Document:

Exhibit (10)(l)

    

     

    GUARANTEE
      AGREEMENT

     

    PEOPLES
      BANCORP OF NORTH CAROLINA, INC.

     

    Dated
      as
      of June 28, 2006

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	 	 	
                TABLE
                  OF CONTENTS

              	 
	 	 	 	 
	 	 	
                 Pa

              	
                ge

              
	
                 

              	
                 

              	
                ARTICLE
                  I 

              	
                 

              
	 	 	
                DEFINITIONS
                  AND INTERPRETATION

              	 
	 	 	 	 
	
                SECTION
                  1.1.

              	 	
                Definitions
                  and Interpretaion
                  ....................................................................................................................................................................................

              	1
	 	 	 	 
	 	 	
                ARTICLE
                  II 

              	
                 

              
	
                 

              	
                 

              	
                POWERS,
                  DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

              	
                 

              
	 	 	 	 
	SECTION
                2.1.	 	
                Powers
                  and Duties of the Guarantee Trustee
                  .........................................................................................................................................................

              	4
	 	 	
                 

              	
                 

              
	SECTION
                2.2.	 	Certain
                Rights of the Guarantee Trustee
                .................................................................................................................................................................	5
	 	 	
                 

              	 
	SECTION
                2.3.	 	
                Not
                  Responsible for Recitals or Issuance of Guarantee
                  ........................................................................................................................................

              	
                7

              
	 	 	 	 
	SECTION
                2.4.	 	
                Events
                  of Default; Waiver
                  .........................................................................................................................................................................................

              	7
	 	 	
                 

              	
                 

              
	SECTION
                2.5.	 	Events
                of Default; Notice
                ...........................................................................................................................................................................................	8
	 	 	
                 

              	
                 

              
	 	 	
                ARTICLE
                  III

              	
                 

              
	
                 

              	
                 

              	
                THE
                  GUARANTEE TRUSTEE

              	 
	 	 	
                 

              	
                 

              
	SECTION
                3.1.	 	The
                Guarantee Trustee; Eligibility
                ............................................................................................................................................................................	8
	
                 

              	 	
                 

              	
                 

              
	SECTION
                3.2.	 	Appointment,
                Removal and Resignation of the Guarantee Trustee
                ....................................................................................................................	9
	
                 

              	 	
                 

              	
                 

              
	 	 	
                ARTICLE
                  IV

              	
                 

              
	
                 

              	
                 

              	
                GUARANTEE

              	
                 

              
	 	 	 	 
	
                SECTION
                  4.1.

              	 	
                Guarantee
                  ......................................................................................................................................................................................................................

              	
                9

              
	 	 	 	 
	
                SECTION
                  4.2.

              	 	
                Waiver
                  of Notice and Demand
                  ..................................................................................................................................................................................

              	
                10

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  4.3.

              	 	
                Obligations
                  Not Affected
                  ...........................................................................................................................................................................................

              	
                10

              
	 	 	 	 
	
                SECTION
                  4.4.

              	 	
                Rights
                  of Holders
                  ........................................................................................................................................................................................................

              	
                11

              
	 	 	 	 
	SECTION
                4.5.	 	Guarantee
                of Payment
                .................................................................................................................................................................................................	11
	 	 	 	 
	
                SECTION
                  4.6.

              	 	
                Subrogation
                  ..................................................................................................................................................................................................................

              	
                11

              
	 	 	 	 
	SECTION
                4.7.	 	Independent
                Obligations
                ...........................................................................................................................................................................................	12
	
                 

              	 	 	
                 

              
	
                SECTION
                  4.8.

              	 	Enforcement
                .................................................................................................................................................................................................................	
                12

              

      

    

     

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    

      
        	 	 	
                TABLE
                  OF CONTENTS

              	 
	 	 	
                 (continued)

              	 
	
                 

              	
                 

              	 	
                 

              
	 	 	
                 Pa

              	ge
	
                 

              	 	
                 

              	 
	 	 	
                ARTICLE
                  V

              	
                 

              
	
                 

              	
                 

              	
                LIMITATION
                  OF TRANSACTIONS; SUBORDINATION

              	 
	 	 	
                 

              	
                 

              
	SECTION
                5.1.	 	Limitation
                of Transactions
                ........................................................................................................................................................................................	12
	 	 	
                 

              	 
	SECTION
                5.2.	 	
                Ranking
                  ........................................................................................................................................................................................................................

              	
                13

              
	 	 	 	 
	 	 	
                ARTICLE
                  VI

              	
                 

              
	
                 

              	 	
                TERMINATION

              	
                 

              
	 	 	 	 
	 SECTION
                6.1.	 	
                Termination
                  ................................................................................................................................................................................................................. 

              	13
	 	 	 	 
	 	 	
                ARTICLE
                  VII

              	
                 

              
	
                 

              	
                 

              	
                INDEMNIFICATION

              	 
	
                 

              	 	
                 

              	 
	SECTION
                7.1.	 	
                Exculpation
                  ..................................................................................................................................................................................................................

              	
                14

              
	 	 	 	 
	
                SECTION
                  7.2.

              	 	
                Indemnification
                  ...........................................................................................................................................................................................................

              	
                14

              
	 	 	 	 
	
                SECTION
                  7.3.

              	 	
                Compensation;
                  Reimbursement of Expenses
                  ..........................................................................................................................................................

              	
                15

              
	 	 	 	 
	
                 

              	
                 

              	
                ARTICLE
                  VIII

              	 
	 	 	
                MISCELLANEOUS

              	 
	 	 	 	 
	
                SECTION
                  8.1.

              	 	
                Successors
                  and Assigns
                  ...........................................................................................................................................................................................

              	
                16

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  8.2.

              	 	
                Amendments
                  ...............................................................................................................................................................................................................

              	
                16

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  8.3.

              	 	
                Notices
                  .........................................................................................................................................................................................................................

              	
                16

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  8.4.

              	 	Benefit
                ..........................................................................................................................................................................................................................	
                17

              
	
                 

              	 	 	
                 

              
	SECTION
                8.5. 	 	Governing
                Law
                ............................................................................................................................................................................................................	17
	 	 	 	 
	SECTION
                8.6.	 	Counterparts
                ................................................................................................................................................................................................................	17

      

    

     

     

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

    
      GUARANTEE
        AGREEMENT

       

      This
        GUARANTEE AGREEMENT (the "Guarantee"), dated as of June 28, 2006, is executed
        and delivered by Peoples Bancorp of North Carolina, Inc., incorporated in
        North
        Carolina (the "Guarantor"), and LaSalle Bank National Association, as trustee
        (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
        from time to time of the Capital Securities (as defined herein) of PEBK Capital
        Trust II, a Delaware statutory trust (the "Issuer").

       

      WHEREAS,
        pursuant to an Amended and Restated Declaration of Trust (the "Declaration"),
        dated as of June 28, 2006, among the trustees named therein of the Issuer,
        the
        administrators of the Issuer named therein, Peoples Bancorp of North Carolina,
        Inc., as sponsor, and the Holders from time to time of undivided beneficial
        interests in the assets of the Issuer, the Issuer is issuing on the date
        hereof
        securities, having an aggregate liquidation amount of up to $20,000,000,
        designated the TP Securities (the "Capital Securities"); and

       

      WHEREAS,
        as incentive for the Holders to purchase the Capital Securities, the Guarantor
        desires irrevocably and unconditionally to agree, to the extent set forth
        in
        this Guarantee, to pay to the Holders of Capital Securities the Guarantee
        Payments (as defined herein) and to make certain other payments on the terms
        and
        conditions set forth herein.

       

      NOW,
        THEREFORE, in consideration of the purchase by each Holder of the Capital
        Securities, which purchase the Guarantor hereby agrees shall benefit the
        Guarantor, the Guarantor executes and delivers this Guarantee for the benefit
        of
        the Holders.

       

      ARTICLE
        I  

      DEFINITIONS
        AND INTERPRETATION

       

      
        
          	
                  SECTION
                    1.1.

                	
                  Definitions
                    and Interpretation

                

        

      

       

      In
        this
        Guarantee, unless the context otherwise requires:

       

      (a)  capitalized
        terms used in this Guarantee but not defined in the preamble above have the
        respective meanings assigned to them in this Section 1.1;

       

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

       

      (c)  all
        references to "the Guarantee" or "this Guarantee" are to this Guarantee as
        modified, supplemented or amended from time to time;

       

      (d)  all
        references in this Guarantee to Articles and Sections are to Articles and
        Sections of this Guarantee, unless otherwise specified;

       

      (e)  terms
        defined in the Declaration as of the date of execution of this Guarantee
        have
        the same meanings when used in this Guarantee, unless otherwise

       defined
        in this Guarantee or unless the context otherwise requires; and

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      "Beneficiaries"
        means any Person to whom the Issuer is or hereafter becomes indebted or
        liable.

       

      "Corporate
        Trust Office" means the office of the Guarantee Trustee at which the corporate
        trust business of the Guarantee Trustee shall, at any particular time, be
        principally administered.

       

      "Covered
        Person" means any Holder of Capital Securities.

       

      "Debentures"
        means the junior subordinated debentures of Peoples Bancorp of North Carolina,
        Inc., designated the Junior Subordinated Debt Securities due 2036, held by
        the
        Institutional Trustee (as defined in the Declaration) of the
        Issuer.

       

      "Event
        of
        Default" has the meaning set forth in Section 2.4.

       

      "Guarantee
        Payments" means the following payments or distributions, without duplication,
        with respect to the Capital Securities, to the extent not paid or made by
        the
        Issuer: (i) any accrued and unpaid Distributions (as defined in the
        Declaration) which are required to be paid on such Capital Securities to
        the
        extent the Issuer has funds available in the Property Account (as defined
        in the
        Declaration) therefor at such time, (ii) the Redemption Price (as defined
        in the
        Indenture) to the extent the Issuer has funds available in the Property Account
        therefor at such time, with respect to any Capital Securities called for
        redemption by the Issuer, (iii) the Special Redemption Price (as defined
        in the
        Indenture) to the extent the Issuer has funds available in the Property Account
        therefor at such time, with respect to Capital Securities called for redemption
        upon the occurrence of a Special Event (as defined in the Indenture), and
        (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up
        or termination of the Issuer (other than in connection with the distribution
        of
        Debentures to the Holders of the Capital Securities in exchange therefor
        as
        provided in the Declaration), the lesser of (a) the aggregate of the liquidation
        amount and all accrued and unpaid Distributions on the Capital Securities
        to the
        date of payment, to the extent the Issuer has funds available in the Property
        Account therefor at such time, and (b) the amount of assets of the Issuer
        remaining available for distribution to Holders in liquidation of the Issuer
        after satisfaction of liabilities to creditors of the Issuer as required
        by
        applicable law (in either case, the "Liquidation Distribution").

       

      "Guarantee
        Trustee" means LaSalle Bank National Association, until a Successor Guarantee
        Trustee has been appointed and has accepted such appointment pursuant to
        the
        terms of this Guarantee and thereafter means each such Successor Guarantee
        Trustee.

       

      "Holder"
        means any holder, as registered on the books and records of the Issuer, of
        any
        Capital Securities; provided, however, that, in determining whether the holders
        of the requisite percentage of Capital Securities have given any request,
        notice, consent or waiver hereunder, "Holder" shall not include the Guarantor
        or
        any Affiliate of the Guarantor.

       

      "Indemnified
        Person" means the Guarantee Trustee (including in its individual capacity),
        any
        Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
        members, partners, employees, representatives, nominees, custodians or agents
        of
        the Guarantee Trustee.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      "Indenture"
        means the Indenture, dated as of June 28, 2006, between the Guarantor and
        LaSalle Bank National Association, not in its individual capacity but solely
        as
        trustee, and any indenture supplemental thereto pursuant to which the Debentures
        are to be issued to the Institutional Trustee of the Issuer.

       

      "Liquidation
        Distribution" has the meaning set forth in the definition of "Guarantee
        Payments" herein.

       

      "Majority
        in liquidation amount of the Capital Securities" means Holder(s) of outstanding
        Capital Securities, voting together as a class, but separately from the holders
        of Common Securities, of more than 50% of the aggregate liquidation amount
        (including the stated amount that would be paid on redemption, liquidation
        or
        otherwise, plus accrued and unpaid Distributions to, but excluding, the date
        upon which the voting percentages are determined) of all Capital Securities
        then
        outstanding.

