capital stock pursuant to the conversion or

 14
 

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, or (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).

Section 3.8.           Federal
Regulatory Approval Required.  The Debentures may not be
repaid in the case of an acceleration due to an Event of Default or voluntarily
redeemed without the prior written approval of or, if applicable, written
notice to the Federal Reserve.  If such approval
is necessary, within 30 days after receipt of any declaration of acceleration
pursuant to Section 5.1, the Bank will apply to the Federal Reserve for written
approval of repayment prior to maturity. 
In the event that the Bank obtains such prior written approval, the Bank
shall notify the Securityholders, and the Trustee will arrange for prompt
payment on the Debentures.

No
payment shall at any time be made on account of the principal of the Debenture,
unless following such payment the aggregate of the Bank’s shareholders’ equity
and capital notes or debentures that comply with the requirements of Section
670 of the California Financial Code thereafter outstanding shall be the equal
of such aggregate at the date of the original issue of the Debenture, or as
otherwise authorized by the California Commissioner of Financial Institutions.

ARTICLE IV.

SECURITYHOLDERS’ LISTS AND REPORTS

BY THE BANK AND THE TRUSTEE

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

(a)           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

(b)           at such other times
as the Trustee may request in writing, within 30 days after the receipt by the
Bank 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.

Section 4.2.           Preservation
and Disclosure of Lists.

(a)           The Trustee shall
preserve, in as current a form as is reasonably practicable, all information as
to the names and addresses of the holders of 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.

(b)           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

 15
 

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:

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

(2)
          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 or the Federal Reserve, 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 or the Federal Reserve, 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 or the Federal Reserve shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise the Trustee
shall be relieved of any obligation or duty to such applicants respecting their
application.

(c)           Each and every
holder of Debentures, by receiving and holding the same, agrees with the Bank
and the Trustee that neither the Bank 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).

ARTICLE V.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

UPON AN EVENT OF DEFAULT

Section 5.1.           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):

(a)           a court of competent
jurisdiction shall enter a decree or order for relief in respect of the Bank 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,

 16
 

sequestrator (or similar
official) of the Bank 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)           the Bank 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 Bank 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.

Section 5.2.           Acceleration
of Maturity; Rescission and Annulment.  If
an 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 Bank (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 immediately due and
payable, subject to the receipt by the Bank of prior approval from the Federal
Reserve for payment of such amounts, if then required under applicable capital
guidelines, regulations or policies of the Federal Reserve.  Upon payment of such amounts, all obligations
of the Bank in respect of the payment of principal of and interest on the
Debentures shall terminate.

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 Bank 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 Defaults 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 Bank 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 Bank, 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
Bank, the Trustee and the holders of the Debentures shall continue as though no
such proceeding had been taken.

Section 5.3.           Defaults.  “Default,” wherever used herein, means any one of the following
events (whatever the reason for such Default and whether it shall be voluntary
or involuntary or be effected by operation of law pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative
or governmental body):

(a)           an
Event of Default has occurred;

 17
 

(b)
          the Bank fails to pay the
principal of any Debenture at the Maturity Date and such failure is continued
for six days, whether or not such payment is prohibited by Article XV hereof;
or

(c)
          the Bank fails to pay any
installment of interest on an Interest Payment Date and such failure is
continued for 30 days, whether or not such payment is prohibited by Article XV
hereof.

The
Bank covenants that, if a Default shall occur, it will, upon demand of the
Trustee and subject to the approval of the Federal Reserve, if then required,
pay to the Trustee, for the benefit of the Securityholders, the entire amount
then due and payable on the Debentures (x) in the case of a Default specified
in clause (a) or (b) above, for the principal and interest, if any, and
interest upon the overdue principal and, to the extent that payment of such
interest shall be legally enforceable, upon overdue installments of interest,
at the Interest Rate, and (y) in the case of a Default specified in clause (c)
above, for the interest and, to the extent that payment of such interest shall
be legally enforceable, upon overdue installments of interest, at the Interest
Rate; and in each case, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

If
the Bank fails to pay such amount forthwith upon such demand and if the
necessary Federal Reserve approval, if any, has been obtained, the Trustee, in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Bank or any other obligor upon the Debentures, and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Bank or any other obligor upon the Debentures wherever
situated.

If
a Default occurs and is continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Securityholders by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

Section 5.4.           Trustee
May File Proof of Claims.  In case there shall be pending proceedings
for the bankruptcy or for the reorganization of the Bank 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 Bank or such other obligor, or in
the case of any other similar judicial proceedings relative to the Bank or
other obligor upon the Debentures, or to the creditors or property of the Bank
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
5.4, 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 Bank or any other obligor on the Debentures, or to the creditors or
property of the Bank or such other obligor, unless prohibited by applicable law
and regulations, to vote on behalf of the holders of the Debentures in any

 18
 

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.

Section 5.5.           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 Bank 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 Bank.

Section 5.6.           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
a Default with respect to the Debentures and unless the

 19
 

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.

Section 5.7.           Proceedings
by Trustee.  In case of a Default hereunder the Trustee
may in its discretion proceed to protect and enforce the rights vested in it by
this Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any of such rights, either by suit
in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.

Section 5.8.           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 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 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 5.6, 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.

Section 5.9.           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.

 20
 

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, and its
consequences, except a Default (a) in the payment of principal of, premium, if
any, or interest on any of the Debentures or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of
the holder of each Debenture affected. 
Upon any such waiver, the Default covered thereby shall be deemed to be
cured for all purposes of this Indenture and the Bank, 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 impair any right consequent thereon.  Whenever any Default hereunder shall have
been waived as permitted by this Section, said Default shall for all purposes
of the Debentures and this Indenture be deemed to have been cured and to be not
continuing.

Section 5.10.        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; 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.

Section 5.11.        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 5.11 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 Bank on or after the same shall have
become due and payable.

ARTICLE VI.

CONCERNING THE TRUSTEE

Section 6.1.           Duties
and Responsibilities of Trustee.  With respect to the holders of Debentures
issued hereunder, the Trustee, prior to the occurrence of a Default with
respect to the Debentures and after the curing or waiving of all Defaults 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 a 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:

 21

(a)
                               prior to the occurrence of a Default with
respect to Debentures and after the curing or waiving of all Defaults which may
have occurred

(1)
                               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

(2)
                               in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture;

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

(c)                                the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith, in accordance
with the direction of the Securityholders pursuant to Section 5.7, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.

None
of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, 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.

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

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

(b)                               any request, direction, order or demand of
the Bank 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 Bank;

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

(d)
                              the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Securityholders, pursuant to the

 22
 

provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;

(e)                                the Trustee shall not be liable for any
action taken or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture; nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of a 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;

(f)                                  the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper or document, unless requested
in writing to do so by the holders of not less than a majority in 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;

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

(h)                               with the exceptions of defaults under
Sections 5.3(b) or 5.3(c), the Trustee shall not be charged with knowledge of
any Default with respect to the Debentures unless a written notice of such
Default shall have been given to the Trustee by the Bank or any other obligor
on the Debentures or by any holder of the Debentures.

Section 6.3.                                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 Bank, 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 Bank 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.

Section 6.4.                                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.

Section 6.5.                                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 Bank. 
So long as no Event of Default shall have occurred and be continuing,
all interest allowed on any such

 23
 

moneys shall be paid from
time to time upon the written order of the Bank, 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
Bank.

Section 6.6.                                Compensation and Expenses of
Trustee.  The Bank 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 Bank 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 Bank
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 Bank 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.

Without
prejudice to any other rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with a
Default, 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 Bank.

Section 6.7.                                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.

Section 6.8.                                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

 24
 

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 Bank may not, nor may
any Person directly or indirectly controlling, controlled by, or under common
control with the Bank, 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.

Section 6.9.                                Resignation or Removal of
Trustee

(a)                                The Trustee, or any trustee or trustees
hereafter appointed, may at any time resign by giving written notice of such
resignation to the Bank and by mailing notice thereof, at the Bank’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 Bank shall promptly appoint a successor trustee or
trustees by written instrument, in duplicate, executed by order of its Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. 
If no successor Trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation to
the affected Securityholders, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee, or any
Securityholder who has been a bona fide holder of a Debenture or Debentures for
at least six months may, subject to the provisions of Section 5.11, on behalf
of himself and all others similarly situated, petition any such court for the
appointment of a successor Trustee.  Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.

(b)                               In case at any time any of the following shall occur —

(1)
                               the Trustee shall fail to comply with the
provisions of Section 6.8 after written request therefor by the Bank or by any
Securityholder who has been a bona fide holder of a Debenture or Debentures for
at least 6 months, or

(2)
                               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 Bank or by any such Securityholder, or

(3)
                               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 Bank 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 5.11, 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

 25
 

situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.  Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Trustee
and appoint successor Trustee.

(c)                                Upon prior written notice to the Bank 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 Bank 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.

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

Section 6.10.                         Acceptance by Successor
Trustee.  Any successor Trustee appointed as provided
in Section 6.9 shall execute, acknowledge and deliver to the Bank 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 Bank
or of the successor Trustee, the Trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 6.6, 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 Bank 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 Bank, 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 Bank 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 Bank fails to
mail such notice within 10

 26
 

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 Bank.

Section 6.11.                         Succession by Merger, etc.  Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided 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.

Section 6.12.                         Authenticating Agents.  There may be one or more Authenticating Agents appointed by the Trustee
upon the request of the Bank 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 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 Bank 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 Bank. 
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 Bank. 
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

 27
 

upon the request of the Bank
shall, promptly appoint a successor Authenticating Agent eligible under this
Section 6.12, shall give written notice of such appointment to the Bank 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
Bank agrees to pay to any Authenticating Agent from time to time reasonable
compensation for its services.  Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.

ARTICLE VII.

CONCERNING THE SECURITYHOLDERS

Section 7.1.                                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 instruments and any such record of such a
meeting of such Securityholders or (d) by any other method the Trustee deems
satisfactory.

If
the Bank shall solicit from the Securityholders any request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, the Bank 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 Bank 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.

Section 7.2.                                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.

 28
 

Section 7.3.                                Who Are Deemed Absolute
Owners.  Prior to due presentment for registration of
transfer of any Debenture, the Bank, 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 Bank 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.

Section 7.4.                                Debentures Owned by Bank
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 Bank 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 Bank 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 Bank or
any such other obligor or Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Bank or any
such other obligor.  In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.

Section 7.5.                                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.

ARTICLE VIII.

SECURITYHOLDERS’ MEETINGS

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

(a)                                to give any notice to the Bank 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;

 29
 

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

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

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

Section 8.2.                                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 Bank is not a
holder of Debentures, to the Bank.  Such
notice shall be mailed not less than 20 nor more than 180 days prior to the
date fixed for the meeting.