       

      "Obligations"
        means any costs, expenses or liabilities (but not including liabilities related
        to taxes) of the Issuer, other than obligations of the Issuer to pay to holders
        of any Trust Securities the amounts due such holders pursuant to the terms
        of
        the Trust Securities.

       

      "Officer's
        Certificate" means, with respect to any Person, a certificate signed by one
        Authorized Officer of such Person. Any Officer's Certificate delivered with
        respect to compliance with a condition or covenant provided for in this
        Guarantee shall include:

       

      (a)  a
        statement that each officer signing the Officer's Certificate has read the
        covenant or condition and the definitions relating thereto;

       

      (b)  a
        brief
        statement of the nature and scope of the examination or investigation undertaken
        by each officer in rendering the Officer's Certificate;

       

      (c)  a
        statement that each such officer has made such examination or investigation
        as,
        in such officer's opinion, is necessary to enable such officer to

       express
        an informed opinion as to whether or not such covenant or condition has been
        complied with; and

       

      (d)  a
        statement as to whether, in the opinion of each such officer, such condition
        or
        covenant has been complied with.

       

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

       

      "Responsible
        Officer" means, with respect to the Guarantee Trustee, any officer within
        the
        CDO Trust Services Group of the Corporate Trust Office of the Guarantee Trustee
        with direct responsibility for the administration of any matters relating
        to
        this Guarantee, including any vice president, any assistant vice president,
        any
        secretary, any assistant secretary, the treasurer, any assistant treasurer,
        any
        trust officer or other officer of the Corporate Trust Office of the Guarantee
        Trustee customarily performing functions similar to those performed
        by

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

         

        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.

      

       

      "Successor
        Guarantee Trustee" means a successor Guarantee Trustee possessing the
        qualifications to act as Guarantee Trustee under Section 3.1.

       

      "Trust
        Securities" means the Common Securities and the Capital Securities.

       

      ARTICLE
        II  

      POWERS,
        DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

       

      
        
          	
                  SECTION
                    2.1.

                	
                  Powers
                    and Duties of the Guarantee
                    Trustee.

                

        

      

       

      (a)  This
        Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders
        of the Capital Securities, and the Guarantee Trustee shall not transfer this
        Guarantee to any Person except a Holder of Capital Securities exercising
        his or
        her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee
        on
        acceptance by such Successor Guarantee Trustee of its appointment to act
        as
        Successor Guarantee Trustee. The right, title and interest of the Guarantee
        Trustee shall automatically vest in any Successor Guarantee Trustee, and
        such
        vesting and cessation of title shall be effective whether or not conveyancing
        documents have been executed and delivered pursuant to the appointment of
        such
        Successor Guarantee Trustee.

       

      (b)  If
        an
        Event of Default actually known to a Responsible Officer of the Guarantee
        Trustee has occurred and is continuing, the Guarantee Trustee shall enforce
        this
        Guarantee for the benefit of the Holders of the Capital Securities.

       

      (c)  The
        Guarantee Trustee, before the occurrence of any Event of Default and after
        the
        curing or waiving of all Events of Default that may have occurred, shall
        undertake to perform only such duties as are specifically set forth in this
        Guarantee, and no implied covenants shall be read into this Guarantee against
        the Guarantee Trustee. In case an Event of Default has occurred (that has
        not
        been cured or waived pursuant to Section 2.4(b)) and is actually known to
        a
        Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
        exercise such of the rights and powers vested in it by this Guarantee, and
        use
        the same degree of care and skill in its exercise thereof, as a prudent person
        would exercise or use under the circumstances in the conduct of his or her
        own
        affairs.

       

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

       

      (i)  prior
        to
        the occurrence of any Event of Default and after the curing or waiving of
        all
        Events of Default that may have occurred:

       

      (A)  the
        duties and obligations of the Guarantee Trustee shall be determined solely
        by
        the express provisions of this

       Guarantee,
        and the

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

       Guarantee
        Trustee shall not be liable except for the performance of such duties and
        obligations as are

       specifically
        set forth in this Guarantee, and no implied covenants or obligations shall
        be
        read into this Guarantee against the

       Guarantee
        Trustee; and

       

      (B)  in
        the
        absence of bad faith on the part of the Guarantee Trustee, the Guarantee
        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 Guarantee Trustee and conforming to the requirements of this Guarantee;
        but in the case of any such 

       certificates
        or opinions furnished to the Guarantee Trustee, the Guarantee Trustee shall
        be
        under a duty to examine the same to

       determine
        whether or not on their face they conform to the requirements of this
        Guarantee;

       

      (ii)  the
        Guarantee Trustee shall not be liable for any error of judgment made in good
        faith by a Responsible Officer of the Guarantee

       Trustee,
        unless it shall be proved that such Responsible Officer of the Guarantee
        Trustee
        or the Guarantee Trustee was negligent in ascertaining 

       the
        pertinent facts upon which such judgment was made;

       

      (iii)  the
        Guarantee 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 written direction of the Holders of not less than a Majority in liquidation
        amount of the Capital Securities relating to the time, method

      and place
        of
        conducting any proceeding for any remedy available to the Guarantee Trustee,
        or
        exercising any trust or power conferred upon the

       Guarantee
        Trustee under this Guarantee; and

       

      (iv)  no
        provision of this Guarantee shall require the Guarantee 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 the Guarantee Trustee shall have

       reasonable
        grounds for believing that the repayment of such funds is not reasonably
        assured
        to it under the terms of this Guarantee, or security

       and
        indemnity, reasonably satisfactory to the Guarantee Trustee, against such
        risk
        or liability is not reasonably assured to it.

       

      
        
          	
                  SECTION
                    2.2.

                	
                  Certain
                    Rights of the Guarantee
                    Trustee.

                

        

      

       

      (a)  Subject
        to the provisions of Section 2.1:

       

      (i)  The
        Guarantee 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, direction, consent,
        order, bond, debenture, note, other evidence of 

       indebtedness
        or other paper or document believed by it to be genuine and to have been
        signed,
        sent or presented by the proper party or parties.

       

      (ii)  Any
        direction or act of the Guarantor contemplated by this Guarantee shall be
        sufficiently evidenced by an Officer's Certificate.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      (iii)  Whenever,
        in the administration of this Guarantee, the Guarantee Trustee shall deem
        it
        desirable that a matter be proved or

       established
        before taking, suffering or omitting any action hereunder, the Guarantee
        Trustee
        (unless other evidence is herein specifically

       prescribed)
        may, in the absence of bad faith on its part, request and conclusively rely
        upon
        an Officer's Certificate of the Guarantor which, upon

       receipt
        of such request, shall be promptly delivered by the Guarantor.

       

      (iv)  The
        Guarantee Trustee shall have no duty to see to any recording, filing or
        registration of any instrument or other writing (or any

       rerecording,
        refiling or reregistration thereof).

       

      (v)  The
        Guarantee Trustee may consult with counsel of its selection, and the advice
        or
        opinion of such counsel with respect to legal 

       matters
        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. Such counsel may be counsel to
        the
        Guarantor or any of its Affiliates and may include any of its

       employees.
        The Guarantee Trustee shall have the right at any time to seek instructions
        concerning the administration of this Guarantee from any

       court
        of competent jurisdiction.

       

      (vi)  The
        Guarantee Trustee shall be under no obligation to exercise any of the rights
        or
        powers vested in it by this Guarantee at the

       request
        or direction of any Holder, unless such Holder shall have provided to the
        Guarantee Trustee such security and indemnity, reasonably

       satisfactory
        to the Guarantee Trustee, against the costs, expenses (including attorneys'
        fees
        and expenses and the expenses of the Guarantee

       Trustee's
        agents, nominees or custodians) and liabilities that might be incurred by
        it in
        complying with such request or direction, including such 

       reasonable
        advances as may be requested by the Guarantee Trustee; provided,
        however,
        that
        nothing contained in this Section 2.2(a)(vi) shall

      be taken
        to
        relieve the Guarantee Trustee, upon the occurrence of an Event of Default,
        of
        its obligation to exercise the rights and powers vested

      in
        it by
        this
        Guarantee.

       

      (vii)  The
        Guarantee 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, direction, consent, order,
        bond,
        debenture, note, other evidence of indebtedness or other 

       
        paper or document, but the Guarantee Trustee, in its discretion, may make
        such
        further inquiry or investigation into such facts or matters as it

        may
        see fit.

       

      (viii)  The
        Guarantee Trustee may execute any of the trusts or powers hereunder or perform
        any duties hereunder either directly or by or

        through
        agents, nominees, custodians or attorneys, and the Guarantee Trustee shall
        not
        be responsible for any misconduct or negligence on

        the part
        of
        any agent or attorney appointed with due care by it hereunder.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      (ix)  Any
        action taken by the Guarantee Trustee or its agents hereunder shall bind
        the
        Holders of the Capital Securities, and the

       signature
        of the Guarantee Trustee or its agents alone shall be sufficient and effective
        to perform any such action. No third party shall be

       required
        to inquire as to the authority of the Guarantee Trustee to so act or as to
        its
        compliance with any of the terms and provisions of this

       Guarantee,
        both of which shall be conclusively evidenced by the Guarantee Trustee's
        or its
        agent's taking such action.

       

      (x)  Whenever
        in the administration of this Guarantee the Guarantee Trustee shall deem
        it
        desirable to receive instructions with respect 

       to
        enforcing any remedy or right or taking any other action hereunder, the
        Guarantee Trustee (A) may request instructions from the Holders of
        a

       Majority
        in liquidation amount of the Capital Securities, (B) may refrain from enforcing
        such remedy or right or taking such other action until 

      such instructions
        are received and (C) shall be protected in conclusively relying on or acting
        in
        accordance with such instructions.

       

      (xi)  The
        Guarantee Trustee shall not be liable for any action taken, suffered, or
        omitted
        to be taken by it in good faith and reasonably

       believed
        by it to be authorized or within the discretion or rights or powers conferred
        upon it by this Guarantee.

       

      (b)  No
        provision of this Guarantee shall be deemed to impose any duty or obligation
        on
        the Guarantee Trustee to perform any act or acts or exercise any

       right,
        power, duty or obligation conferred or imposed on it, in any jurisdiction
        in
        which it shall be illegal or in which the Guarantee Trustee shall be unqualified
        or

       incompetent
        in accordance with applicable law to perform any such act or acts or to exercise
        any such right, power, duty or obligation. No permissive power or

       authority
        available to the Guarantee Trustee shall be construed to be a duty.

       

      
        
          	
                  SECTION
                    2.3.

                	
                  Not
                    Responsible for Recitals or Issuance of
                    Guarantee.

                

        

      

       

      The
        recitals contained in this Guarantee shall be taken as the statements of
        the
        Guarantor, and the Guarantee Trustee does not assume any responsibility for
        their correctness. The Guarantee Trustee makes no representation as to the
        validity or sufficiency of this Guarantee.

       

      
        
          	
                  SECTION
                    2.4.

                	
                  Events
                    of Default; Waiver.

                

        

      

       

      (a)  An
        Event
        of Default under this Guarantee will occur upon the failure of the Guarantor
        to
        perform any of its payment or other obligations hereunder.

       

      (b)  The
        Holders of a Majority in liquidation amount of the Capital Securities may,
        voting or consenting as a class, on behalf of the Holders of all of
        the

      Capital
        Securities, waive any past Event of Default and its consequences. Upon such
        waiver, any such Event of Default shall cease to exist, and shall be
        deemed

      to
        have
        been cured, for every purpose of this Guarantee, but no such waiver shall
        extend
        to any subsequent or other default or Event of Default or impair any
        right

      consequent
        thereon.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      
        
          	
                  SECTION
                    2.5.

                	
                  Events
                    of Default; Notice.

                

        

      

       

      (a)  The
        Guarantee Trustee shall, within 90 days after the occurrence of an Event
        of
        Default, transmit by mail, first class postage prepaid, to the Holders
        of

       the
        Capital Securities, notices of all Events of Default actually known to a
        Responsible Officer of the Guarantee Trustee, unless such defaults have been
        cured 

       before
        the giving of such notice; provided,
        however,
        that
        the Guarantee Trustee shall be protected in withholding such notice if and
        so
        long as a Responsible

       Officer
        of the Guarantee Trustee in good faith determines that the withholding of
        such
        notice is in the interests of the Holders of the Capital
        Securities.

       

      (b)  The
        Guarantee Trustee shall not be charged with knowledge of any Event of Default
        unless the Guarantee Trustee shall have received written notice

       thereof
        from the Guarantor or a Holder of the Capital Securities, or a Responsible
        Officer of the Guarantee Trustee charged with the administration of
        this

       Guarantee shall
        have actual knowledge thereof.

       

      ARTICLE
        III  

      THE
        GUARANTEE TRUSTEE

       

      
        
          	
                  SECTION
                    3.1.

                	
                  The
                    Guarantee Trustee;
                    Eligibility.

                

        

      

       

      (a)  There
        shall at all times be a Guarantee Trustee which shall:

       

      (i)  not
        be an
        Affiliate of the Guarantor; and

       

      (ii)  be
        a
        corporation or national association 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 Person authorized under such laws
        to
        exercise corporate trust powers, having a combined

       capital
        and surplus of at least Fifty Million U.S. Dollars ($50,000,000), and subject
        to
        supervision or examination by federal, state, territorial or 

       District
        of Columbia authority. If such corporation or national association publishes
        reports of condition at least annually, pursuant to law or to

       the
        requirements of the supervising or examining authority referred to above,
        then,
        for the purposes of this Section 3.1(a)(ii), the combined

       capital and
        surplus of such corporation or national association shall be deemed to be
        its
        combined capital and surplus as set forth in its most

       recent report
        of
        condition so published.

       

      (b)  If
        at any
        time the Guarantee Trustee shall cease to be eligible to so act under Section
        3.1(a), the Guarantee Trustee shall immediately resign in the

       manner
        and with the effect set forth in Section 3.2(c).

       

      (c)  If
        the
        Guarantee Trustee has or shall acquire any "conflicting interest' within
        the
        meaning of Section 310(b) of the Trust Indenture Act, the Guarantee

       Trustee
        shall either eliminate such interest or resign to the extent and in the manner
        provided by, and subject to, this Guarantee.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      

        
          	
                  SECTION
                    3.2.

                	
                  Appointment,
                    Removal and Resignation of the Guarantee
                    Trustee.

                

        

      

       

      (a)  Subject
        to Section 3.2(b), the Guarantee Trustee may be appointed or removed without
        cause at any time by the Guarantor except during an Event of

       Default.

       

      (b)  The
        Guarantee Trustee shall not be removed in accordance with Section 3.2(a)
        until a
        Successor Guarantee Trustee has been appointed and has

       accepted
        such appointment by written instrument executed by such Successor Guarantee
        Trustee and delivered to the Guarantor.

       

      (c)  The
        Guarantee Trustee appointed to office shall hold office until a Successor
        Guarantee Trustee shall have been appointed or until its removal or

       resignation.
        The Guarantee Trustee may resign from office (without need for prior or
        subsequent accounting) by an instrument in writing executed by the

       Guarantee
        Trustee and delivered to the Guarantor, which resignation shall not take
        effect
        until a Successor Guarantee Trustee has been appointed and has

       accepted
        such appointment by an instrument in writing executed by such Successor
        Guarantee Trustee and delivered to the Guarantor and the resigning

       Guarantee Trustee.

       

      (d)  If
        no
        Successor Guarantee Trustee shall have been appointed and accepted appointment
        as provided in this Section 3.2 within 60 days after delivery

       of
        an instrument of removal or resignation, the Guarantee Trustee resigning
        or
        being removed may petition any court of competent jurisdiction for appointment
        

      of
        a Successor
        Guarantee Trustee. Such court may thereupon, after prescribing such notice,
        if
        any, as it may deem proper, appoint a Successor Guarantee Trustee.

       

      (e)  No
        Guarantee Trustee shall be liable for the acts or omissions to act of any
        Successor Guarantee Trustee.

       

      (f)  Upon
        termination of this Guarantee or removal or resignation of the Guarantee
        Trustee
        pursuant to this Section 3.2, the Guarantor shall pay to the

       Guarantee
        Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and
        7.3
        accrued to the date of such termination, removal or resignation.

       

           
        ARTICLE IV  

      GUARANTEE

       

      

        
          	
                  SECTION
                    4.1.

                	
                  Guarantee.

                

        

      

       

      (a)  The
        Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
        the Guarantee Payments (without duplication of amounts theretofore paid by
        the
        Issuer), as and when due, regardless of any defense (except as defense of
        payment by the Issuer), right of set-off or counterclaim that the Issuer
        may
        have or assert. The Guarantor's obligation to make a Guarantee Payment may
        be
        satisfied by direct payment of the required amounts by the Guarantor to the
        Holders or by causing the Issuer to pay such amounts to the
        Holders.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      (b)  The
        Guarantor hereby also agrees to assume any and all Obligations of the Issuer
        and
        in the event any such Obligation is not so assumed, subject to

       the
        terms and conditions hereof, the Guarantor hereby irrevocably and
        unconditionally guarantees to each Beneficiary the full payment, when and
        as
        due, of any

       and
        all Obligations to such Beneficiaries. This Guarantee is intended to be for
        the
        Beneficiaries who have received notice hereof.

      

        
          	
                  SECTION
                    4.2.

                	
                  Waiver
                    of Notice and Demand.

                

        

      

       

      The
        Guarantor hereby waives notice of acceptance of this Guarantee and of any
        liability to which it applies or may apply, presentment, demand for payment,
        any
        right to require a proceeding first against the Issuer or any other Person
        before proceeding against the Guarantor, protest, notice of nonpayment, notice
        of dishonor, notice of redemption and all other notices and
        demands.

       

      
        
          	
                  SECTION
                    4.3.

                	
                  Obligations
                    Not Affected.

                

        

      

       

      The
        obligations, covenants, agreements and duties of the Guarantor under this
        Guarantee shall in no way be affected or impaired by reason of the happening
        from time to time of any of the following:

       

      (a)  the
        release or waiver, by operation of law or otherwise, of the performance or
        observance by the Issuer of any express or implied agreement,
        covenant,

       term
        or condition relating to the Capital Securities to be performed or observed
        by
        the Issuer;

       

      (b)  the
        extension of time for the payment by the Issuer of all or any portion of
        the
        Distributions, Redemption Price, Special Redemption Price, Liquidation

       Distribution
        or any other sums payable under the terms of the Capital Securities or the
        extension of time for the performance of any other obligation under,
        arising

       out
        of, or in connection with, the Capital Securities (other than an extension
        of
        time for the payment of the Distributions, Redemption Price, Special
        Redemption

       Price,
        Liquidation Distribution or other sums payable that results from the extension
        of any interest payment period on the Debentures or any extension of
        the

       maturity
        date of the Debentures permitted by the Indenture);

       

      (c)  any
        failure, omission, delay or lack of diligence on the part of the Holders
        to
        enforce, assert or exercise any right, privilege, power or remedy
        conferred

       on
        the Holders pursuant to the terms of the Capital Securities, or any action
        on
        the part of the Issuer granting indulgence or extension of any
        kind;

       

      (d)  the
        voluntary or involuntary liquidation, dissolution, sale of any collateral,
        receivership, insolvency, bankruptcy, assignment for the benefit of

       creditors,
        reorganization, arrangement, composition or readjustment of debt of, or other
        similar proceedings affecting, the Issuer or any of the assets of the
        Issuer;

       

      (e)  any
        invalidity of, or defect or deficiency in, the Capital Securities;

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      (f)  the
        settlement or compromise of any obligation guaranteed hereby or hereby incurred;
        or

       

      (g)  any
        other
        circumstance whatsoever that might otherwise constitute a legal or equitable
        discharge or defense of a guarantor, it being the intent of this

       Section
        4.3 that the obligations of the Guarantor hereunder shall be absolute and
        unconditional under any and all circumstances.

       

      There
        shall be no obligation of the Holders to give notice to, or obtain consent
        of,
        the Guarantor with respect to the happening of any of the
        foregoing.

       

      
        
          	
                  SECTION
                    4.4.

                	
                  Rights
                    of Holders.

                

        

      

       

      (a)  The
        Holders of a Majority in liquidation amount of the Capital Securities have
        the
        right to direct the time, method and place of conducting any

       proceeding
        for any remedy available to the Guarantee Trustee in respect of this Guarantee
        or to direct the exercise of any trust or power conferred upon the

       Guarantee
        Trustee under this Guarantee; provided,
        however,
        that
        (subject to Sections 2.1 and 2.2) the Guarantee Trustee shall have the right
        to
        decline to follow

       any
        such direction if the Guarantee Trustee shall determine that the actions
        so
        directed would be unjustly prejudicial to the Holders not taking part in
        such

       direction
        or if the Guarantee Trustee being advised by legal counsel determines that
        the
        action or proceeding so directed may not lawfully be taken or if
        the

       Guarantee
        Trustee in good faith by its board of directors or trustees, executive committee
        or a trust committee of directors or trustees and/or Responsible
        Officers

       shall
        determine that the action or proceeding so directed would involve the Guarantee
        Trustee in personal liability.

       

      (b)  Any
        Holder of Capital Securities may institute a legal proceeding directly against
        the Guarantor to enforce the Guarantee Trustee's rights under this

       Guarantee,
        without first instituting a legal proceeding against the Issuer, the Guarantee
        Trustee or any other Person. The Guarantor waives any right or remedy to
        

       require
        that any such action be brought first against the Issuer, the Guarantee Trustee
        or any other Person before so proceeding directly against the
        Guarantor.

       

      
        
          	
                  SECTION
                    4.5.

                	
                  Guarantee
                    of Payment.

                

        

      

       

      This
        Guarantee creates a guarantee of payment and not of collection.

      

        
          	
                  SECTION
                    4.6.

                	
                  Subrogation.

                

        

      

       

      The
        Guarantor shall be subrogated to all (if any) rights of the Holders of Capital
        Securities against the Issuer in respect of any amounts paid to such Holders
        by
        the Guarantor under this Guarantee; provided,
        however,
        that
        the Guarantor shall not (except to the extent required by applicable provisions
        of law) be entitled to enforce or exercise any right that it may acquire
        by way
        of subrogation or any indemnity, reimbursement or other agreement, in all
        cases
        as a result of payment under this Guarantee, if, after giving effect to any
        such
        payment, any amounts are due and unpaid under this Guarantee. If any amount
        shall be paid to the Guarantor

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

         

        in
          violation of the preceding sentence, the Guarantor agrees to hold such
          amount in
          trust for the Holders and to pay over such amount to the
          Holders.

      

      

        
          	
                  SECTION
                    4.7.

                	
                  Independent
                    Obligations.

                

        

      

       

      The
        Guarantor acknowledges that its obligations hereunder are independent of
        the
        obligations of the Issuer with respect to the Capital Securities and that
        the
        Guarantor shall be liable as principal and as debtor hereunder to make Guarantee
        Payments pursuant to the terms of this Guarantee notwithstanding the occurrence
        of any event referred to in subsections (a) through (g), inclusive, of Section
        4.3 hereof.

       

      
        
          	
                  SECTION
                    4.8.

                	
                  Enforcement.

                

        

      

       

      A
        Beneficiary may enforce the Obligations of the Guarantor contained in
        Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
        right or remedy to require that any action be brought against the Issuer
        or any
        other person or entity before proceeding against the Guarantor.

       

      The
        Guarantor shall be subrogated to all rights (if any) of any Beneficiary against
        the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor
        under this Guarantee; provided,
        however,
        that
        the Guarantor shall not (except to the extent required by applicable provisions
        of law) be entitled to enforce or exercise any rights that it may acquire
        by way
        of subrogation or any indemnity, reimbursement or other agreement, in all
        cases
        as a result of payment under this Guarantee, if, after giving effect to such
        payment, any amounts are due and unpaid under this Guarantee.

       

      ARTICLE
        V  

      LIMITATION
        OF TRANSACTIONS; SUBORDINATION

       

      
        
          	
                  SECTION
                    5.1.

                	
                  Limitation
                    of Transactions.