Section 8.3.                                Call of Meetings by Bank or
Securityholders.  In case at any time the Bank 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 the Bank 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.

Section 8.4.                                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 Bank and its counsel.

Section 8.5.                                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 Bank or by
Securityholders as provided in Section 8.3, in which case the Bank 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

 30
 

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.

Section 8.6.                                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 Bank and the other to the Trustee
to be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.

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

Section 8.7.                                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

 31
 

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.

ARTICLE IX.

SUPPLEMENTAL INDENTURES

Section 9.1.                                Supplemental Indentures
without Consent of Securityholders.  The Bank, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto, without the consent of the
Securityholders, for one or more of the following purposes:

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

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

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

(d)                               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 (for purposes of
assuring that no registration of Debentures is required under the Securities
Act or the Member Bank Securities Laws); provided, however, that
any such action shall not adversely affect the interests of the holders of the
Debentures then outstanding;

(e)                                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;

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

 32
 

(g)                               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 Bank 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 Bank 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.

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 Bank, 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
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.

Upon
the request of the Bank 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 Bank 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 Bank 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 Bank, 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.

Section 9.3.                                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 Bank and the holders of Debentures
shall

 33
 

thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

Section 9.4.                                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 Bank or the Trustee shall so determine,
new Debentures so modified as to conform, in the opinion of the Board of
Directors of the Bank, to any modification of this Indenture contained in any
such supplemental indenture may be prepared and executed by the Bank,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debentures then outstanding.

Section 9.5.                                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.

ARTICLE X.

REDEMPTION OF SECURITIES

Section 10.1.                         Optional Redemption.  The Bank shall have the right (subject to the receipt by the Bank of
prior written approval by the Federal Reserve, if then required under
applicable regulations of the Federal Reserve) 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 June 2010 (the “Redemption Date”) at the Redemption Price.

Section 10.2.                         Notice of Redemption;
Selection of Debentures.  In case the Bank 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 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, the Redemption Price 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.

 34
 

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

If
all, or less than all, the Debentures are to be redeemed, the Bank will give
the Trustee notice not less than 45 nor more than 60 days, respectively, prior
to the Redemption Date, 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.

Section 10.3.                         Payment of Debentures Called
for Redemption.  If notice of redemption has been given as
provided in Section 10.2, the Debentures or portions of Debentures with respect
to which such notice has been given shall become due and payable on the
Redemption Date and at the place or places stated in such notice at the
applicable Redemption Price (unless the Bank shall default in the payment of
such Debentures at the Redemption Price) 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 Bank at the
applicable Redemption Price.

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

ARTICLE XI.

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

Section 11.1.                         Bank May Consolidate, etc.,
on Certain Terms.  Nothing contained in this Indenture or in the
Debentures shall prevent any consolidation or merger of the Bank with or into
any other Person (whether or not affiliated with the Bank) or successive
consolidations or mergers in which the Bank 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 Bank or its successor or successors as
an entirety, or substantially as an entirety, to any other Person (whether or
not affiliated with the Bank, or its successor or successors) authorized to
acquire and operate the same; provided, however, that the Bank
hereby covenants and agrees that, upon any such consolidation, merger (where
the Bank 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 Bank, 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 Bank shall have been merged, or
by the entity which shall have acquired such property.

Section 11.2.                         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
Bank, such successor entity shall succeed to and be substituted for the Bank,
with the same effect as if it had been named herein as the Bank, 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

 35
 

or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Bank and
delivered to the Trustee or the Authenticating Agent; and, upon the order of
such successor entity instead of the Bank 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 Bank, 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 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.

Section 11.3.                         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.

ARTICLE XII.

SATISFACTION AND DISCHARGE OF INDENTURE

Section
12.1.                         Discharge of Indenture.  When

(a)
                               the Bank 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 Bank 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 Bank 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 Bank shall also pay or cause to be paid all other
sums payable hereunder by the Bank, 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 Bank 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 Bank, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture. 
The Bank 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.

 36
 

Section 12.2.                         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 Bank 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.

Section 12.3.                         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 Bank, be repaid to it or paid to the Trustee, and thereupon such
paying agent shall be released from all further liability with respect to such
moneys.

Section 12.4.                         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 Bank
by the Trustee or such paying agent on written demand; and the holder of any of
the Debentures shall thereafter look only to the Bank for any payment which
such holder may be entitled to collect, and all liability of the Trustee or
such paying agent with respect to such moneys shall thereupon cease.

ARTICLE XIII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

Section 13.1.                         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 Bank 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 Bank or of any successor Person of the Bank, either directly or through
the Bank or any successor Person of the Bank, 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.

ARTICLE XIV.

MISCELLANEOUS PROVISIONS

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

Section 14.2.                         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 Bank 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 Bank.

Section 14.3.                         Surrender of Bank Powers.  The Bank 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 Bank and thereupon such power so surrendered shall
terminate both as to the Bank, and as to any permitted successor.

 37
 

Section 14.4.                         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 Bank 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 Bank, with the Trustee for the purpose) to the
Bank, 4275 Executive Square, Suite 650, La Jolla, California  92037, Attention:  James Burgess.  Any notice, consent, direction, request,
authorization, waiver or demand by any Securityholder or the Bank to or upon
the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of the Trustee, addressed
to the Trustee, 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.

Section 14.5.                         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.

Section 14.6.                         Evidence of Compliance with
Conditions Precedent.  Upon any application or demand by the Bank to
the Trustee to take any action under any of the provisions of this Indenture,
the Bank 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.

Section 14.7.                         Table of Contents, Headings,
etc.  The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.

Section 14.8.                         Execution in Counterparts.  This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.

Section 14.9.                         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.

Section
14.10.                  Assignment.  The Bank 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 Bank, provided

 38
 

that, in the event of any
such assignment, the Bank 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.  In
addition, the obligations of the Bank may be assigned in accordance with
Section 11.3.  This Indenture may not
otherwise be assigned by the parties hereto.

ARTICLE XV.

SUBORDINATION OF DEBENTURES

Section 15.1.                         Agreement to Subordinate.  The Bank 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 Bank 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 Bank, whether outstanding at the date of this
Indenture or thereafter incurred.

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

Section 15.2.                         Default on Senior
Indebtedness.  In the event and during the continuation of
any default by the Bank in the payment of principal, premium, interest or any
other payment due on any Senior Indebtedness of the Bank following any grace
period, or in the event that the maturity of any Senior Indebtedness of the
Bank 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 Bank 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 of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.

Section 15.3.                         Liquidation, Dissolution,
Bankruptcy.  Upon any payment by the Bank or distribution
of assets of the Bank of any kind or character, whether in cash, property or
securities, to creditors upon any insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshaling of assets and liabilities or
similar proceedings or any liquidation or winding up of or relating to the
Bank, whether voluntary or involuntary, all amounts due upon all Senior Indebtedness
of the Bank 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 Bank, on
account of the principal (and premium, if any) or interest on the Debentures.  In the event of any such proceedings, any
payment by the Bank, or distribution of assets of the Bank 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 Bank,
except for the provisions of this Article XV, shall be paid by the Bank, 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

 39
 

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 Bank)
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 Bank 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 Bank, 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 Bank as reorganized or readjusted,
or securities of the Bank 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 Bank with, or the
merger of the Bank into, another corporation or the liquidation or dissolution
of the Bank 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.

Section 15.4.                         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 Bank, 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 Bank, its creditors other than holders of Senior
Indebtedness of the Bank, and the holders of the Debentures be deemed to be a
payment or distribution by the Bank 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.

 40
 

Nothing
contained in this Article XV or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as between the Bank, its creditors
other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Bank, 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 Bank, 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 Bank,
received upon the exercise of any such remedy.

Upon
any payment or distribution of assets of the Bank 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 Bank, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XV.

Section 15.5.                         Trustee to Effectuate
Subordination.  Each Securityholder by such Securityholder’s
acceptance thereof authorizes and directs the Trustee on such Securityholder’s
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder’s attorney-in-fact for any and all such purposes.

Section 15.6.                         Notice by the Bank.  The Bank 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
Bank 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 Bank or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least 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

 41
 

any payment or distribution
pursuant to this Article XV, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

Section 15.7.                         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 Bank 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.

Section 15.8.                         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 Bank, or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Bank, 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 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 Bank, and any other Person.

Signatures appear on the following page

 42
 

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.

	
  

  	
  1ST PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ James Burgess

  	
   

  
	
   

  	
   

  	
  Name:

  	
  JAMES BURGESS

  
	
   

  	
   

  	
  Title:

  	
  EVP/CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 43
 

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.

	
  

  	
  1ST PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Heather L. Williamson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Heather
  L. Williamson

  
	
   

  	
   

  	
  Title:

  	
  Financial Services Officer

  
					

 

 44

EXHIBIT A

FORM OF FLOATING RATE JUNIOR SUBORDINATED DEBENTURE

[FORM
OF FACE OF SECURITY]

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

THIS OBLIGATION IS
SUBORDINATED TO CLAIMS OF DEPOSITORS, IS UNSECURED, AND IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BANK.

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 (INCLUDING 12 U.S.C. 221 ET SEQ. AND 12 C.F.R. PART 208
PROMULGATED THEREUNDER (THE “MEMBER BANK SECURITIES LAWS”)) AND 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 OTHER APPLICABLE
SECURITIES LAW, INCLUDING THE MEMBER BANK SECURITIES LAWS.  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO
THE BANK, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER, AS APPLICABLE, THE SECURITIES ACT OR THE MEMBER BANK
SECURITIES LAWS, (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 THE MEMBER BANK SECURITIES LAWS, OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AS APPLICABLE,
THE SECURITIES ACT OR THE MEMBER BANK SECURITIES LAWS, SUBJECT TO THE BANK’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
BANK.

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

 A-1
 

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 $500,000.00 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 $500,000.00 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.

[CUSIP NO. [                ] **To
be inserted at the request of the Holder]

Floating
Rate Junior Subordinated Debenture

of

1st
Pacific Bank of California

March
31, 2005

1st
Pacific Bank of California, a member bank organized under the laws of
California (the “Bank” which term includes any successor Person under the
Indenture hereinafter referred to), for value received promises to pay to First
Tennessee Bank National Association or registered assigns, the principal sum of
five million dollars ($5,000,000.00) on June 15, 2020, and to pay interest on
said principal sum from March 31, 2005, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly
provided for, 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 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 June 2005, at an annual rate equal to 4.90%
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in June 2005 and at an annual rate for each
successive period beginning on (and including) the Interest Payment Date in
June 2005, and each succeeding Interest Payment Date, and ending on (but

 A-2
 

excluding) the next
succeeding Interest Payment Date (each a “Distribution Period”), equal to
3-Month LIBOR, determined as described below, plus 1.78% (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 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 Telerate Page 3750 as of 11:00 a.m.
(London time) on the related Determination Date (“Telerate Page 3750” means the
display designated as “Page 3750” on the Moneyline Telerate Service or such
other page as may replace Page 3750 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 Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 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

 A-3
 

dollar amounts used in or
resulting from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward)).

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 Bank) 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 Bank or by wire transfer to an account appropriately designated
by the holder hereof.

The
indebtedness of the Bank evidenced by this Debenture shall be subordinate and
junior in right of payment to all claims (including post default interest in
the case of liquidation of the Bank) against the Bank, incurred, assumed or
guaranteed by the Bank, having the same priority as the Bank’s obligations to
its depositors, its obligations under bankers’ acceptances and letters of
credit, and its obligations to any other creditors (including its obligations
to the Federal Reserve, FDIC, and any rights acquired by the FDIC as a result
of loans made by the FDIC to the Bank or the purchase or guarantee of any of
its assets by the FDIC pursuant to the provisions of 12 USC §1823(c), (d) or
(e)), whether now outstanding or hereafter incurred, or any higher priority,
and the principal, premium, if any, and interest in respect thereof, whether
incurred on or prior to the date of this Indenture or thereafter incurred.  Notwithstanding the foregoing, the
indebtedness of the Bank evidenced by this Debenture shall not be subordinate
and junior in right of payment to obligations with respect to which 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. 
The obligations that are senior in right of payment to this Debenture
shall continue to be senior and be entitled to the subordination provisions
irrespective of any amendment, modification or waiver of any term of such
senior obligations.

No
payment shall at any time be made on account of the principal of this
Debenture, unless following such payment the aggregate of the Bank’s
shareholders’ equity and capital notes or debentures that comply with the
requirements of Section 670 of the California Financial Code thereafter
outstanding shall be the equal of such aggregate at the date of the original
issue of this Debenture, or as otherwise authorized by the California
Commissioner of Financial Institutions.

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.

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.

Signatures appear on the following page

 A-4
 

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

	
  

  	
  1ST PACIFIC BANK OF
  CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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-5
 

[FORM
OF REVERSE OF DEBENTURE]

This
Debenture is one of the floating rate junior subordinated debentures of the
Bank, all issued or to be issued under and pursuant to the Indenture dated as
of March 31, 2005 (the “Indenture”), duly executed and delivered between the
Bank 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 Bank and the holders of the
Debentures.  The Debentures are limited
in aggregate principal amount as specified in the Indenture.

The
Bank 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 June 2010, at
the Redemption Price.

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

If
all, or less than all, the Debentures are to be redeemed, the Bank will give the
Trustee notice not less than 45 nor more than 60 days, respectively, prior to
the Redemption Date 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 Bank shall be subject to the
receipt of any and all required regulatory approvals.

In
case an 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, including the receipt of any and all required regulatory
approvals.

The
Indenture contains provisions permitting the Bank 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.

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, and its consequences, except a default (a)
in the payment of principal of, premium, if any, or interest on any of the
Debentures or (b) in respect of covenants or provisions hereof which cannot be
modified or amended without the consent of the holder of each Debenture
affected.  Upon any such waiver, the
default covered thereby shall be deemed to be cured for all purposes of the Indenture
and the Bank, the Trustee and the holders of the

 A-6
 

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 Default or impair any
right consequent thereon.  Whenever any
default or Default hereunder shall have been waived as permitted by the
Indenture, said default or Default shall for all purposes of the Debentures and
the Indenture be deemed to have been cured and to be not continuing.

In
the event of any insolvency, receivership, conservatorship, reorganization,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings or any liquidation or winding up of or relating to the Bank,
whether voluntary or involuntary, all such obligations shall be entitled to be
paid in full before any payment shall be made on account of the principal of,
or premium, if any, or interest (including Additional Interest), on this
Debenture.  In the event of any such
proceedings, after payment in full of all sums owing on such prior obligations,
the holder of this Debenture, together with any obligations of the Bank ranking
on a parity with the Debentures, shall be entitled to be paid from the
remaining assets of the Bank the unpaid principal thereof and any unpaid
premium, if any, and interest (including Additional Interest) before any
payment or other distribution, whether in cash, property, or otherwise, shall
be made on account of any capital stock or any obligations of the Bank ranking
junior to the Debentures.  Nothing herein
shall impair the obligation of the Bank, which is absolute and unconditional,
to pay the principal of and any premium and interest (including Additional
Interest) on this Debenture according to its terms.

The
Debentures are issuable only in registered, certificated form without coupons
and in minimum denominations of $500,000.00 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 Bank.  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 Bank maintained for such purpose as provided in Section 3.2 of
the Indenture, the Bank shall execute, the Bank 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 Bank 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
Bank 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 Bank 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 Bank, 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 Bank 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 Bank
in the Indenture or in any supplemental indenture, or in

 A-7
 

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 Bank or of any successor Person of the Bank,
either directly or through the Bank or any successor Person of the Bank,
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 Bank.

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-8Exhibit
10.12

EMPLOYMENT
AGREEMENT

This Employment Agreement (the “Agreement”) is
effective as of November 17, 2006 (the “Effective Date”) by and
between James H. Burgess (“Executive”) and 1st Pacific Bank of California, a California
state-chartered bank (the “Bank”), with regard to the following:

A.    Executive has served as the Executive Vice President and Chief
Financial Officer of the Bank under an Employment Agreement between Executive
and the Bank dated November 17, 2003, as amended on November 17, 2004
(collectively, the “Former Employment Agreement”).

B.    Executive and the Bank have agreed that Executive shall continue
to serve as the Executive Vice President and Chief Financial Officer and a
full-time employee of the Bank under the terms of this Agreement, and as such
is expected to make a major contribution to the profitability, growth and
financial strength of the Bank.

C.    The Bank considers the availability of Executive’s services,
managerial skills and business experience to be in the best interests of the
Bank and the shareholders of the Bank and desires to assure the continued
services of Executive on behalf of the Bank.

D.    Executive is willing to be employed by the Bank upon the
understanding that the Bank will provide him with income security and benefits
if his employment with the Bank is terminated, upon certain terms and
conditions.

NOW, THEREFORE, for valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1.             Definitions.

“Bank” means 1st Pacific Bank of California, a
California state-chartered bank, its successors and permitted assigns.

“Bank Board” means the Board of Directors of
the Bank.

“Beneficiary” means the person or entity to
receive rights or benefits under this Agreement, as set forth in this
Agreement, in the event of the death of Executive.  Unless otherwise specified in a written
notice to the Bank, the Beneficiary shall be the spouse of Executive, if any,
and if there is none, the estate of Executive (including any trust created by
the terms of Executive’s will) or, if Executive provides the Bank with written
notice thereof prior to his death, any trust as to which Executive was a
settlor with a power of revocation.

“Benefits” means the types and amounts of
benefits provided under Paragraph 3.6, provided that if at the date of
reference the terms of any Bank insurance plan prohibit the continuance or
recommencement of insurance benefits that Executive formerly held, the Bank
shall be obligated to pay to Executive in cash on a monthly basis an amount
equal to the Bank’s former premium payments (pro rated on a monthly basis) for
the benefit of Executive under such plan, except that if Executive is entitled
to COBRA health insurance benefits the

 1
 

amount shall be increased
to the amount payable by Executive for such benefits if higher than the Bank’s
former premium payments.

“Change of Control” means the occurrence of any
of the following events:

(i)            any
“person” (as used in Section 13(d) of the Securities Exchange Act of
1934 and the rules promulgated thereunder) becomes the “beneficial owner” (as
defined in Rule  13d-3) of securities
representing a majority of the voting power of the then outstanding securities
of the Bank; or

(ii)           a
sale of assets involving all or substantially all of the assets of the Bank, or
a merger or consolidation of the Bank in which the holders of securities of the
Bank immediately prior to such event hold in the aggregate less than a majority
of the securities of the Bank or any other surviving or resulting entity
immediately after such event.

Notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred in the event the Bank forms a holding
company as a result of which the holders of the Bank’s outstanding voting
securities immediately prior to the transaction hold, in approximately the same
relative proportions as they held prior to the transaction, substantially all
of the outstanding voting securities of a holding company owning all of the
Bank’s outstanding voting securities after the completion of the transaction.

“Change of Control Severance Benefits” means
(i) an amount equal to the sum of (y) one (1) times Executive’s base
annual salary at the rate then in effect in accordance with Paragraph 3.1,
plus (z) the amount actually paid by the Bank to Executive under the Plan
for the immediately preceding year, if any; and (ii) continuation of
benefits provided under Paragraph 3.6 or substitute equivalent benefits in
the event that the particular benefits (for instance, insurance coverage) are
not carried by the Bank under its programs following the Change of Control
Termination, for a period of twelve (12) months.

“Change of Control Termination” means the
termination of employment of Executive within twelve (12) months after a Change
of Control (i) by the Bank under Paragraph 4.1.5; or (ii) by
Executive under Paragraph 4.2 for Good Cause.

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

“Disability” shall be deemed to occur on the
date the Executive is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Bank.

“Executive” means James H. Burgess.

“Expiration Date” means December 31, 2008.

“Good Cause” means:  (i) a reduction in Executive’s base
salary below the rate then in effect in accordance with Paragraph 3.1;
(ii) the Bank requiring that Executive be based

 2
 

at a location more than
fifty (50) miles from the Bank’s headquarters as of the Effective Date
(excluding travel for Bank business and other temporary relocations of no more
than thirty (30) days individually); (iii) a reduction in his title; or
(iv) the continuation after a Change of Control, or imposition within six
(6) months after a Change of Control, of a material reduction in the
duties or authority of Executive so that he is no longer performing
substantially all of the duties of a chief credit officer of a community bank.

“Plan” means the 1st Pacific Bank of California
Incentive Compensation Plan for Senior Management, in substantially the form
attached hereto as Exhibit A, as the same may be amended from time
to time.

“Separation Agreement” means the Separation and
General Release of Claims, substantially in the form attached hereto as Exhibit B.

“Trade Secrets and Other Proprietary and
Confidential Information” means and consist of, for example, and not
intending to be inclusive, information concerning any matters relating to the
business of the Bank, any of its customers, governmental relations, customer
contacts, underwriting methodology, loan program configuration and
qualification strategies, marketing strategies and proposals, or any other
information concerning the business of the Bank, its subsidiaries and
affiliates, and the Bank’s good will; provided that “Trade Secrets and Other
Proprietary and Confidential Information” shall not be deemed to include
information that is or becomes, through no fault of Executive, in the public
domain.