                

        

      

       

      So
        long
        as any Capital Securities remain outstanding, if (a) there shall have occurred
        and be continuing an Event of Default or (b) the Guarantor shall have selected
        an Extension Period as provided in the Declaration and such period, or any
        extension thereof, shall have commenced and be continuing, then the Guarantor
        may not (x) declare or pay any dividends or distributions on, or redeem,
        purchase, acquire, or make a liquidation payment with respect to, any of
        the
        Guarantor's capital stock 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
        Guarantor that rank pari
        passu
        in all
        respects with or junior in interest to the Debentures (other than (i) payments
        under this Guarantee, (ii) repurchases, redemptions or other acquisitions
        of
        shares of capital stock of the Guarantor (A) in connection with any employment
        contract, benefit plan or other similar arrangement with or for the benefit
        of
        one or more employees, officers, directors, or consultants, (B) in connection
        with a dividend reinvestment or stockholder stock purchase plan or (C) in
        connection with the issuance of capital stock of the Guarantor (or securities
        convertible into or exercisable for such capital stock), as consideration
        in an
        acquisition transaction entered into prior to the occurrence of the Event
        of
        Default or the applicable Extension Period, (iii) as a result of any exchange,
        reclassification, combination or conversion of any class or series of the
        Guarantor's capital stock (or any capital stock of a

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

         

        subsidiary
          of the Guarantor) for any class or series of the Guarantor's capital stock
          or of
          any class or series of the Guarantor's indebtedness for any class or series
          of
          the Guarantor's capital stock, (iv) the purchase of fractional interests
          in
          shares of the Guarantor's capital stock pursuant to the conversion or exchange
          provisions of such capital stock or the security being converted or exchanged,
          (v) any declaration of a dividend in connection with any stockholder's
          rights
          plan, or the issuance of rights, stock or other property under any stockholder's
          rights plan, or the redemption or repurchase of rights pursuant thereto,
          or (vi)
          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).

      

      

        
          	
                  SECTION
                    5.2.

                	
                  Ranking.

                

        

      

       

      This
        Guarantee will constitute an unsecured obligation of the Guarantor and will
        rank
        subordinate and junior in right of payment to all present and future Senior
        Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance
        thereof, each Holder of Capital Securities agrees to the foregoing provisions
        of
        this Guarantee and the other terms set forth herein.

       

      The
        right
        of the Guarantor to participate in any distribution of assets of any of its
        subsidiaries upon any such subsidiary's liquidation or reorganization or
        otherwise is subject to the prior claims of creditors of that subsidiary,
        except
        to the extent the Guarantor may itself be recognized as a creditor of that
        subsidiary. Accordingly, the Guarantor's obligations under this Guarantee
        will
        be effectively subordinated to all existing and future liabilities of the
        Guarantor's subsidiaries, and claimants should look only to the assets of
        the
        Guarantor for payments thereunder. This Guarantee does not limit the incurrence
        or issuance of other secured or unsecured debt of the Guarantor, including
        Senior Indebtedness of the Guarantor, under any indenture or agreement that
        the
        Guarantor may enter into in the future or otherwise.

       

           
        ARTICLE VI  

      TERMINATION

      

        
          	
                  SECTION
                    6.1.

                	
                  Termination.

                

        

      

       

      This
        Guarantee shall terminate as to the Capital Securities (i) upon full payment
        of
        the Redemption Price or the Special Redemption Price, as the case may be,
        of all
        Capital Securities then outstanding, (ii) upon the distribution of all of
        the
        Debentures to the Holders of all of the Capital Securities or (iii) upon
        full
        payment of the amounts payable in accordance with the Declaration upon
        dissolution of the Issuer. This Guarantee will continue to be effective or
        will
        be reinstated, as the case may be, if at any time any Holder of Capital
        Securities must restore payment of any sums paid under the Capital Securities
        or
        under this Guarantee.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

            
        ARTICLE VII  

      INDEMNIFICATION

      

        
          	
                  SECTION
                    7.1.

                	
                  Exculpation.

                

        

      

       

      (a)  No
        Indemnified Person shall be liable, responsible or accountable in damages
        or
        otherwise to the Guarantor or any Covered Person for any loss,

       damage
        or claim incurred by reason of any act or omission of such Indemnified Person
        in
        good faith in accordance with this Guarantee and in a manner that
        such

       Indemnified
        Person reasonably believed to be within the scope of the authority conferred
        on
        such Indemnified Person by this Guarantee or by law, except that an

       Indemnified
        Person shall be liable for any such loss, damage or claim incurred by reason
        of
        such Indemnified Person's negligence or willful misconduct with

       respect to
        such
        acts or omissions.

       

      (b)  An
        Indemnified Person shall be fully protected in relying in good faith upon
        the
        records of the Issuer or the Guarantor and upon such information, 

       opinions,
        reports or statements presented to the Issuer or the Guarantor by any Person
        as
        to matters the Indemnified Person reasonably believes are within such

       other
        Person's professional or expert competence and who, if selected by such
        Indemnified Person, has been selected with reasonable care by such Indemnified
        

       Person,
        including information, opinions, reports or statements as to the value and
        amount of the assets, liabilities, profits, losses, or any other facts pertinent
        to

       the existence
        and amount of assets from which Distributions to Holders of Capital Securities
        might properly be paid.

       

      
        
          	
                  SECTION
                    7.2.

                	
                  Indemnification.

                

        

      

       

      (a)  The
        Guarantor agrees to indemnify each Indemnified Person for, and to hold each
        Indemnified Person harmless against, any and all loss, liability,

       damage,
        claim or expense incurred without negligence or willful misconduct on the
        part
        of the Indemnified Person, arising out of or in connection with the

       acceptance
        or administration of the trust or trusts hereunder, including but not limited
        to
        the costs and expenses (including reasonable legal fees and expenses)
        of

       the
        Indemnified Person defending itself against, or investigating, any claim
        or
        liability in connection with the exercise or performance of any of the
        Indemnified

       Person's
        powers or duties hereunder. The obligation to indemnify as set forth in this
        Section 7.2 shall survive the resignation or removal of the Guarantee
        Trustee

       and
        the termination of this Guarantee.

       

      (b)  Promptly
        after receipt by an Indemnified Person under this Section 7.2 of notice of
        the
        commencement of any action, such Indemnified Person will, if a

       claim
        in respect thereof is to be made against the Guarantor under this Section
        7.2,
        notify the Guarantor in writing of the commencement thereof; but the failure
        so

       to
        notify the Guarantor (i) will not relieve the Guarantor from liability under
        paragraph (a) above unless and to the extent that the Guarantor did not
        otherwise learn

       of
        such action and such failure results in the forfeiture by the Guarantor of
        substantial rights and defenses and (ii) will not, in any event, relieve
        the
        Guarantor from 

       any
        obligations to any Indemnified Person other than the indemnification obligation
        provided in paragraph (a) above. The Guarantor shall be entitled to
        appoint

       counsel
        of the Guarantor's choice at the Guarantor's

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      
        expense
          to represent the Indemnified Person in any action for which indemnification
          is
          sought (in which case the Guarantor shall not thereafter be responsible
          for the
          fees and expenses of any separate counsel retained by the Indemnified Person
          or
          Persons except as set forth below); provided,
          however,
          that
          such counsel shall be satisfactory to the Indemnified Person. Notwithstanding
          the Guarantor's election to appoint counsel to represent the Indemnified
          Person
          in any action, the Indemnified Person shall have the right to employ separate
          counsel (including local counsel), and the Guarantor shall bear the reasonable
          fees, costs and expenses of such separate counsel (and local counsel),
          if (i)
          the use of counsel chosen by the Guarantor to represent the Indemnified
          Person
          would present such counsel with a conflict of interest, (ii) the actual
          or
          potential defendants in, or targets of, any such action include both the
          Indemnified Person and the Guarantor and the Indemnified Person shall have
          reasonably concluded that there may be legal defenses available to it and/or
          other Indemnified Persons which are different from or additional to those
          available to the Guarantor, (iii) the Guarantor shall not have employed
          counsel
          satisfactory to the Indemnified Person to represent the Indemnified Person
          within a reasonable time after notice of the institution of such action
          or (iv)
          the Guarantor shall authorize the Indemnified Person to employ separate
          counsel
          at the expense of the Guarantor. The Guarantor will not, without the prior
          written consent of the Indemnified Persons, settle or compromise or consent
          to
          the entry of any judgment with respect to any pending or threatened claim,
          action, suit or proceeding in respect of which indemnification or contribution
          may be sought hereunder (whether or not the Indemnified Persons are actual
          or
          potential parties to such claim or action) unless such settlement, compromise
          or
          consent includes an unconditional release of each Indemnified Person from
          all
          liability arising out of such claim, action, suit or
          proceeding.

      

       

      

        
          	
                  SECTION
                    7.3.

                	
                  Compensation;
                    Reimbursement of
                    Expenses.

                

        

      

       

      Other
        than as provided in the Fee Agreement of even date herewith between the
        Guarantor, Cohen Bros. & Company and the Guarantee Trustee, the Guarantor
        agrees:

       

      (a)  to
        pay to
        the Guarantee Trustee from time to time such compensation for all services
        rendered by it hereunder as the parties shall agree to from time to

       time
        (which compensation shall not be limited by any provision of law in regard
        to
        the compensation of a trustee of an express trust); and

       

      (b)  except
        as
        otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
        request for all reasonable expenses, disbursements and

       advances
        incurred or made by it in accordance with any provision of this Guarantee
        (including the reasonable compensation and the expenses and
        disbursements

       of
        its agents and counsel), except any such expense, disbursement or advance
        as may
        be attributable to its negligence or willful misconduct.

       

      The
        provisions of this Section 7.3 shall survive the resignation or removal of
        the
        Guarantee Trustee and the termination of this Guarantee.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

            
        ARTICLE VIII  

      MISCELLANEOUS

      

        
          	
                  SECTION
                    8.1.

                	
                  Successors
                    and Assigns.

                

        

      

       

      All
        guarantees and agreements contained in this Guarantee shall bind the successors,
        assigns, receivers, trustees and representatives of the Guarantor and shall
        inure to the benefit of the Holders of the Capital Securities then outstanding.
        Except in connection with any merger or consolidation of the Guarantor with
        or
        into another entity or any sale, transfer or lease of the Guarantor's assets
        or
        capital stock to another entity, in each case to the extent permitted under
        the
        Indenture, the Guarantor may not assign its rights or delegate its obligations
        under this Guarantee without the prior approval of the Holders of not less
        than
        a Majority in liquidation amount of the Capital Securities.

       

      
        
          	
                  SECTION
                    8.2 .

                	
                  Amendments.

                

        

      

       

      Except
        with respect to any changes that do not adversely affect the rights of Holders
        of the Capital Securities in any material respect (in which case no consent
        of
        Holders will be required), this Guarantee may be amended only with the prior
        approval of the Holders of not less than a Majority in liquidation amount
        of the
        Capital Securities. The provisions of the Declaration with respect to amendments
        thereof shall apply equally with respect to amendments of the
        Guarantee.

       

      
        
          	
                  SECTION
                    8.3.

                	
                  Notices.

                

        

      

       

      All
        notices provided for in this Guarantee shall be in writing, duly signed by
        the
        party giving such notice, and shall be delivered, telecopied or mailed by
        first
        class mail, as follows:

       

      (a)  If
        given
        to the Guarantee Trustee, at the Guarantee Trustee's mailing address set
        forth
        below (or such other address as the Guarantee Trustee may 

       give notice
        of
        to the Holders of the Capital Securities):

       

      LaSalle
        Bank National Association

      135
        S.
        LaSalle Street, Suite 1511

      Chicago,
        Illinois 60603

      Attention:
        CDO Trust Services Group

      PEBK
        Capital Trust II

      Telecopy:
        (312) 904-0524

      Telephone:
        (312) 904-0283

      

      (b)  If
        given
        to the Guarantor, at the Guarantor's mailing address set forth below (or
        such
        other address as the Guarantor may give notice of to the Holders

       of
        the Capital Securities and to the Guarantee Trustee):

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

      Peoples
        Bancorp of North Carolina, Inc.

      518
        West
        C Street

      Newton,
        North Carolina 28658

      Attention:
        A. Joseph Lampron

      Telecopy:
        (828) 465-6780

      Telephone:
        (828) 464-5620

      

      (c)  If
        given
        to any Holder of the Capital Securities, at the address set forth on the
        books
        and records of the Issuer.

       

      All
        such
        notices shall be deemed to have been given when received in person, telecopied
        with receipt confirmed, or mailed by first class mail, postage prepaid, except
        that if a notice or other document is refused delivery or cannot be delivered
        because of a changed address of which no notice was given, such notice or
        other
        document shall be deemed to have been delivered on the date of such refusal
        or
        inability to deliver.

       

      
        
          	
                  SECTION
                    8.4.

                	
                  Benefit.

                

        

      

       

      This
        Guarantee is solely for the benefit of the Holders of the Capital Securities
        and, subject to Section 2.1(a), is not separately transferable from the Capital
        Securities.

       

      
        
          	
                  SECTION
                    8.5.

                	
                  Governing
                    Law.

                

        

      

       

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

       

      
        
          	
                  SECTION
                    8.6.

                	
                  Counterparts.

                

        

      

       

      This
        Guarantee may contain more than one counterpart of the signature page and
        this
        Guarantee may be executed by the affixing of the signature of the Guarantor
        and
        the Guarantee Trustee to any of such counterpart signature pages. All of
        such
        counterpart signature pages shall be read as though one, and they shall have
        the
        same force and effect as though all of the signers had signed a single signature
        page.

       

       

       

      
 

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      THIS
        GUARANTEE is executed as of the day and year first above written.

       

      
        

          
            	 	
                    PEOPLES
                      BANCORP OF NORTH 

                  	 
	 	
                    CAROLINA,
                      INC., 

                  	 
	 	
                    as
                      Guarantor

                  	 
	 	 	 	 
	 	By:	/s/
                    A. Joseph Lampron	 
	 	
                    Name:

                  	A.
                    Joseph Lampron	
                     

                  
	 	Title:	
                    Executive
                      Vice President, Chief Financial

                  	 
	 	 	
                    Officer,
                      and Corporate Treasurer

                  	 

          

        

      

       

      
         

        

          
            	 	
                    LASALLE
                      BANK NATIONAL

                  	 
	 	
                    ASSOCIATION,
                      as Guarantee Trustee

                  	 
	 	
                     

                  	 
	 	
                    By:

                  	/s/
                    Suzanne Smith	
                     

                  
	 	Name	
                    Suzanne
                      Smith

                  	 
	 	Title	
                    Vice
                      President

                  	 

          

        

      

       

       

       

           

      

      

       

       

      
        
          
          

        

        
          -18-Exhibit (10)(m)

    

     

    

     

    PEOPLES
      BANCORP OF NORTH CAROLINA, INC.

     

    as
      Company

     

     

    

     

    INDENTURE

    Dated
      as
      of June 28, 2006

     

     

    LASALLE
      BANK NATIONAL ASSOCIATION

    As
      Trustee

     

     

    JUNIOR
      SUBORDINATED DEBT SECURITIES 

    Due
      September 15, 2036

     

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	 	 	
                TABLE
                  OF CONTENTS

              	 
	 	 	
                 Pa

              	ge
	 	 	 	 
	
                 

              	 	
                ARTICLE
                  I

              	
                 

              
	
                 

              	
                 

              	
                DEFINITIONS

              	 
	 	 	 	 
	SECTION
                1.01.	 	
                Definitions
                  ....................................................................................................................................................................................................................

              	1
	 	 	
                 

              	
                 

              
	 	 	
                ARTICLE
                  II

              	
                 

              
	
                 

              	
                 

              	
                DEBT
                  SECURITIES 

              	 
	 	 	
                 

              	
                 

              
	SECTION
                2.01.	 	Authentication
                and Dating
                ........................................................................................................................................................................................	9
	 	 	 	 
	SECTION
                2.02.	 	
                Form
                  of Trustee's Certificate of Authentication
                  .....................................................................................................................................................

              	9
	 	 	
                 

              	
                 

              
	SECTION
                2.03.	 	Form
                and Denomination of Debt Securities
                ............................................................................................................................................................	10
	 	 	 	 
	SECTION
                2.04.	 	
                Execution
                  of Debt Securities
                  ......................................................................................................................................................................................

              	10
	 	 	
                 

              	
                 

              
	SECTION
                2.05.	 	Exchange
                and Registration of Transfer of Debt Securities
                ...................................................................................................................................	10
	 	 	 	 
	SECTION
                2.06.	 	
                Mutilated,
                  Destroyed, Lost or Stolen Debt Securities
                  ...........................................................................................................................................

              	
                13

              
	 	 	 	 
	
                SECTION
                  2.07.

              	 	
                Temporary
                  Debt Securities
                  ........................................................................................................................................................................................

              	14
	 	 	
                 

              	
                 

              
	SECTION
                2.08.	 	Payment
                of Interest
                .....................................................................................................................................................................................................	15
	
                 

              	 	
                 

              	
                 

              
	SECTION
                2.09.	 	Cancellation
                of Debt Securities Paid, etc.
                ................................................................................................................................................................	16
	
                 

              	 	
                 

              	
                 

              
	SECTION
                2.10.	 	Computation
                of Interest
                .............................................................................................................................................................................................	16
	
                 

              	
                 

              	 	 
	SECTION
                2.11.	 	Extension
                of Interest Payment Period
                ......................................................................................................................................................................	18
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  2.12.

              	 	
                CUSIP
                  Numbers
                  ...........................................................................................................................................................................................................

              	
                19

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  2.13.

              	 	
                Income
                  Tax
                  Certification ............................................................................................................................................................................................

              	
                19

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  2.14.

              	 	
                Global
                  Debentures
                  ......................................................................................................................................................................................................

              	
                19

              
	
                 

              	 	 	
                 

              
	
                 

              	 	
                ARTICLE
                  III

              	
                 

              
	
                 

              	
                 

              	
                PARTICULAR
                  COVENANTS OF THE COMPANY

              	
                 

              
	 	 	 	 
	SECTION
                3.01.	 	Payment
                of Principal, Premium and Interest; Agreed Treatment of	
              
	 	 	the
                Debt Securities
                ......................................................................................................................................................................................................	21
	 	 	 	 
	SECTION
                3.02.	 	Offices
                for Notices and Payments, etc.
                ....................................................................................................................................................................	22
	 	 	 	 
	SECTION
                3.03.	 	Appointments
                to Fill Vacancies in Trustee's Office
                ...............................................................................................................................................	23
	 	 	 	 
	SECTION
                3.04.	 	Provision
                as to Paying Agent
                ...................................................................................................................................................................................	23
	 	 	 	 
	SECTION
                3.05.	 	Certificate
                to Trustee
                ..................................................................................................................................................................................................	24
	 	 	 	 
	SECTION
                3.06.	 	Additional
                Interest
                ......................................................................................................................................................................................................	24
	 	 	 	 
	SECTION
                3.07.	 	Compliance
                with Consolidation Provisions
                ............................................................................................................................................................	25
	 	 	 	 
	SECTION
                3.08.	 	Limitation
                on Dividends
                .............................................................................................................................................................................................	25
	 	 	 	 
	SECTION
                3.09.	 	Covenants
                as to the Trust
                .........................................................................................................................................................................................	25
	 	 	 	 
	
                 

              	
                 

              	
                ARTICLE
                  IV

              	 
	 	 	
                LISTS
                  AND REPORTS BY THE COMPANY AND THE TRUSTEE

              	 

      

    

     

     

    
      
        
        

      

      
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                  OF CONTENTS

              	 
	
                 

              	
                 

              	
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	SECTION
                4.01.	 	Securityholders'
                Lists
                .................................................................................................................................................................................................	26
	 	 	
                 

              	 
	SECTION
                4.02.	 	
                Preservation
                  and Disclosure of Lists
                  ......................................................................................................................................................................

              	
                26

              
	 	 	 	 
	SECTION
                4.03.	 	
                Financial
                  and Other Information
                  ...............................................................................................................................................................................
                  

              	27
	 	 	
                 

              	
                 

              
	
                 

              	
                 

              	
                ARTICLE
                  V

              	 
	 	 	
                REMEDIES
                  OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF  

              	 
	 	 	
                DEFAULT

              	
                 

              
	 	 	 	 
	SECTION
                5.01.	 	
                Events
                  of Default
                  ........................................................................................................................................................................................................

              	28
	 	 	
                 

              	
                 

              
	SECTION
                5.02.	 	Payment
                of Debt Securities on Default; Suit Therefor
                ..........................................................................................................................................	30
	 	 	
                 

              	
                 

              
	SECTION
                5.03.	 	Application
                of Moneys Collected by Trustee
                .......................................................................................................................................................	31
	
                 

              	 	
                 

              	 
	SECTION
                5.04.	 	
                Proceedings
                  by Securityholders
                  ..............................................................................................................................................................................

              	
                32

              
	 	 	 	 
	
                SECTION
                  5.05.

              	 	
                Proceedings
                  by Trustee
                  .............................................................................................................................................................................................

              	
                32

              
	 	 	 	 
	
                SECTION
                  5.06.

              	 	
                Remedies
                  Cumulative and Continuing
                  .....................................................................................................................................................................

              	
                33

              
	 	 	 	 
	
                SECTION
                  5.07.

              	
                 

              	Direction
                of Proceedings and Waiver of Defaults by Majority of 	 
	 	 	Securityholders
                ...........................................................................................................................................................................................................	33
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  5.08.

              	 	
                Notice
                  of Defaults
                  ......................................................................................................................................................................................................

              	
                34

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION 5.09.

              	 	
                Undertaking
                  to Pay Costs
                  .........................................................................................................................................................................................

              	
                34

              
	
                 

              	 	
                 

              	
                 

              
	
                 

              	 	
                ARTICLE
                  VI

              	
                 

              
	
                 

              	
                 

              	
                CONCERNING
                  THE TRUSTEE

              	
                 

              
	
                 

              	 	 	
                 

              
	SECTION
                6.01.	 	Duties
                and Responsibilities of Trustee
                ...................................................................................................................................................................	35
	 	 	 	 
	SECTION
                6.02.	 	Reliance
                on Documents, Opinions,
                etc.....................................................................................................................................................................	36
	 	 	 	 
	SECTION
                6.03.	 	No
                Responsibility for Recitals,
                etc............................................................................................................................................................................	37
	 	 	 	 
	SECTION
                6.04.	 	Trustee,
                Authenticating Agent, Paying Agents, Transfer Agents or	 
	 	 	Registrar
                May Own Debt Securities
                .........................................................................................................................................................................	37
	 	 	 	 
	SECTION
                6.05.	 	Moneys
                to be Held in Trust
                ......................................................................................................................................................................................	37
	 	 	 	 
	SECTION
                6.06.	 	Compensation
                and Expenses of Trustee
                .................................................................................................................................................................	38
	 	 	 	 
	SECTION
                6.07.	 	Officers'
                Certificate as Evidence
                ................................................................................................................................................................................	39
	 	 	 	 
	SECTION
                6.08.	 	Eligibility
                of Trustee
                ....................................................................................................................................................................................................	39
	 	 	 	 
	SECTION
                6.09.	 	Resignation
                or Removal of Trustee, Calculation Agent, Paying	 
	 	 	Agent
                or Debt Security Registrar
                .............................................................................................................................................................................	39
	 	 	 	 
	SECTION
                6.10.	 	Acceptance
                by Successor
                .........................................................................................................................................................................................	41
	 	 	 	 
	SECTION
                6.11.	 	Succession
                by Merger, etc
                ........................................................................................................................................................................................	42
	 	 	 	 
	SECTION
                6.12.	 	Authenticating
                Agents
                ..............................................................................................................................................................................................	42

      

    

     

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

     

    

      
        	 	 	
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                  OF CONTENTS

              	 
	
                 

              	
                 

              	
                 (CONTINUED)

              	 
	
                 

              	
                 

              	 	
                 

              
	 	 	
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              	ge
	
                 

              	
                 

              	
                ARTICLE
                  VII

              	 
	
                 

              	 	
                CONCERNING
                  THE SECURITYHOLDERS

              	 
	 	 	 	 
	SECTION
                7.01.	 	
                Action
                  by Securityholders
                  ......................................................................................................................................................................................
                  