2.             Rights and Duties of Executive.

2.1           Employment.  The Bank hereby employs Executive as its
Executive Vice President and Chief Financial Officer, and Executive accepts the
duties described herein, and agrees to discharge the same faithfully and to the
best of his ability.  Executive shall
perform such other duties as shall be from time to time prescribed by the Chief
Executive Officer of the Bank and shall report to and be subject to the
direction of the Chief Executive Officer of the Bank.  Executive shall devote his full business time
and attention to the business and affairs of the Bank.

2.2           Termination of Former Employment
Agreement.  As of the Effective Date,
the Former Employment Agreement shall terminate without further liability of
the Bank or Executive thereunder of any kind.

2.3           At-Will Employment.  Executive’s employment with the Bank is not
for a fixed period of time and can be terminated at the will of either
Executive or the Bank at any time, with or without notice, and with or without
cause.  There are no agreements between
Executive and the Bank contrary to Executive’s at-will status.  Neither a Bank Board member nor a manager,
supervisor, employee or agent of the Bank is authorized to alter Executive’s
at-will status, except for the Chairperson of the Bank Board, and then only in
a writing signed both by the Chairperson of the Bank Board and Executive
following adoption of a resolution by the Bank Board authorizing the specific
change reflected in such writing and authorizing the Chairperson of the Bank
Board to sign such writing.  Executive
should neither assume nor imply any promise of employment for any specified
period of time except through such a signed writing.  This

 3
 

Agreement shall terminate immediately without further
liability or obligation to Executive if (i) the Bank is closed by any
supervisory authority, or (ii) any supervisory authority demands, by
proposed consent agreement or by a Prompt Corrective Action Directive, or
pursuant to cease and desist powers, the removal of Executive from his position
as the Executive Vice President or Chief Financial Officer of the Bank.  Should Executive remain employed under this
Agreement through the Expiration Date, Executive’s employment with the Bank
shall automatically terminate on that date and this Agreement shall be of no
force or effect on or after that date, subject to Paragraphs 5.4 and 8.6.

2.4           Outside Activities.  Executive shall not have other employment,
consulting, charitable or independent contractor work that materially
interferes with the fulfillment of Executive’s duties to the Bank.  Executive shall not undertake expanded
commitments to business or charitable activities or engage in new such
activities before consulting with the President and Chief Executive Officer of
the Bank.  Executive will not provide
services to, hold or make any investment in or loan to, or participate in the management
or business of, any bank, savings and loan, credit union, thrift and loan,
industrial loan or other entity engaged in the business of making loans or
accepting deposits or both; provided that Executive may own less than 5% of the
voting stock of any company that files reports under the Securities Exchange
Act of 1934.

3.             Compensation and Benefits.  In consideration for the services to be
rendered by Executive to the Bank, the Bank agrees to provide Executive with
the following compensation and benefits:

3.1           Salary.  The Bank shall pay Executive a minimum annual
salary, pro rated for partial years, at the rate of One Hundred Forty Seven
Thousand Five Hundred Dollars ($147,500) for the period of the Effective Date
through December 31, 2007, increasing to One Hundred Fifty Seven Thousand Five
Hundred Dollars ($157,500) for the period of January 1, 2008 through December
31, 2008, due and payable biweekly, or otherwise in accordance with the Bank’s
policy for the scheduling of salary payments to employees as in effect from
time to time.  Other salary increases, if
any, shall only be as approved by the Bank Board in its sole discretion.

3.2           Withholding and Deductions.  The Bank shall withhold and/or deduct from
any and all salary or other payments to Executive, all taxes which may be
required to be deducted or withheld under any provision of law (including, but
not limited to, social security payments and income tax withholding) now in
effect or which may become effective any time during Executive’s employment
with the Bank.

3.3           Executive Incentive Compensation.  In general, the Bank believes that superior
performance of Executive should be rewarded and encouraged by incentive
compensation.  The Bank Board shall adopt
the Plan pursuant to which Executive may be entitled to incentive compensation
provided that the performance goals of the Bank as set forth in the Plan are
achieved and the terms and conditions of the Plan are satisfied.  In addition, Executive shall be entitled to
other incentive compensation and bonuses as the Bank Board may determine in its
sole discretion.  Notwithstanding the
foregoing, Executive shall not participate in the Bank’s Team Share Plan.

 4
 

3.4           Automobile Allowance.  The Bank shall pay Executive an automobile
allowance of Six Hundred Dollars ($600.00) per month, subject to
withholding.  This is an allowance for
all automobile costs and expenses, including, but not limited to, fuel,
license, maintenance, insurance, repairs and purchase or lease payments.

3.5           Expense Reimbursement.  The Bank agrees to reimburse Executive for
all ordinary and necessary expenses incurred by Executive on behalf of the Bank
in accordance with the Bank’s policies and procedures as in effect from time to
time, including entertainment, meal and travel expenses.

3.6           Insurance.  The Bank shall provide life insurance with a
life insurance benefit equal to at least one and one-half times the annual
salary of Executive at the rate then in effect under Paragraph 3.1, which
shall be provided through any group life insurance plan of the Bank at the Bank’s
option.  The Bank shall provide to
Executive the long term disability insurance provided by the Bank to employees
at the Effective Date under the Bank’s group plan or shall replace it with
similar coverage so long as Executive is employed by the Bank.  Executive shall be entitled to participate in
such other insurance benefits as are generally provided to the employees of the
Bank from time to time.

3.7           Vacation.  Executive shall be entitled to five (5) weeks
of vacation time and pay per annum, which shall be scheduled in Executive’s
discretion, subject to and taking into account applicable banking laws and
regulations.  Unused vacation may be
accrued up to a maximum of six (6) weeks of unused vacation in addition to the
vacation to which Executive may be entitled in the current year, and thereafter
Executive shall cease to accrue unused vacation until used.  Vacation
must be accrued before taken, and if not yet accrued, must have the prior
approval of the Chief Executive Officer of the Bank to be taken.  Vacation may be used only at the time or
times approved by the Chief Executive Officer of the Bank.

4.             Termination.

4.1           Employer Right to Terminate
Employment.  Nothing in this
Agreement shall adversely affect the right of the Bank Board to terminate
Executive.  The Bank Board has the right
to terminate the employment of Executive with the Bank at will, with or without
cause, upon delivery of written notice to Executive (except in the case of
death of Executive, in which event termination shall automatically occur at the
date of death), and including, but not limited to, for any of the following
grounds:

4.1.1        Willful breach or habitual neglect or
inability (except where such inability is due to Disability or death) to
perform Executive’s duties hereunder, including without limitation failure to
cooperate with the Bank Board in the structuring, documentation or negotiation
of a transaction that might result in a Change of Control;

4.1.2        Malfeasance or misfeasance in the
performance of Executive’s duties hereunder, imposition of a regulatory order
to remove Executive, failure to comply with a direction by the Chief Executive Officer of the Bank,
material breach of Bank policy or procedure, or breach of this Agreement;

 5
 

4.1.3        Immoral or illegal conduct, conviction
of a felony, conviction of a misdemeanor involving moral turpitude;

4.1.4        Disability or death;

4.1.5        Determination in the complete discretion
of the Bank Board that the employment of Executive should be terminated prior
to the Expiration Date, without reference to the grounds set forth in
Paragraphs 4.1.1, 4.1.2, 4.1.3 or 4.1.4, and specification of the
termination date in the notice described in Paragraph 4.1.

4.2           Termination by Executive.  Executive may terminate his employment with
the Bank at will, for any reason, and without advance notice.  However, as a courtesy, Executive is
requested to deliver written notice to the Bank three (3) months in
advance of the date such termination is to take effect, except with respect to
a termination for Good Cause.  Executive
may terminate his employment with the Bank prior to the Expiration Date for
Good Cause upon thirty (30) days notice to the Bank and the Bank’s failure to
cure within that time.  To be effective,
such notice must be given by Executive within fifteen (15) days of the
occurrence of the event that constitutes Good Cause, provided that if Good
Cause results from a material reduction in the duties or authority of Executive
so that he is no longer performing substantially all of the duties of a chief
financial officer of a community bank and such reduction occurs before a Change
of Control occurs and continues after the Change of Control occurs, Executive
shall be required to give the thirty (30) day notice described above within
fifteen (15) days of the Change of Control.

4.3           Termination Upon Expiration.  If Executive and the Bank have not entered
into an amendment of this Agreement extending its term or another written
agreement replacing this Agreement on or prior to the Expiration Date, at that
date his employment will automatically terminate as a result of expiration of this Agreement at the Expiration Date.  Nothing in this Paragraph shall
prejudice the at-will status of Executive or require the Bank to negotiate with
Executive.

4.4           Post-Notice Activities of
Executive.  In the event termination
is not effective immediately upon the delivery of notice of termination by the
Bank or Executive, the Bank shall have the right to require that during the
period between the giving of notice and the effective date of termination,
Executive’s activities and responsibilities be curtailed as deemed appropriate
by the Bank.  Such curtailment shall
include, without limitation, removing Executive from corporate offices,
requiring Executive to be physically absent from the Bank’s facilities, and
eliminating Executive’s access to computer systems, e-mail and telephone
systems.

4.5           Automatic Resignations.  Upon notice of termination of employment
Executive shall, automatically and without further action by any party, be deemed
to have resigned from all directorships with the Bank and any of its
subsidiaries and affiliates.  Upon
termination of employment, Executive shall, automatically and without further
action by any party, be deemed to have resigned from all offices and other
capacities with the Bank and any of its subsidiaries and affiliates.

 6
 

5.             Post-Termination Payments and Benefits.  The following are the post-termination
payments and benefits to which Executive is entitled upon termination of
employment with the Bank.

5.1           Termination Resulting from Breach.  In the event the employment of Executive is
terminated under Paragraphs 4.1.1, 4.1.2 or 4.1.3, the Bank shall provide
Executive only a payout of all accrued but unused vacation as of the date of
termination, the base salary and Benefits, if any, then-provided, on the terms
then-provided, due him through the date of termination and shall not be
obligated to provide any other compensation or Benefits.

5.2           Other Terminations.

5.2.1        Payments – Disability.  In the event the employment of Executive is
terminated under Paragraphs 4.1.4 for disability, the Bank shall provide
Executive only the following:

(a)           the salary due Executive as of the
date of termination;

(b)           payment of certain incentive
compensation due Executive, if any, in compliance with the Plan;

(c)           a payout of all accrued but unused
vacation as of the date of termination; and

(d)           continuation of the group medical and
other insurance benefits, if any, then-provided under Paragraph 3.6, for a
period of three (3) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or policies under
which such benefits are provided.

5.2.2        Payments – Death.  In the event the employment of Executive is
terminated under Paragraphs 4.1.4 for death, the Bank shall provide the
Beneficiary only the following:

(a)           the salary due Executive as of the
date of death plus a lump sum payment equal to three (3) months of the base
salary at the rate then in effect in accordance with Paragraph 3.1;

(b)           payment of certain incentive
compensation due Executive, if any, in compliance with the Plan;

(c)           a payout of all accrued but unused
vacation as of the date of termination; and

(d)           continuation of the group medical and
other insurance benefits, if any, then-provided under Paragraph 3.6, for a
period of three (3) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or policies under
which such benefits are provided.

 7
 

5.2.3        Payments – Termination Under
Paragraph 4.1.5.  In the event
the employment of Executive is terminated under Paragraph 4.1.5 or under
Paragraph 4.2 for Good Cause, subject to Executive first entering into the
Separation Agreement and such agreement being fully effective, the Bank shall
provide Executive only the following:

(a)           continued salary at the rate then in
effect under Paragraph 3.1 and the automobile allowance then provided under
Paragraph 3.4 for a period of nine (9) months from the date notice of
termination is delivered to the Executive, or at the option of the Bank a lump
sum payment of such amount, all subject to withholding;

(b)           payment of certain incentive
compensation due Executive, if any, in compliance with the Plan, with Executive’s
termination under this Paragraph 5.2.3 being considered for the limited purpose
of interpreting the Plan in the context of this Agreement as being a
termination “without cause”;

(c)           a payout of all accrued but unused
vacation as of the date of termination; and

(d)           continuation of the group medical and
other insurance benefits, if any, then-provided under Paragraph 3.6, for a
period of nine (9) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or policies under
which such benefits are provided.

5.2.4        Executive’s Right to Waive Payments.  Executive shall have the right to waive his
rights to receive such payments and Benefits otherwise due under this
Paragraph 5.2 by giving advance written notice of such waiver to the Bank.  After receipt of such notice, the Bank shall
have no further obligation to provide any payments or Benefits under this
Paragraph 5.2.

5.3           Change of Control.

5.3.1        Payment Following Certain
Terminations Related to Change of Control. 
Subject to Executive first entering into the Separation Agreement and
such agreement being fully effective, in respect of any Change of Control
Termination the Bank shall pay to Executive the Change of Control Severance
Benefits in a lump sum (except for the benefits under Paragraph 3.6, which
shall be continued) within five (5) days following the date the Separation
Agreement is fully effective.

5.3.2        Executive’s Right to Waive Payments.  Executive shall have the right to waive his
rights to receive payments and Benefits otherwise due under this
Paragraph 5.3 by giving advance written notice of such waiver to the
Bank.  After receipt of such notice, the
Bank shall have no further obligation to provide any payments or Benefits under
this Paragraph 5.3.

5.3.3        Adjustments in Payments.  The terms of this Paragraph 5.3.3
override and control any and all other terms of this Agreement to the extent
inconsistent with this Paragraph 5.3.3. 
This Paragraph 5.3.3 shall apply to the extent that the aggregate
present value of any or all payments and benefits in the nature of compensation
to (or for the benefit of)

 8
 

Executive provided under this Agreement or otherwise
provided to Executive by or on behalf of the Bank or any affiliate, parent or
controlling entity of the Bank, constitute a “parachute payment” under the
provisions of Section 280G of the Code, and the regulations thereunder
(the “Total Payments”).  In the
event that the Total Payments would exceed an amount equal to 299% of Executive’s
“base amount” as that term is defined in Section 280G of the Code, as
determined by the independent public accountants for the Bank, Executive and
the Bank agree that the payments or benefits provided to Executive under this
Agreement shall be reduced (or the parties shall agree to a reduction in other
payments or benefits included in the Total Payments to the extent legally and
contractually permissible) so that the present value of the total amount
received by Executive that would constitute a “parachute payment” will be one
dollar ($1.00) less than three (3) times Executive’s base amount (as defined in
Section 280G of the Code) and so that no portion of the payment or benefits
received by Executive would be subject to the excise tax imposed by Section
4999 of the Code.

5.4           Termination at Expiration Date.  If
Executive’s employment is terminated as a result of expiration of this
Agreement at the Expiration Date, subject to Executive first entering into the
Separation Agreement and such agreement being fully effective, the Bank shall
provide Executive only the following:

5.4.1        continued salary at the rate then in
effect under Paragraph 3.1 for a period of six (6) months from the date of
termination, or at the option of the Bank a lump sum payment of such amount,
all subject to withholding;

5.4.2        continuation of the group medical and
other insurance benefits, if any, then-provided under Paragraph 3.6, for a
period of six (6) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or policies under
which such benefits are provided;

5.4.3        a payout of all accrued but unused
vacation as of the date of termination; and

5.4.4        payment of certain incentive
compensation due Executive, if any, in compliance with the Plan, with Executive’s
termination as a result of expiration being considered for the limited purpose
of interpreting the Plan in the context of this Agreement as being a
termination “without cause.”

5.5           Consideration for Payments and
Remedies.  Without limiting any other
remedies available to the Bank, the payments to be made under
Paragraphs 5.2, 5.3 or 5.4 (subject to the exceptions stated therein)
after the date of termination of Executive’s employment shall be subject to
Executive’s execution of the Separation Agreement, and Executive’s continued
compliance with the Separation Agreement and the terms of this Agreement that
are effective after termination of Executive’s employment, through the making
of the last such payment.

5.6           Death Following Termination.  In the event that Executive dies while
receiving any payments under this Paragraph 5, such payments shall be
continued for the benefit of the Beneficiary, as would otherwise be required
under this Paragraph 5.

 9
 

5.7           Nonassignability.  Neither Executive nor any other person or
entity shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of
the rights or benefits of Executive under this Paragraph 5, nor shall any
of said rights or benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by Executive or any other
person or entity, or be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise.  The
terms of this Paragraph 5.7 shall not affect the interpretation of any
provision of this Agreement.

5.8           Claims Procedure.  The Bank Board shall make all determinations
as to rights to benefits under this Paragraph 5.

5.9           Regulatory Restrictions.  The parties understand and agree that at the
time any payment would otherwise be made or benefit provided under this
Paragraph 5, depending on the facts and circumstances existing at such
time, the satisfaction of such obligations by the Bank may be deemed by a
regulatory authority to be illegal, an unsafe and unsound practice, or for some
other reason not properly due or payable by the Bank.  Among other things, the regulations at 12
C.F.R. Part 30, Appendix A promulgated pursuant to Section 39(a) of
the Federal Deposit Insurance Act, and at 12 C.F.R. Part 359, or similar
regulations or regulatory action following similar principles may apply at such
time.  The Bank agrees that to the extent
reasonably feasible, it will in good faith seek to determine the position of
the appropriate regulatory authority in advance of each payment or benefit
otherwise due under this Paragraph 5, including seeking the approval or
acquiescence of the appropriate regulatory authorities, if required.  The parties understand, acknowledge and agree
that, notwithstanding any other provision of this Agreement, the Bank shall not
be obligated to make any payment or provide any benefit under this
Paragraph 5 where (i) an appropriate regulatory authority does not
approve or acquiesce as required or (ii) the Bank has been informed either
orally or in writing by a representative of the appropriate regulatory
authority that it is the position of such regulatory authority that making such
payment or providing such benefit would constitute an unsafe and unsound
practice, violate a written agreement with the regulatory authority, violate an
applicable rule, law or regulation, or would cause the representative of the
regulatory authority to recommend enforcement action against the Bank.

5.10         Right of Offset. Any and all of
the compensation and benefits that would otherwise be provided under this
Paragraph 5 are subject to the Bank’s offset for any liability of
Executive to the Bank to the extent the Bank Board determines that such
liability exists.  In addition, without
limiting the remedies of the Bank otherwise available under this Agreement or
otherwise, all compensation and benefits that would otherwise be payable under
this Paragraph 5 shall cease as of the date Executive first violates any
of the provisions included in Paragraphs 6.4, 6.5 or 6.6.

5.11         Overlapping Benefits and Payments.  In the event that Executive receives payments
and/or benefits under one of Paragraphs 5.1 through 5.4, inclusive,
Executive may not receive payments and/or benefits under one of the other of
such Paragraphs, and the first such applicable of those Paragraphs shall
apply.

 10
 

5.12         Delayed Payments.  In the event that Code Section 409A (“409A”) applies to any compensation with
respect to a separation from service, payment of that compensation shall be
delayed if Executive is a “specified employee,” as defined in 409A(a)(2)(B)(i),
and such delayed payment is required by 409A. 
Such delay shall last six months from the date of separation from
service.  On the day following the end of
such six-month period, the Bank shall make a catch-up payment to Executive
equal to the total amount of such payments that would have been made during the
six-month period but for this Section 5.12, plus interest calculated at the
prime rate as reported in The Wall Street Journal.

6.             Additional Covenants.

6.1           Insurance.  The Bank shall have the right to obtain and
hold a “keyman” life insurance policy on the life of Executive and disability
insurance covering Executive, in each case, with the Bank as beneficiary of
such policy.  Executive agrees to provide
any information required for the issuance of any such policy and submit himself
to any physical examination required for any such policy.

6.2           Unsecured General Creditor.  Neither Executive nor any other person or
entity shall have any legal right or equitable rights interests or claims in or
to any property or assets of the Bank under the provisions of this
Agreement.  No assets of the Bank shall
be held under any trust for the benefit of Executive or any other person or
entity or held in any way as security for the fulfilling of the obligations of
the Bank under this Agreement.  All of
the Bank’s assets shall be and remain the general, unpledged, unrestricted
assets of the Bank.  The Bank’s
obligations under this Agreement are unfunded and unsecured promises, and to
the extent such promises involve the payment of money, they are promises to pay
money in the future.  Executive and any
person or entity claiming through him shall be unsecured general creditors with
respect to any rights or benefits hereunder.

6.3           Dispute Resolution.  Simultaneously with the execution of this
Agreement, the parties have entered into the Arbitration Agreement attached as
Exhibit C, which the parties agree shall govern the resolution of any and
all disputes referenced therein.

6.4           Return of Documents.  Executive expressly agrees that upon
termination of employment he will return to the Bank all Bank manuals,
document, files, reports, studies, customer lists, business plans, loan and
deposit program plans and outlines, customer solicitation and follow-up
techniques and plans, marketing plans, employee policies, incentive
compensation arrangements, instruments, software, and other materials used
and/or developed by Executive during his employment, whether in paper, computer
readable, computer coded, magnetic, compact disk or other tangible or
electronic form.

6.5           Confidentiality.

6.5.1        No Disclosure.  During the term of employment with the Bank,
Executive will have access to and become acquainted with various Trade Secrets
and Other Proprietary and Confidential Information which are owned by the Bank
and which are used in the operation of the Bank’s business, the wrongful use or
disclosure of which to the public or competitors of the Bank would materially
adversely affect the business and prospects of the

 11
 

Bank.  Executive shall not disclose or use in any
manner, directly or indirectly, any Trade Secrets and Other Proprietary and
Confidential Information either during his employment with the Bank or at any
time thereafter, except as required in the course of employment with the Bank.