              	43
	 	 	
                 

              	
                 

              
	SECTION
                7.02.	 	Proof
                of Execution by Securityholders
                .................................................................................................................................................................	44
	 	 	
                 

              	 
	SECTION
                7.03.	 	
                Who
                  Are Deemed Absolute Owners
                  ....................................................................................................................................................................

              	
                44

              
	 	 	 	 
	SECTION
                7.04.	 	
                Debt
                  Securities Owned by Company Deemed Not Outstanding
                  ......................................................................................................................

              	44
	 	 	
                 

              	
                 

              
	SECTION
                7.05.	 	Revocation
                of Consents; Future Securityholders Bound
                ..................................................................................................................................	45
	 	 	
                 

              	 
	
              	 	
                ARTICLE
                  VIII

              	
                 

              
	
                 

              	
                 

              	
                SECURITYHOLDERS'
                  MEETINGS

              	 
	 	 	
                 

              	
                 

              
	SECTION
                8.01.	 	Purpose
                of Meetings
                ..................................................................................................................................................................................................	45
	 	 	 	 
	
                SECTION
                  8.02.

              	 	
                Call
                  of Meetings by Trustee
                  ......................................................................................................................................................................................

              	46
	 	 	
                 

              	
                 

              
	SECTION
                8.03.	 	Call
                of Meetings by Company or Securityholders
                .................................................................................................................................................	46
	 	 	 	 
	
                SECTION
                  8.04.

              	 	
                Qualifications
                  for Voting
                  ............................................................................................................................................................................................

              	
                46

              
	 	 	 	 
	
                SECTION
                  8.05.

              	 	
                Regulations
                  ..................................................................................................................................................................................................................

              	
                46

              
	 	 	 	 
	
                SECTION
                  8.06.

              	
                 

              	Voting
                ...........................................................................................................................................................................................................................	47
	 	 	 	 
	
                SECTION
                  8.07.

              	 	
                Quorum;
                  Actions
                  ........................................................................................................................................................................................................

              	
                47

              
	 	 	 	 
	
                SECTION
                  8.08.

              	 	
                Written
                  Consent Without a Meeting
                  ......................................................................................................................................................................

              	
                48

              
	 	 	 	 
	
                 

              	
                 

              	
                ARTICLE
                  IX

              	 
	 	 	
                SUPPLEMENTAL
                  INDENTURES

              	 
	 	 	 	 
	
                SECTION
                  9.01.

              	 	
                Supplemental
                  Indentures without Consent of Securityholders
                  ...........................................................................................................................

              	
                49

              
	 	 	 	 
	
                SECTION
                  9.02.

              	 	
                Supplemental
                  Indentures with Consent of Securityholders
                  .................................................................................................................................

              	
                50

              
	 	 	 	 
	
                SECTION
                  9.03.

              	 	
                Effect
                  of Supplemental Indentures
                  ...........................................................................................................................................................................

              	
                51

              
	 	 	 	 
	
                SECTION
                  9.04.

              	 	
                Notation
                  on Debt Securities
                  ......................................................................................................................................................................................

              	
                51

              
	 	 	 	 
	
                SECTION
                  9.05.

              	 	Evidence
                of Compliance of Supplemental Indenture to be 	
                 

              
	
                 

              	 	furnished
                to Trustee
                ...................................................................................................................................................................................................	
                51

              
	 	 	 	 
	
                 

              	
                 

              	
                ARTICLE
                  X

              	 
	
                 

              	 	
                REDEMPTION
                  OF SECURITIES

              	 
	 	 	 	 
	SECTION
                10.01.	 	Optional
                Redemption
                ..................................................................................................................................................................................................	52
	 	 	 	 
	SECTION
                10.02.	 	Special
                Event Redemption
                .........................................................................................................................................................................................	52
	 	 	 	 
	SECTION
                10.03.	 	Notice
                of Redemption; Selection of Debt Securities
                .............................................................................................................................................	52
	 	 	 	 
	SECTION
                10.04.	 	Payment
                of Debt Securities Called for Redemption
                ...............................................................................................................................................	53
	 	 	 	 
	 	 	
                ARTICLE
                  XI

              	
                 

              
	
                 

              	
                 

              	
                CONSOLIDATION,
                  MERGER, SALE, CONVEYANCE AND LEASE

              	
                 

              

      

    

     

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

     

    
      
        	 	 	
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                  OF CONTENTS

              	 
	 	 	
                 (CONTINUED)

              	 
	
                 

              	
                 

              	 	
                 

              
	 	 	
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              	ge
	 	 	 	 
	
                SECTION
                  11.01.

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

              	53
	 	 	 	 
	SECTION
                11.02.	 	
                Successor
                  Entity to be
                  Substituted ......................................................................................................................................................
                  

              	54
	 	 	
                 

              	
                 

              
	SECTION
                11.03.	 	Opinion
                of Counsel to be Given to Trustee
                ..................................................................................................................................................	55
	 	 	 	 
	 	 	
                ARTICLE
                  XII 

              	 
	 	 	
                SATISFACTION
                  AND DICHARGE OF INDENTURE

              	
                 

              
	 	 	 	 
	SECTION
                12.01.	 	
                Discharge
                  of
                  Indenture ...........................................................................................................................................................................................
                  

              	55
	 	 	 	 
	SECTION
                12.02.	 	
                Deposited
                  Moneys to be Held in Trust by Trustee
                  ............................................................................................................................................

              	
                56

              
	 	 	 	 
	SECTION
                12.03.	 	
                Paying
                  Agent to Repay Moneys
                  Held .................................................................................................................................................................
                  

              	56
	 	 	
                 

              	
                 

              
	SECTION
                12.04.	 	Return
                of Unclaimed Moneys
                ................................................................................................................................................................................	56
	 	 	 	 
	
              	 	
                ARTICLE
                  XIII

              	
                 

              
	
                 

              	
                 

              	
                IMMUNITY
                  OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

              	 
	 	 	 	 
	
                SECTION
                  13.01.

              	 	
                Indenture
                  and Debt Securities Solely Corporate Obligations
                  ..........................................................................................................................

              	56
	 	 	
                 

              	
                 

              
	
                 

              	 	
                ARTICLE
                  XIV

              	 
	
                 

              	 	
                MISCELLANEOUS
                  PROVISIONS

              	
                 

              
	 	 	 	 
	
                SECTION
                  14.01.

              	 	
                Successors
                  ...................................................................................................................................................................................................................

              	
                57

              
	 	 	 	 
	
                SECTION
                  14.02.

              	
                 

              	Official
                Acts by Successor Entity
                ............................................................................................................................................................................	57
	 	 	 	 
	
                SECTION
                  14.03.

              	 	
                Surrender
                  of Company Powers
                  .................................................................................................................................................................................

              	
                57

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  14.04.

              	 	
                Addresses
                  for Notices, etc
                  .......................................................................................................................................................................................

              	
                57

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  14.05.

              	 	
                Governing
                  Law
                  ............................................................................................................................................................................................................

              	
                58

              
	
                 

              	 	
                 

              	
                 

              
	
                SECTION
                  14.06.

              	 	Evidence
                of Compliance with Conditions Precedent
                ............................................................................................................................................	
                58

              
	
                 

              	 	 	
                 

              
	SECTION
                14.07.	 	Non-Business
                Days
                ...................................................................................................................................................................................................	58
	 	 	 	 
	SECTION
                14.08.	 	Table
                of Contents, Headings, etc
                .............................................................................................................................................................................	58
	 	 	 	 
	SECTION
                14.09.	 	Execution
                in Counterparts
                .........................................................................................................................................................................................	59
	 	 	 	 
	SECTION
                14.10.	 	Severability
                ..................................................................................................................................................................................................................	59
	 	 	 	 
	SECTION
                14.11.	 	Assignment
                .................................................................................................................................................................................................................	59
	 	 	 	 
	SECTION
                14.12.	 	Acknowledgment
                of Rights
                ......................................................................................................................................................................................	59
	 	 	 	 
	
                 

              	 	
                ARTICLE
                  XV

              	 
	
                 

              	 	
                SUBORDINATION
                  OF DEBT SECURITIES

              	 
	 	 	 	 
	SECTION
                15.01.	 	Agreement
                to Subordinate
                ........................................................................................................................................................................................	60
	 	 	 	 
	SECTION
                15.02.	 	Default
                on Senior Indebtedness
                ...............................................................................................................................................................................	60
	 	 	 	 
	SECTION
                15.03.	 	Liquidation;
                Dissolution; Bankruptcy
                .....................................................................................................................................................................	60
	 	 	 	 
	SECTION
                15.04.	 	Subrogation
                .................................................................................................................................................................................................................	62

      

    

     

     

    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    

     

     

    

      
        	 	 	
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                  OF CONTENTS

              	 
	
                 

              	
                 

              	
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                SECTION
                  15.05.

              	 	
                Trustee
                  to Effectuate Subordination
                  ........................................................................................................................................................................

              	63
	 	 	 	 
	SECTION
                15.06.	 	
                Notice
                  by the Company
                  ..............................................................................................................................................................................................

              	63
	 	 	
                 

              	
                 

              
	SECTION
                15.07.	 	Rights
                of the Trustee, Holders of Senior Indebtedness
                .......................................................................................................................................	63 
	 	 	
                 

              	 
	SECTION
                15.08.	 	
                Subordination
                  May Not Be Impaired
                  .......................................................................................................................................................................

              	
                64

              
	 	 	 	 
	 	 	 	 
	EXHIBITS	 	
                 

              	
                 

              
	 	 	 	 
	EXHIBIT
                A	 	FORM
                OF DEBT SECURITY	 
	 	 	 	 

      

    

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
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    THIS
      INDENTURE, dated as of June 28, 2006, between Peoples Bancorp of North Carolina,
      Inc., a bank holding company incorporated in North Carolina (hereinafter
      sometimes called the "Company"), and LaSalle Bank National Association as
      trustee (hereinafter sometimes called the "Trustee").

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      for its lawful corporate purposes, the Company has duly authorized the issuance
      of its Junior Subordinated Debt Securities due September 15, 2036 (the "Debt
      Securities") under this Indenture and to provide, among other things, for the
      execution and authentication, delivery and administration thereof, the Company
      has duly authorized the execution of this Indenture.

     

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

     

          
      ARTICLE I  

     

    DEFINITIONS

     

    SECTION
      1.01.   Definitions.

     

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

     

      "Additional
      Interest" shall have the meaning set forth in Section 3.06.

     

      "Additional
      Provisions" shall have the meaning set forth in Section 15.01.

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      "Board
      Resolution" means a copy of a resolution certified by the Secretary or an
      Assistant Secretary of the Company to have been duly adopted by the Board of
      

    Directors
      and to be in full force and effect on the date of such certification and
      delivered to the Trustee.

     

      "Business
      Day" means any day other than a Saturday, Sunday or any other day on which
      banking institutions in Wilmington, Delaware, New York City or the

     city of
      the
      Principal Office of the Trustee or the Company are permitted or required by
      any
      applicable law or executive order to close.

     

      "Calculation
      Agent" means the Person identified as "Trustee" in the first paragraph hereof
      with respect to the Debt Securities and the Institutional Trustee
      with

     respect
      to the Trust Securities.

     

      "Capital
      Securities" means undivided beneficial interests in the assets of the Trust
      which are designated as "TP Securities" and rank pari passu with Common

    Securities
      issued by the Trust; provided, however, that if an Event of Default (as defined
      in the Declaration) has occurred and is continuing, the rights of holders
      of

    such
      Common Securities to payment in respect of distributions and payments upon
      liquidation, redemption and otherwise are subordinated to the rights of holders
      of 

    such
      Capital Securities.

     

      "Capital
      Securities Guarantee" means the guarantee agreement that the Company will enter
      into with LaSalle Bank National Association or other Persons that

    operates
      directly or indirectly for the benefit of holders of Capital Securities of
      the
      Trust.