6.5.2        Nonsolicitation of Business.  Without limiting Paragraph 6.5.1, Executive
agrees that for a period of twelve (12) months following the termination of his
employment with the Bank, Executive will not, directly or indirectly, solicit,
attempt to solicit, divert, or attempt to divert any customers of the Bank or
any business the Bank or a subsidiary or affiliate had enjoyed or solicited
from its customers, borrowers, depositors or investors by using any Trade
Secrets and Other Proprietary and Confidential Information.

6.6           Business Protection Covenants.

6.6.1        Covenant Not to Compete.  Executive agrees that he will not, during the
course of employment, voluntarily or involuntarily, directly or indirectly,
(i) engage in any banking or financial products or service business, loan
origination or deposit-taking business or any other business competitive with
that of the Bank, its subsidiaries or affiliates (“Competitive Business”)
within the County of San Diego (the “Market Area”), (ii) own,
manage, operate, control, be employed by, or provide management or consulting
services in any capacity to any firm, corporation, or other entity (other than
the Bank or its subsidiaries or affiliates) engaged in any Competitive Business
in the Market Area, or (iii) solicit or otherwise intentionally cause any
member of the Bank Board or any employee or officer of the Bank or any of its
subsidiaries or affiliates to engage in any action prohibited under (i) or
(ii) of this Paragraph 6.6.1.

6.6.2        Inducing Employees To Leave The Bank;
Employment of Employees.  Any attempt
on the part of Executive to induce others to leave the Bank’s employ, or the
employ of any of its subsidiaries or affiliates, or any effort by Executive to
interfere with the Bank’s relationship with its other employees would be
harmful and damaging to the Bank. 
Executive agrees that during the term of employment and during any
period following the termination of his employment during which he is receiving
compensation or benefits under Paragraphs 5.2, 5.3 or 5.4, Executive will
not in any way, directly or indirectly (i) induce or attempt to induce any
employee of the Bank or any of its subsidiaries of affiliates to quit
employment with the Bank or the relevant subsidiary or affiliate;
(ii) otherwise interfere with or disrupt the relationships between the
Bank and its subsidiaries and affiliates and their respective employees;
(iii) solicit, entice, or hire away any employee of the Bank or any of its
subsidiaries or affiliates; or (iv) hire or engage any employee of the
Bank or any subsidiary or affiliate or any former employee of the Bank or any
subsidiary or affiliate whose employment with the Bank or the relevant
subsidiary or affiliate ceased after the date of termination of Executive’s
employment with the Bank.

6.7           Equitable
Relief.  Executive acknowledges and
agrees that irreparable injury will result to the Bank in the event of a breach
of any of the provisions of this Paragraph 6 (the “Designated Provisions”)
and that the Bank will have no adequate remedy at law with respect
thereto.  Accordingly, in the event of a
material breach of any Designated Provision, and in addition to any other legal
or equitable remedy the Bank or its subsidiaries or affiliates may

 12
 

have, the Bank and any relevant subsidiary or affiliate shall be
entitled to the entry of a preliminary and permanent injunction (including,
without limitation, specific performance) to restrain the violation or breach
thereof by Executive or any affiliates, agents, or any other persons acting for
or with Executive in any capacity whatsoever, and Executive submits to the
jurisdiction of such court in any such action. 
Any such remedy shall be granted pursuant to the dispute resolution
procedures applicable under Paragraph 6.3.

6.8           Severability.  It is the desire and intent of the parties
that the provisions of this Paragraph 6 shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. 
Accordingly, if any particular provision of this Paragraph 6 shall
be adjudicated or found to be invalid or unenforceable, such provisions shall
be deemed amended to delete therefrom the portion thus adjudicated or found to
be invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication or finding is made.  In
addition, should any court or arbitrator determine that the provisions of this
Paragraph 6 shall be unenforceable with respect to scope, duration, or
geographic area, such court or arbitrator shall be empowered to substitute, to
the extent enforceable, provisions similar hereto or other provisions so as to
provide to the Bank, to the fullest extent permitted by applicable law, the
benefits intended by this Paragraph 6.

6.9           Indemnification.  To the fullest extent permitted by law and in
accordance with the procedures and substantive requirements imposed by law and
applicable regulation (including 12 C.F.R. Part 359, or similar regulations or
regulatory action following similar principles), the Bank shall indemnify
Executive in the event he was or is a party or is threatened to be made a party
in any action brought by a third party against Executive (whether or not the
Bank is joined as a party defendant) against expenses, judgments, fines,
settlement, and other amounts actually and reasonably incurred in connection
with said action, provided Executive acted in good faith and in a manner Executive
reasonably believed to be in the best interests of the Bank, and provided the
alleged conduct of Executive arose out of and was within the course and scope
of his employment as an officer or employee of the Bank.  This Paragraph 6.7 shall not limit any
other rights to indemnification that Executive may now or hereafter have by law
or under the articles, bylaws or resolutions of the Bank or otherwise.

7.             Other Agreements.

7.1           Bank
Policies and Manuals.  The parties
further agree that to the extent of any inconsistency between this Agreement
and any employee manual or policy of the Bank, that the terms of this Agreement
shall supersede the terms of such employee manual or policy.

7.2           Outstanding
Stock Options.  The provisions of
this Agreement are not and shall not be interpreted to change the terms of any
outstanding stock options previously granted by the Bank to Executive.  Without limiting the foregoing, the
provisions regarding the grant of options to Executive set forth in Paragraph
4.4 of the Former Employment Agreement are not amended by this Agreement and
shall be deemed included in this Agreement, and the references in that
paragraph to other provisions of the Former Employment Agreement are hereby
incorporated by reference for the limited purpose of continuing to effectuate
the agreement of the

 13
 

parties set forth in Paragraph 4.4 of the Former Employment
Agreement.  The parties intend that this
Agreement be considered as establishing an “extended term” for purposes of that
provision.

8.             General Provisions.

8.1           Notices.  Unless otherwise specifically permitted by
this Agreement, all notices or other communications required or permitted under
this Agreement shall be in writing, and shall be personally delivered or sent
by registered or certified mail, postage prepaid return receipt requested, or
sent by facsimile, provided that the facsimile cover sheet contain a notation
of the date and time of transmission, and shall be deemed received: (i) if
personally delivered, upon the date of delivery to the address of the person to
receive such notice, (ii) if mailed in accordance with the provisions of
this paragraph, two (2) business days after the date placed in the United
States mail, (iii) if mailed other than in accordance with the provisions
of this paragraph or mailed from outside the United States, upon the date
of delivery to the address of the person to receive such notice, or
(iv) if given by facsimile, when sent. 
Notices shall be given at the following addresses:

If to Executive:

James H. Burgess

7728 Regents Road, Suite
503

San Diego, CA  92122

Fax:                

If to the Bank:

James G. Knight, M.D.

Chairman

1st Pacific Bank of
California

c/o 6907 Camino Degrazia

San Diego, CA  92111

Fax: 
619-222-8216

With a copy to:

Kurt L. Kicklighter, Esq.

Luce, Forward,
Hamilton & Scripps LLP

601 West Broadway,
Suite 2600

San Diego, CA  92101

Fax: 
619-645-5339

The relevant party may change the address for delivery of notices by
giving notice of such change in accordance with this paragraph.

8.2           Complete Agreement; Modifications.  This Agreement and written agreements, if
any, entered into concurrently herewith (i) constitute the parties’ entire
agreement, including all terms, conditions, definitions, warranties,
representations, and covenants, with

 14
 

respect to the subject matter hereof, (ii) merge
all prior discussions and negotiations between or among any or all of them as
to the subject matter hereof, and (iii) supersede and replace all terms,
conditions, definitions, warranties, representations, covenants, agreements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof.  This Agreement
may not be amended, altered or modified except by a writing signed by the party
to be bound.  With respect to the Bank,
such amendment, alteration or modification may only be made on behalf of the
Bank by the Chairperson of the Personnel Committee of the Bank Board, the
Chairperson of the Bank Board or another person specifically designated by the
Bank Board.  With regard to such
amendments, alterations, or modifications, facsimile signatures shall be
effective as original signatures.  Any
amendment, alteration, or modification requiring the signature of more than one
party may be signed in counterparts.

8.3           Further Actions.  Each party agrees to perform any further acts
and execute and deliver any further documents reasonably necessary to carry out
the provisions of this Agreement.

8.4           Assignment.  No party may assign its rights under this
Agreement without the prior written consent of the other parties hereto.

8.5           Successors and Assigns.  Except as explicitly provided herein to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns.

8.6           Termination and Survival.  Upon the termination of the employment of
Executive, the Bank may terminate this Agreement upon notice to Executive,
which may be provided at the time notice of termination of employment is
provided by either party.

8.6.1        The obligations of Executive and the
rights of the Bank under Paragraphs 4.5, 5.9, 5.10, 5.11 and 6.3 through
and including 6.6 shall survive the termination of this Agreement, provided
that if Executive and the Bank have entered into the Separation Agreement, the
dispute resolution provisions of the Separation Agreement shall apply to and
govern any and all disputes related to this Agreement.

8.6.2        The obligations of the Bank to Executive
which by their terms are to continue after termination of employment under
Paragraph 5 shall survive such termination of employment and termination
of the Agreement.  The notice provisions
of Paragraph 8.1 and this Paragraph 8.6 shall survive termination of
employment and termination of the Agreement.

8.6.3        Notwithstanding any provision of this
Agreement to the contrary, this Agreement shall terminate and, therefore, among
other things, none of the provisions providing for compensation or benefits to
Executive shall be of any effect, in the event that the Bank is placed into a
conservatorship or receivership, it loses its Federal deposit insurance, or its
banking charter is revoked.

8.7           Severability.  If any portion of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void, or otherwise
unenforceable, the remaining provisions shall remain enforceable to the fullest
extent permitted by law if enforcement would not frustrate

 15
 

the overall intent of the parties (as such intent is
manifested by all provisions of the Agreement including such invalid, void, or
otherwise unenforceable portion).

8.8           Extension Not a Waiver.  No delay or omission in the exercise of any
power, remedy, or right herein provided or otherwise available to any party
shall impair or affect the right of such party thereafter to exercise the same.  Any extension of time or other indulgence
granted to a party hereunder shall not otherwise alter or affect any power,
remedy or right of any other party, or the obligations of the party to whom
such extension or indulgence is granted except as specifically waived.

8.9           Time of Essence.  Time is of the essence of each and every
term, condition, obligation and provision hereof.

8.10         No Third Party Beneficiaries.  This Agreement and each and every provision
hereof is for the exclusive benefit of the parties hereto and not for the
benefit of any third party.

8.11         Headings.  The headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, or extend or
interpret the scope of this Agreement or of any particular provision hereof.

8.12         References.  A reference to a particular paragraph of
this Agreement shall be deemed to include references to all subordinate
paragraphs, if any.

8.13         Counterparts.  This Agreement may be signed in multiple
counterparts with the same force and effect as if all original signatures
appeared on one copy; and in the event this Agreement is signed in
counterparts, each counterpart shall be deemed an original and all of the
counterparts shall be deemed to be one agreement.

8.14         Applicable Law.  This Agreement shall be construed in
accordance with, and governed by, the laws of the State of California.

8.15         Representation by Counsel.  This Agreement has been negotiated by the
parties with the assistance of their respective counsel and at their own cost
and expense.  For this reason the
principal that an agreement shall be interpreted against the party that drafted
it shall not apply to this Agreement.

 16
 

IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the dates set forth below.

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James H. Burgess

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1st PACIFIC BANK OF CALIFORNIA, a

  
	
   

  	
   

  	
  California state-chartered bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  A. Vincent
  Siciliano, President and CEO

  
							

 

 17

EXHIBIT A

1st PACIFIC BANK OF CALIFORNIA INCENTIVE
COMPENSATION PLAN FOR

SENIOR
MANAGEMENT

EXHIBIT B

SEPARATION AGREEMENT

AND

GENERAL
RELEASE OF CLAIMS

This Separation Agreement and General Release of Claims (this “Agreement”)
is entered into by and between James H. Burgess (“Employee”) and 1st Pacific Bank of
California, a California state bank (the “Bank”).

RECITALS

A.    Employee commenced employment with Bank on or about              .  Employee’s employment with the Bank
terminated on           ,     .

B.    Employee and the Bank desire to settle and compromise any and all
possible claims against the Bank by Employee arising out of their relationship
to date, including Employee’s employment with the Bank and the termination of
Employee’s employment, and to provide for a general release of any and all such
claims.

AGREEMENT

1.     Separation Pay/Consideration.  In consideration of the covenants and
releases set forth herein, the Bank agrees to pay Employee the amount payable
to him and the non-monetary consideration (if any) due him, pursuant to and in
accordance with, Paragraphs 5.2, 5.3 or 5.4, as the case may be, of the
Employment Agreement dated November 17, 2006, by and between the Bank and
Employee (the “Employment Agreement”), less all applicable state and
federal deductions (in each case, the “Payment”), $2,000 of which shall
be consideration for Employee’s release of ADEA claims as set forth in
Section 3, below; provided that no such Payment shall be made until at
least eight (8) days have past since Employee’s execution of this
Agreement.  The check representing the
Payment shall be mailed to Employee at his/her home address at                 .

2.     Release of All Claims Except Age Discrimination in Employment
Act of 1967 (“ADEA”) Claims.

a.     In consideration of the payment and other benefits described in
Section 1, which Employee would otherwise not be entitled to except for
signing this Agreement, Employee does hereby unconditionally, irrevocably and
absolutely release and discharge the Bank and any related holding, parent,
sister or subsidiary entities and all of their respective boards of directors,
officers, employees, agents, volunteers, attorneys, insurers, divisions,
successors and assigns from any and all loss, liability, claims, demands,
causes of action or suits of any type, whether in law and/or in equity, related
directly or indirectly, or in any way connected with any transaction, affairs
or occurrences between them to date, including, but not limited to, Employee’s
employment with the Bank and the termination of said employment.  This Agreement specifically applies, without
limitation, to any and all contract or tort claims, claims for wrongful
termination, wage claims, and claims arising under Title VII of the Civil
Rights Act

 B-1
 

of 1991, the Americans
with Disabilities Act, the Equal Pay Act, the California Fair Employment and
Housing Act, the Fair Labor Standards Act, the Family and Medical Leave Act,
the California Family Rights Act, the California Labor Code, and any and all
federal or state statutes or provisions governing the employment relationship
or discrimination in employment except the federal statute specifically
excluded hereafter.  This release
specifically excludes any and all loss, liability, claims, demands, causes of
action or suits of any type arising under the ADEA.  Employee’s release of ADEA claims will be
addressed separately in Section 3 of this Agreement.

b.     Employee irrevocably and absolutely agrees that he/she will not
prosecute nor allow to be prosecuted on his/her behalf, in any administrative
agency, whether federal or state, or in any court, whether federal or state,
any claim or demand of any type related to the matters released above, it being
the intention of the parties that with the execution by Employee of this
release, the Bank and any related holding, parent, sister or subsidiary
corporations or entities and all of their respective boards of directors,
officers, employees, agents, volunteers, attorneys, insurers, divisions,
successors and assigns will be absolutely, unconditionally and forever
discharged of and from all obligations to or on behalf of Employee related in
any way to the matters discharged herein.

3.     Release of All ADEA Claims.

a.     This section of the Agreement exclusively addresses Employee’s
release of claims arising under federal law involving discrimination on the
basis of age in employment (age 40 and above). 
This section is provided separately, in compliance with federal law,
including but not limited to the Older Workers’ Benefit Protection Act of 1990,
to ensure that Employee clearly understands his/her rights so that any release
of age discrimination claims under federal law (the ADEA) is knowing and
voluntary on the part of Employee.

b.     Employee represents, acknowledges and agrees that the Bank has
advised him/her, in writing, to discuss this Agreement with an attorney, and to
the extent, if any, that Employee has desired, Employee has done so; that the
Bank has given Employee twenty-one (21) days from receipt of this Agreement to
review and consider this Agreement before signing it, and Employee understands
that he/she may use as much of this twenty-one (21) day period as he/she wishes
prior to signing; that no promise, representation, warranty or agreements not
contained herein have been made by or with anyone to cause him/her to sign this
Agreement; that he/she has read this Agreement in its entirety, and fully
understands and is aware of its meaning, intent, content and legal effect; and
that he/she is executing this release voluntarily and free of any duress or
coercion.

c.     The parties acknowledge that for a period of seven (7) days
following the execution of this Agreement, Employee may revoke the Agreement,
and the Agreement shall not become effective or enforceable until the
revocation period has expired.  This
Agreement shall become effective eight (8) days after it has been signed
by Employee and the Bank, and in the event the parties do not sign on the same
date, then this Agreement shall become effective eight (8) days after the
date it is signed by Employee.

 B-2
 

d.     In consideration of the separation payment and other benefits
made to Employee described in Section 1 of this Agreement, which Employee
would otherwise not be entitled to except for signing this Agreement, Employee
does hereby unconditionally, irrevocably and absolutely release and discharge
the Bank and any related holding, parent, sister or subsidiary entities and all
of their respective boards of directors, officers, employees, agents,
volunteers, attorneys, insurers, divisions, successors and assigns from any and
all loss, liability, claims, demands, causes of action or suits of any type
arising under the ADEA and related directly or indirectly to Employee’s
employment with the Bank and the termination of said employment.

4.     Section 1542 Waiver. 
Employee does expressly waive all of the benefits and rights granted to him/her
pursuant to California Civil Code section 1542, which reads:

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OF
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Employee does certify
that he/she has read all of this Agreement, including the release provisions
contained herein and the quoted Civil Code section, above, and that he/she
fully understands all of the same. 
Employee hereby expressly agrees that this Agreement shall extend and
apply to all unknown, unsuspected and unanticipated injuries and damages
(including, without limitation, those arising under the ADEA), as well as those
injuries and damages that are now disclosed.

5.     Confidentiality. 
Employee agrees that all matters relative to this Agreement, including
the negotiations leading up to this Agreement and its terms, shall remain
confidential.  Accordingly, Employee
hereby agrees that, with the exception of his/her spouse, regulatory agencies
of the Bank and tax and legal advisors, he/she will not discuss, disclose or
reveal to any other persons, entities or organizations, whether within or
outside of the Bank, the terms and conditions of this Agreement.

6.     Non-Disparagement. 
Employee agrees that he/she will not disparage the Bank or any of its
directors, employees, agents or volunteers or otherwise interfere with the
Bank’s business, vendor or other relationships. 
Employee agrees not to make any derogatory or adverse statements,
written or verbal, to anyone regarding the Bank or any of its present or former
directors, employees, agents or volunteers. 
The Bank agrees that it will neither disparage Employee nor make any
derogatory or adverse statements, written or verbal, to anyone regarding
Employee.  If an arbitrator determines
that the Bank has breached its obligations under this Section 6, to the
extent the Payment has not been paid in full, the Bank shall be required to
make the Payment in full to Employee within five (5) days following such
arbitrator’s determination.  Nothing in
this Section 6 shall prohibit or relate to any statement by any person to any
bank regulatory agency.

7.     Entire Agreement. 
The parties further declare and represent that no promise, inducement or
agreement not herein expressed has been made to them and that this Agreement

 B-3
 

contains the full and
entire agreement between and among the parties, and that the terms of this
Agreement are contractual and not a mere recital.

8.     Future Employment. 
Employee agrees that the Bank will not be obligated to offer employment
to him/her or to hire him/her for any reason, regardless of the circumstances,
at any time on or after the date of this Agreement.  Employee agrees that he/she will not apply
for nor accept any such employment.

9.     Trade Secret/Proprietary Information.  Employee hereby reaffirms his/her obligations
under his/her Employment Agreement with the Bank to which this Agreement
relates, which shall remain in effect to the extent provided in the Employment
Agreement.  Employee further agrees that
he/she shall not disclose to any person(s) or entity(ies) at any time or
in any manner, directly or indirectly, any information relating to the operations
of the Bank which has not already been disclosed to the general public.  Employee agrees that this provision includes,
but is not limited to, the following information: proprietary information
and/or trade secrets; secret formulae; customer lists and/or names; product and
service prices; customer charges; contracts; contract negotiations and employee
relations matters.  Employee understands
and agrees that this list is not all-inclusive.

10.   Return of Company Property.  Employee agrees to promptly return all
property or information belonging to the Bank, including all keys, computers,
cellular telephones, and any document or property Employee generated during
his/her employment at the Bank, and agrees that no such property will be in
his/her possession or control at the time he/she receives the consideration
specified in Section 1.  This
includes all property or information that may have come into his/her possession
as a result of his/her employment with the Bank.  Employee further acknowledges that he/she has
not retained any copies of any such information.

11.   Applicable Law.  The validity, interpretation, and performance
of this Agreement shall be construed and interpreted according to the laws of
the State of California.

12.   Dispute Resolution.  Any dispute arising out of or related to this
Agreement shall be resolved through binding arbitration through JAMS/Endispute
in San Diego, California, under the then current applicable rules of
JAMS/Endispute.  Each party shall be
responsible for its or his/her own costs and attorneys’ fees in connection with
the arbitration.