     

      "Capital
      Treatment Event" means, if the Company is organized and existing under the
      laws
      of the United States or any state thereof or the District of
      Columbia,

    the
      receipt
      by the Company and the Trust of an Opinion of Counsel experienced in such
      matters to the effect that, as a result of (a) any amendment to, or change
      in,

    the
      laws,
      rules or regulations of the United States or any political subdivision thereof
      or therein, or any rules, guidelines or policies of any applicable regulatory
      

    authority
      for
      the
      Company or (b) any official or administrative pronouncement or action or
      decision interpreting or applying such laws, rules or regulations,
      which

    amendment
      or
      change
      is effective or which pronouncement, action or decision is announced on or
      after
      the date of original issuance of the Debt Securities, there is

    more
      than
      an insubstantial
      risk that, within 90 days of the receipt of such opinion, the aggregate
      Liquidation Amount of the Capital Securities will not be eligible
      to

    be
      treated by the Company
      as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital
      adequacy guidelines of the Federal Reserve (or any 

    successor
      regulatory authority
      with jurisdiction over bank or financial holding companies), as then in effect
      and applicable to the Company (or if the Company is 

    not
      a
      bank holding company,
      such guidelines applied to the Company as if the Company were subject to such
      guidelines); provided, however, that the inability of 

    the
      Company to treat all
      or
      any portion of the aggregate Liquidation Amount of the Capital Securities as
      Tier 1 Capital shall not constitute the basis for a Capital

    Treatment
      Event, if such inability
      results from the Company having cumulative preferred stock, minority interests
      in consolidated subsidiaries, or any other class of 

    security
      or interest which the
      Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1
      Capital treatment in excess of the amount which may now or

    hereafter
      qualify for treatment
      as Tier 1 Capital under applicable capital adequacy guidelines; provided
      further, however, that the distribution of the Debt Securities in

    connection
      with the liquidation
      of

     

    
      
        
        

      

      
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     the
      Trust by the Company shall not in and of itself constitute a Capital Treatment
      Event unless such liquidation shall have occurred in connection with a Tax
      Event

    or
      an
      Investment Company Event.

     

      "Certificate"
      means a certificate signed by any one of the principal executive officer, the
      principal financial officer or the principal accounting officer of
      the

     Company.

     

      "Common
      Securities" means undivided beneficial interests in the assets of the Trust
      which are designated as "Common Securities" and rank pari passu
      with

     Capital
      Securities issued by the Trust; provided, however, that if an Event of Default
      (as defined in the Declaration) has occurred and is continuing, the rights
      of

     holders
      of such Common Securities to payment in respect of distributions and payments
      upon liquidation, redemption and otherwise are subordinated to the
      rights

    of holders
      of such Capital Securities.

     

      "Company"
      means Peoples Bancorp of North Carolina, Inc., a bank holding company
      incorporated in North Carolina, and, subject to the provisions of Article
      XI,

     shall
      include its successors and assigns.

     

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

     

      "Debt
      Security Register" has the meaning specified in Section 2.05.

     

      "Declaration"
      means the Amended and Restated Declaration of Trust of the Trust dated as of
      June 28, 2006, as amended or supplemented from time to time.

     

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

     

      "Defaulted
      Interest" has the meaning set forth in Section 2.08.

     

      "Deferred
      Interest" has the meaning set forth in Section 2.11.

     

      "Depositary"
      means an organization registered as a clearing agency under the Exchange Act
      that is designated as Depositary by the Company or any successor 

    thereto.
      DTC will be the initial Depositary.

     

      "Depositary
      Participant" means a broker, dealer, bank, other financial institution or other
      Person for whom from time to time the Depositary effects book-entry

    transfers
      and pledges of securities deposited with the Depositary.

     

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

     

      "Event
      of
      Default" means any event specified in Section 5.01, which has continued for
      the
      period of time, if any, and after the giving of the notice, if any,
      therein

     designated.

     

      "Extension
      Period" has the meaning set forth in Section 2.11.

     

    
      
        
        

      

      
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      "Federal
      Reserve" means the Board of Governors of the Federal Reserve System.

     

      "Global
      Debenture" means a security that evidences all or part of the Debt Securities,
      the ownership and transfers of which shall be made through book entries
      by

     a
      Depositary.

     

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

     

          
      "Initial Purchaser" means the initial purchaser of the Capital
      Securities.

     

      "Institutional
      Trustee" has the meaning set forth in the Declaration.

     

      "Interest
      Payment Date" means March 15, June 15, September 15 and December 15 of each
      year, commencing on September 15, 2006, during the term of this

     Indenture.

     

         
      "Interest Payment Period" means the period from and including an Interest
      Payment Date, or in the case of the first Interest Payment Period, the original
      date

     of issuance
      of the Debt Securities, to, but excluding, the next succeeding Interest Payment
      Date or, in the case of the last Interest Payment Period, the
      Redemption

     Date,
      Special Redemption Date or Maturity Date, as the case may be.

     

      "Interest
      Rate" means, with respect to any Interest Payment Period, a per annum rate
      of
      interest, equal to LIBOR, as determined on the LIBOR Determination
      Date

     for
      such Interest Payment Date, plus 1.63%; provided, however, that the Interest
      Rate for any Interest Payment Period may not exceed the highest rate permitted
      by 

     New
      York law, as the same may be modified by United States law of general
      applicability.

     

      "Investment
      Company Event" means the receipt by the Company and the Trust of an Opinion
      of
      Counsel experienced in such matters to the effect that, as a result

    of
      a
      change in law or regulation or written change in interpretation or application
      of law or regulation by any legislative body, court, governmental agency
      or

    regulatory
      authority, there is more than an insubstantial risk that the Trust is or, within
      90 days of the date of such opinion will be, considered an
      "investment

    company"
      that is required to be registered under the Investment Company Act of 1940,
      as
      amended, which change or prospective change becomes effective or
      would

    become
      effective, as the case may be, on or after the date of the original issuance
      of
      the Debt Securities.

     

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

     

      "LIBOR
      Banking Day" has the meaning set forth in Section 2.10(b)(1).

     

      "LIBOR
      Business Day" has the meaning set forth in Section 2.10(b)(1).

     

      "LIBOR
      Determination Date" has the meaning set forth in Section 2.10(b).

     

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

     

    
      
        
        

      

      
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      "Maturity
      Date" means September 15, 2036.

     

      "Notice"
      has the meaning set forth in Section 2.11.

     

      "Officers'
      Certificate" means a certificate signed by the Chairman of the Board, the Vice
      Chairman, the President or any Vice President, and by the Chief
      Financial

    Officer,
      the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant
      Comptroller, the Secretary or an Assistant Secretary of the Company, and
      delivered to 

    the
      Trustee.
      Each such certificate shall include the statements provided for in Section
      14.06
      if and to the extent required by the provisions of such Section.

     

      "Opinion
      of Counsel" means an opinion in writing signed by legal counsel, who may be
      an
      employee of or counsel to the Company, or may be other counsel 

    reasonably
      satisfactory to the Trustee. Each such opinion shall include the statements
      provided for in Section 14.06 if and to the extent required by the provisions
      of

    such
      Section.

     

      "OTS"
      means the Office of Thrift Supervision and any successor federal agency that
      is
      primarily responsible for regulating the activities of savings and
      loan

     holding
      companies.

     

      "Outstanding"
      means, when used with reference to Debt Securities, subject to the provisions
      of
      Section 7.04, as of any particular time, all Debt Securities

     authenticated
      and delivered by the Trustee or the Authenticating Agent under this Indenture,
      except

     

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

     

    (b)  Debt
      Securities, or portions thereof, for the payment or redemption of which moneys
      in the necessary amount shall have been deposited in trust with 

     
      the Trustee
      or with any Paying Agent (other than the Company) or shall have been set aside
      and segregated in trust by the Company (if the Company shall act as
      its

      own Paying
      Agent); provided,
      that,
      if such Debt Securities, or portions thereof, are to be redeemed prior to
      maturity thereof, notice of such redemption shall have

      been given
      as
      provided in Articles X and XIV or provision satisfactory to the Trustee shall
      have been made for giving such notice; and

     

    (c)  Debt
      Securities paid pursuant to Section 2.06 or in lieu of or in substitution for
      which other Debt Securities shall have been authenticated and

     
      delivered pursuant
      to the terms of Section 2.06 unless proof satisfactory to the Company and the
      Trustee is presented that any such Debt Securities are held 

      
      by bona fide holders in due course.

     

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

     

      "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 Debt Security means every previous Debt Security
      evidencing all or a portion of the same debt as that evidenced by

     such particular
      Debt Security; and, for the purposes of this definition, any Debt Security
      authenticated and delivered

     

    
      
        
        

      

      
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     under
      Section 2.06 in lieu of a lost, destroyed or stolen Debt Security shall be
      deemed to evidence the same debt as the lost, destroyed or stolen Debt
      Security.

     

      "Principal
      Office of the Trustee" means the office of the Trustee, at which at any
      particular time its corporate trust business shall be principally
      administered,

     which
      at all times shall be located within the United States and at the time of the
      execution of this Indenture shall be 135 S. LaSalle Street, Suite 1511, Chicago,
      Illinois

     60603,
      Attn: CDO Trust Services Group - PEBK Capital Trust II.

     

      "Redemption
      Date" has the meaning set forth in Section 10.01.

     

      "Redemption
      Price" means 100% of the principal amount of the Debt Securities being redeemed
      plus accrued and unpaid interest on such Debt Securities to the

     Redemption
      Date.

     

      "Responsible
      Officer" means, with respect to the Trustee, any officer within the CDO Trust
      Services Group in the Principal Office of the Trustee with direct

     responsibility
      for the administration of the Indenture, including any vice-president, any
      assistant vice-president, any secretary, any assistant secretary, the treasurer,
      

     any
      assistant treasurer, any trust officer or other officer of the Principal Office
      of the Trustee customarily performing functions similar to those performed
      by
      any of 

     the
      above designated officers and also means, with respect to a particular corporate
      trust matter, any other officer to whom such matter is referred because of
      that

     officer's
      knowledge of and familiarity with the particular subject.

     

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

     

      "Securityholder,"
      "Holder," "holder of Debt Securities" or other similar terms, means any Person
      in whose name at the time a particular Debt Security is registered

     on
      the Debt Security Register.

     

      "Senior
      Indebtedness" means, with respect to the Company, (i) the principal, premium,
      if
      any, and interest in respect of (A) indebtedness of the Company for

     money
      borrowed and (B) indebtedness evidenced by securities, debentures, notes, bonds
      or other similar instruments issued by the Company; (ii) all capital
      lease

     obligations
      of the Company; (iii) all obligations of the Company issued or assumed as the
      deferred purchase price of property, all conditional sale obligations of
      the 

     Company
      and all obligations of the Company under any title retention agreement (but
      excluding trade accounts payable arising in the ordinary course of business);
      

     (iv)
      all obligations of the Company for the reimbursement of any letter of credit,
      any banker's acceptance, any security purchase facility, any repurchase
      agreement or 

     similar
      arrangement, any interest rate swap, any other hedging arrangement, any
      obligation under options or any similar credit or other transaction; (v) all
      obligations

     of
      the type referred to in clauses (i) through (iv) above of other Persons for
      the
      payment of which the Company is responsible or liable as obligor, guarantor
      or

     otherwise;
      and (vi) all obligations of the type referred to in clauses (i) through (v)
      above of other Persons secured by any lien on any property or asset of
      the

     Company
      (whether or not such obligation is assumed by the Company), whether incurred
      on
      or prior to the date of this Indenture or thereafter incurred, unless,
      with

     the
      prior

     

    
      
        
        

      

      
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     approval
      of the Federal Reserve if not otherwise generally approved, it is provided
      in
      the instrument creating or evidencing the same or pursuant to which the
      same

     is outstanding,
      that such obligations are not superior or are pari
      passu
      in right
      of payment to the Debt Securities; provided, however, that Senior Indebtedness
      shall

     not
      include (A) any debt securities issued to any trust other than the Trust (or
      a
      trustee of such trust) that is a financing vehicle of the Company (a
“financing

     entity”),
      in connection with the issuance by such financing entity of equity or other
      securities in transactions substantially similar in structure to the
      transactions

     contemplated
      hereunder and in the Declaration, (B) any guarantees of the Company in respect
      of the equity or other securities of any financing entity referred to in

     clause
      (A) above or (C) any other instruments classified as subordinated or
pari
      passu
      to the
      Debt Securities by the Federal Reserve.

     

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

     

      "Special
      Redemption Date" has the meaning set forth in Section 10.02.