13.   Complete Defense.  This Agreement may be pleaded as a full and
complete defense against any action, suit or proceeding which may be
prosecuted, instituted or attempted by either party in breach thereof.

14.   Severability.  If any provision of this Agreement, or part
thereof, is held invalid, void or voidable as against public policy or
otherwise, the invalidity shall not affect other provisions, or parts thereof,
which may be given effect without the invalid provision or part.  To this extent, the provisions, and parts
thereof, of this Agreement are declared to be severable.

15.   No Admission of Liability.  It is understood that this Agreement is not
an admission of any liability by the Bank

 B-4
 

16.   Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.

17.   Counterparts.  This Agreement may be signed in
counterparts.  A facsimile signature
shall have the same force and effect as an original signature.

Employee and the Bank have read the foregoing
Agreement and know its contents and fully understand it.  Employee and the Bank acknowledge that they
have fully discussed this Agreement with their respective attorneys to the
extent desired, or have had the opportunity to do so, and fully understand the
consequences of this Agreement.  No party
is being influenced by any statement made by or on behalf of any of the other
party to this Agreement.  Employee and
the Bank have relied and are relying solely upon his/her or its own judgment,
belief and knowledge of the nature, extent, effect and consequences relating to
this Agreement and/or upon the advice of their own legal counsel concerning the
consequences of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this
Agreement on the dates shown below.

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James H. Burgess

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1st Pacific Bank of California:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
								

 

 B-5

EXHIBIT C

EXECUTIVE
ARBITRATION AGREEMENT

THIS EXECUTIVE ARBITRATION AGREEMENT (“Arbitration
Agreement”) is made by and between 1st Pacific Bank of California, a
California state-chartered bank (the “Bank”), and James H. Burgess (the “Executive”),
effective as of the date that the Employment Agreement between the Bank and
Executive executed contemporaneously herewith (the “Employment Agreement”),
becomes effective.

The purpose of this Arbitration Agreement is to
establish final and binding arbitration for disputes arising out of Executive’s
employment, the Employment Agreement or the termination of Executive’s
employment.  Executive and the Bank
desire to arbitrate their disputes on the terms and conditions set forth below,
in order to gain the benefits of a speedy, impartial dispute-resolution
procedure.  Executive and the Bank agree
to the following:

1.             Claims Covered By The Arbitration Agreement.  Executive and the Bank mutually consent to
the resolution by final and binding arbitration of all claims or controversies
(“claims”) that the Bank may have against Executive or that Executive
may have against the Bank or against its officers, directors, partners,
employees, agents, pension or benefit plans, administrators, or fiduciaries, or
any subsidiary or affiliated company or corporation (collectively referred to
as the “Bank”), relating to, resulting from, or in any way arising out
of Executive’s employment relationship with the Bank, the Employment Agreement
and/or the termination of Executive’s employment relationship with the Bank, to
the extent permitted by law.  The claims
covered by this Arbitration Agreement include, but are not limited to, claims
for wages or other compensation due; claims for breach of any contract or
covenant (express or implied); tort claims; claims for discrimination and
harassment (including, but not limited to, race, sex, religion, national
origin, age, marital status or medical condition, disability, sexual
orientation, or any other characteristic protected by federal, state or local
law); claims for benefits (except where an employee benefit or pension plan
specifies that its claims procedure shall culminate in an arbitration procedure
different from this one); and claims for violation of any public policy,
federal, state or other governmental law, statute, regulation or ordinance.

2.             Required Notice Of Claims And Statute Of Limitations.  Executive may initiate arbitration by serving
or mailing a written notice to the Board of Directors of the Bank at the Bank’s
administrative headquarters, care of the Corporate Secretary.  The Bank may initiate arbitration by serving
or mailing a written notice to Executive at his last known address.  The written notice must specify the claims
asserted against the other party.  Notice
of any claim sought to be arbitrated must be served within the limitations
period established by applicable federal or state law.

3.             Arbitration Procedures.  After demand for arbitration has been made by
serving written notice under the terms of Section 3 of this Arbitration
Agreement, the party demanding arbitration shall file a demand for arbitration
with the American Arbitration Association (“AAA”).  Except as otherwise provided in this
Arbitration Agreement, the arbitration will be

 C-1
 

conducted according to the then applicable arbitration
rules of AAA for the arbitration of employment disputes.

4.             Discovery. 
Discovery shall be allowed and conducted pursuant to the then applicable
arbitration rules of AAA for the arbitration of employment disputes.

5.             Choice of Law. 
The arbitrator shall apply the substantive law (and the law of remedies,
if applicable) of the State of California, or federal law, or both, as
applicable to the claim(s) asserted. 
The arbitrator shall have authority to resolve any dispute relating to
the interpretation, applicability, enforceability or formation of this
Arbitration Agreement, including but not limited to any claim that all or any
part of this Arbitration Agreement is void or voidable.

6.             Summary Judgment. 
Either party may file a motion for summary judgment with the
arbitrator.  The arbitrator is entitled
to resolve some or all of the asserted claims through such a motion.  The standards to be applied by the arbitrator
in ruling on a motion for summary judgment shall be the applicable laws as
specified in Section 5 of this Arbitration Agreement.

7.             Application For Emergency Injunctive And/Or Other
Equitable Relief.  Claims by the Bank
or Executive for emergency injunctive and/or other equitable relief relating to
unfair competition and/or the use and/or unauthorized disclosure of trade
secrets or confidential information shall be subject to the then current
version of the AAA’s Optional Rules for Emergency Measures of Protection set
forth within the AAA’s Commercial Dispute Resolution Procedures.  The AAA shall appoint a single emergency
arbitrator to handle the claim(s) for emergency relief.  The emergency arbitrator selected by the AAA
shall be either a retired judge or an individual experienced in handling
matters involving claims for emergency injunctive and/or other equitable relief
relating to unfair competition and the use or unauthorized disclosure of trade
secrets and/or confidential information.

8.             Arbitration Decision.  The arbitrator’s decision will be final and
binding.  The arbitrator shall issue a
written arbitration decision revealing the essential findings and conclusions
upon which the decision and/or award is based. 
A party’s right to appeal the decision is limited to grounds provided
under applicable federal or state law.

9.             Place Of Arbitration.  The arbitration will be at a mutually
convenient location, which must be within 50 miles of Executive’s last
employment location with the Bank.  If
the parties cannot agree upon a location, then the arbitration will be held at
AAA’s office nearest to Executive’s last employment location with the Bank.

10.           Severability.  Should any portion of this Arbitration
Agreement be found to be unenforceable, such portion will be severed from this
Arbitration Agreement, and the remaining portions shall continue to be
enforceable.

11.           Section Headings.  The section headings of this Arbitration
Agreement are intended solely for the convenience of reference and shall not in
any manner amplify, limit, modify or otherwise be used in interpretation of any
provisions hereof.

 C-2
 

12.           Construction.  This Arbitration Agreement shall not be
interpreted for or against any party on the basis that such party or its legal
representative caused part or all of this Arbitration Agreement to be drafted.

13.           Consideration.  The Bank’s offer to employ Executive, and the
promises by the Bank and Executive to arbitrate differences, rather than
litigate them before courts or other bodies, provide consideration for each
other.

14.           Fees and Costs.  Each party may be represented by an attorney
or other representative selected by the party. 
Each party shall be responsible for its own attorneys’ or representative’s
fees.  However, if any party prevails on
a statutory claim which affords the prevailing party’s attorneys’ fees, or if
there is a written agreement providing for fees, the arbitrator may award
reasonable fees to the prevailing party. 
In no event shall Executive be required to pay administrative fees,
including arbitrator’s fees, beyond the fees which would have been incurred by
Executive, if any, had the dispute(s) arbitrated under this Arbitration
Agreement been litigated in state or federal court; the Bank shall be
responsible for all administrative fees exceeding such amount.

15.           Enforcement of Arbitration
Agreement.  Should either party file
a court action concerning or refuse to arbitrate a claim which is subject to
arbitration under this Arbitration Agreement, the other party shall be entitled
to recover its costs and reasonable attorneys’ fees incurred in enforcing this
Arbitration Agreement in court.

16.           Sole And Entire Agreement.  This Arbitration Agreement expresses the
entire agreement of the parties and there are no other agreements, oral or
written, concerning arbitration, except as provided herein, and except for the
Employment Agreement which incorporates this Arbitration Agreement by
reference.  By itself, this Arbitration
Agreement is not, and shall not be construed to create, any contract of
employment, express or implied.

17.           Requirements for Modification or
Revocation.  This Arbitration
Agreement shall survive the termination of Executive’s employment.  It can only be revoked or modified by a
writing signed by the Chairperson of the Personnel Committee of the Bank’s
Board of Directors, the Chairperson of the Bank’s Board of Directors or another
person specifically designated by the Board of Directors of the Bank and
Executive, that specifically states an intent to revoke or modify this
Arbitration Agreement.

18.           Waiver of Jury Trial/Exclusive
Remedy.  EXECUTIVE AND THE BANK WAIVE ANY CONSTITUTIONAL OR STATUTORY RIGHT TO
HAVE ANY DISPUTE BETWEEN THEM COVERED BY THE TERMS OF THIS ARBITRATION
AGREEMENT DECIDED BY A COURT OF LAW AND/OR BY A JURY IN A COURT.

19.           Voluntary Agreement.  EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS
CAREFULLY READ THIS ARBITRATION AGREEMENT, UNDERSTANDS ITS TERMS, AND AGREES
THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE BANK AND EXECUTIVE RELATING
TO THE SUBJECTS COVERED IN THE ARBITRATION AGREEMENT ARE CONTAINED IN IT.  EXECUTIVE HAS VOLUNTARILY ENTERED INTO THE
ARBITRATION AGREEMENT WITHOUT

 C-3
 

RELIANCE ON ANY PROVISIONS OR REPRESENTATIONS BY THE
BANK, OTHER THAN THOSE CONTAINED IN THIS ARBITRATION AGREEMENT OR EMPLOYMENT
AGREEMENT INTO WHICH IT IS INCORPORATED BY REFERENCE.

EXECUTIVE FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE
OPPORTUNITY TO DISCUSS THIS ARBITRATION AGREEMENT AND THE EMPLOYMENT AGREEMENT
WITH EXECUTIVE’S PRIVATE LEGAL COUNSEL AND EXECUTIVE HAS UTILIZED THAT
OPPORTUNITY TO THE EXTENT DESIRED.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James H. Burgess, Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1st PACIFIC BANK OF CALIFORNIA,

  
	
   

  	
   

  	
  a California
  state-chartered bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  A. Vincent
  Siciliano, President and CEO

  
						

 

 C-4

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