     

          
      "Special Redemption Price" means, with respect to the redemption of any Debt
      Security following a Special Event, an amount in cash equal to 103.525% of
      the

     principal
      amount of Debt Securities to be redeemed prior to September 15, 2007 and
      thereafter equal to the percentage of the principal amount of the Debt
      Securities

     that
      is specified below for the Special Redemption Date plus, in each case, unpaid
      interest accrued thereon to the Special Redemption Date: 

     

    
      	
              Special
                Redemption During the 

              12-Month
                Period Beginning September 15

            	
              Percentage
                of Principal Amount

            
	 	 
	
              2007

            	
              103.140%

            
	
              2008

            	
              102.355%

            
	
              2009

            	
              101.570%

            
	
              2010

            	
              100.785%

            
	
              2011
                and thereafter

            	
              100.000%

            
	 	 

    

      

      "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.

     

    
      
        
        

      

      
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      "Tax
      Event" means the receipt by the Company and the Trust of an Opinion of Counsel
      experienced in such matters to the effect that, as a result of any

     amendment
      to or change (including any announced prospective change) in the laws or any
      regulations thereunder of the United States or any political
      subdivision

     or taxing
      authority thereof or therein, or as a result of any official administrative
      pronouncement (including any private letter ruling, technical advice memorandum,
      

     regulatory
      procedure, notice or announcement (an "Administrative Action")) or judicial
      decision interpreting or applying such laws or regulations, regardless of

     whether
      such Administrative Action or judicial decision is issued to or in connection
      with a proceeding involving the Company or the Trust and whether or not

     subject
      to review or appeal, which amendment, clarification, change, Administrative
      Action or decision is enacted, promulgated or announced, in each case on
      or

     after
      the date of original issuance of the Debt Securities, there is more than an
      insubstantial risk that: (i) the Trust is, or will be within 90 days of the
      date
      of such

     opinion,
      subject to United States federal income tax with respect to income received
      or
      accrued on the Debt Securities; (ii) if the Company is organized and
      existing

     under
      the laws of the United States or any state thereof or the District of Columbia,
      interest payable by the Company on the Debt Securities is not, or within 90
      days

     of
      the date of such opinion, will not be, deductible by the Company, in whole
      or in
      part, for United States federal income tax purposes; or (iii) the Trust is,
      or
      will be

     within
      90 days of the date of such opinion, subject to or otherwise required to pay,
      or
      required to withhold from distributions to holders of Trust Securities, more
      

     than a
      de
      minimis amount of other taxes (including withholding taxes), duties, assessments
      or other governmental charges.

     

      "Trust"
      means PEBK Capital Trust II, the Delaware statutory trust, or any other similar
      trust created for the purpose of issuing Capital Securities in
      connection

     with
      the issuance of Debt Securities under this Indenture, of which the Company
      is
      the sponsor.

     

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

     

      "Trust
      Securities" means Common Securities and Capital Securities of PEBK Capital
      Trust
      II.

     

      "Trustee"
      means the Person identified as "Trustee" in the first paragraph hereof, and,
      subject to the provisions of Article VI hereof, shall also include
      its

     successors
      and assigns as Trustee hereunder.

     

      "United
      States" means the United States of America and the District of
      Columbia.

     

      "U.S.
      Person" has the meaning given to United States Person as set forth in Section
      7701(a)(30) of the Internal Revenue Code of 1986, as amended.

     

    
      
        
        

      

      
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      ARTICLE II  

     

    DEBT
      SECURITIES

     

    SECTION
      2.01.   Authentication
      and Dating.

     

    Upon
      the
      execution and delivery of this Indenture, or from time to time thereafter,
      Debt
      Securities in an aggregate principal amount not in excess of $20,619,000 may
      be
      executed and delivered by the Company to the Trustee for authentication, and
      the
      Trustee shall thereupon authenticate and make available for delivery said Debt
      Securities to or upon the written order of the Company, signed by its Chairman
      of the Board of Directors, Vice Chairman, President or Chief Financial Officer
      or one of its Vice Presidents, without any further action by the Company
      hereunder. In authenticating such Debt Securities, and accepting the additional
      responsibilities under this Indenture in relation to such Debt Securities,
      the
      Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
      fully protected in relying upon a copy of any Board Resolution or Board
      Resolutions relating thereto and, if applicable, an appropriate record of any
      action taken pursuant to such resolution, in each case certified by the
      Secretary or an Assistant Secretary or other officers with appropriate delegated
      authority of the Company as the case may be.

     

    The
      Trustee shall have the right to decline to authenticate and deliver any Debt
      Securities under this Section if the Trustee, being advised by counsel,
      determines that such action may not lawfully be taken or if a Responsible
      Officer of the Trustee in good faith shall determine that such action would
      expose the Trustee to personal liability to existing Securityholders. The
      Trustee shall also be entitled to receive an opinion of counsel to the effect
      that (1) all conditions precedent to the execution, delivery and authentication
      of the Securities have been complied with; (2) the Securities are not required
      to be registered under the Securities Act; and (3) the Indenture is not required
      to be qualified under the Trust Indenture Act.

     

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

     

    SECTION
      2.02.   Form
      of Trustee's Certificate of Authentication.

     

    The
      Trustee's certificate of authentication on all Debt Securities shall be in
      substantially the following form:

     

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

     

    LaSalle
      Bank National Association, not in its individual capacity but solely as
      Trustee

     

                                                                       
      By__________________________________      

                                                           
      Authorized Signatory

     

     

    
      
        
        

      

      
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    SECTION
      2.03.   Form
      and Denomination of Debt Securities.

     

    The
      Debt
      Securities shall be substantially in the form of Exhibit A hereto. The Debt
      Securities shall be in registered, certificated form without coupons and in
      minimum denominations of $100,000 and any multiple of $1,000 in excess thereof.
      The Debt Securities shall be numbered, lettered, or otherwise distinguished
      in
      such manner or in accordance with such plans as the officers executing the
      same
      may determine with the approval of the Trustee as evidenced by the execution
      and
      authentication thereof.

     

    SECTION
      2.04.   Execution
      of Debt Securities.

     

    The
      Debt
      Securities shall be signed in the name and on behalf of the Company by the
      manual or facsimile signature of any of its Chairman of the Board of Directors,
      Vice Chairman, President or Chief Financial Officer or one of its Executive
      Vice
      Presidents, Senior Vice Presidents or Vice Presidents, under its corporate
      seal
      (if legally required), which may be affixed thereto or printed, engraved or
      otherwise reproduced thereon, by facsimile or otherwise, and which need not
      be
      attested. Only such Debt Securities as shall bear thereon a certificate of
      authentication substantially in the form herein before recited, executed by
      the
      Trustee or the Authenticating Agent by the manual signature of an authorized
      officer, shall be entitled to the benefits of this Indenture or be valid or
      obligatory for any purpose. Such certificate by the Trustee or the
      Authenticating Agent upon any Debt Security executed by the Company shall be
      conclusive evidence that the Debt Security so authenticated has been duly
      authenticated and delivered hereunder and that the holder is entitled to the
      benefits of this Indenture.

     

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

     

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

     

    SECTION
      2.05.   Exchange
      and Registration of Transfer of Debt Securities.

     

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

     

    Debt
      Securities to be exchanged may be surrendered at the Principal Office of the
      Trustee or at any office or agency to be maintained by the Company for such
      purpose as provided in Section 3.02, and the Company shall execute, the Company
      or the Trustee shall

     

    
      
        
        

      

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

    

     

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

     

    Neither
      the Trustee nor the Debt Security Registrar shall be responsible for
      ascertaining whether any transfer hereunder complies with the registration
      provisions of or any exemptions from the Securities Act (under and as defined
      in
      the Declaration), applicable state securities laws or the applicable laws of
      any
      other jurisdiction, ERISA, the United States Internal Revenue Code of 1986,
      as
      amended, or the Investment Company Act (under and as defined in the
      Declaration).

     

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

     

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

     

    Notwithstanding
      the foregoing, Debt Securities may not be transferred except in compliance
      with
      the restricted securities legend set forth below, unless otherwise determined
      by
      the Company in accordance with applicable law, which legend shall be placed
      on
      each Debt Security:

     

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
      IS
      EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

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

    

     

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

     

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

     

    
      
        
        

      

      
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      OF
        ERISA,
        OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER
        PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER
        PERSON
        OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE
        SUCH
        PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION
        UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS
        NO
        APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

    

     

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

     

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

     

    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 THE CLAIMS OF DEPOSITORS AND
      THE
      CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS
      COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT
      SECURED.

     

    SECTION
      2.06.   Mutilated,
      Destroyed, Lost or Stolen Debt Securities.

     

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

     

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

     

    
      
        
        

      

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

    

     

    Every
      substituted Debt Security issued pursuant to the provisions of this Section
      2.06
      by virtue of the fact that any such Debt Security is destroyed, lost or stolen
      shall constitute an additional contractual obligation of the Company, whether
      or
      not the destroyed, lost or stolen Debt Security shall be found at any time,
      and
      shall be entitled to all the benefits of this Indenture equally and
      proportionately with any and all other Debt Securities duly issued hereunder.
      All Debt Securities shall be held and owned upon the express condition that,
      to
      the extent permitted by applicable law, the foregoing provisions are exclusive
      with respect to the replacement or payment of mutilated, destroyed, lost or
      stolen Debt Securities and shall preclude any and all other rights or remedies
      notwithstanding any law or statute existing or hereafter enacted to the contrary
      with respect to the replacement or payment of negotiable instruments or other
      securities without their surrender.

     

    SECTION
      2.07.   Temporary
      Debt Securities.

     

    Pending
      the preparation of definitive Debt Securities, the Company may execute and
      the
      Trustee shall authenticate and make available for delivery temporary Debt
      Securities that are typed, printed or lithographed. Temporary Debt Securities
      shall be issuable in any authorized denomination, and substantially in the
      form
      of the definitive Debt Securities but with such omissions, insertions and
      variations as may be appropriate for temporary Debt Securities, all as may
      be
      determined by the Company. Every such temporary Debt Security shall be executed
      by the Company and be authenticated by the Trustee upon the same conditions
      and
      in substantially the same manner, and with the same effect, as the definitive
      Debt Securities. Without unreasonable delay, the Company will execute and
      deliver to the Trustee or the Authenticating Agent definitive Debt Securities
      and thereupon any or all temporary Debt Securities may be surrendered in
      exchange therefor, at the Principal Office of the Trustee or at any office
      or
      agency maintained by the Company for such purpose as provided in Section 3.02,
      and the Trustee or the Authenticating Agent shall authenticate and make
      available for delivery in exchange for such temporary Debt Securities a like
      aggregate principal amount of such definitive Debt Securities. Such exchange
      shall be made by the Company at its own expense and without any charge therefor
      except that in case of any such exchange involving a registration of transfer
      the Company may require payment of a sum sufficient to cover any tax, fee or
      other governmental charge that may be imposed in relation thereto. Until so
      exchanged, the temporary Debt Securities shall in all respects be entitled
      to
      the same benefits under this Indenture as definitive Debt Securities
      authenticated and delivered hereunder.

     

    
      
        
        

      

      
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    SECTION
      2.08.   Payment
      of Interest.

     

    Each
      Debt
      Security will bear interest at the then applicable Interest Rate from and
      including each Interest Payment Date or, in the case of the first Interest
      Payment Period, the original date of issuance of such Debt Security to, but
      excluding, the next succeeding Interest Payment Date or, in the case of the
      last
      Interest Payment Period, the Redemption Date, Special Redemption Date or
      Maturity Date, as applicable, on the principal thereof, on any overdue principal
      and (to the extent that payment of such interest is enforceable under applicable
      law) on Deferred Interest and on any overdue installment of interest (including
      Defaulted Interest), payable on each Interest Payment Date commencing on
      September 15, 2006. Interest and any Deferred Interest on any Debt Security
      that
      is payable, and is punctually paid or duly provided for by the Company, on
      any
      Interest Payment Date shall be paid to the Person in whose name said Debt
      Security (or one or more Predecessor Securities) is registered at the close
      of
      business on the regular record date for such interest installment, except that
      interest and any Deferred Interest payable on the Maturity Date shall be paid
      to
      the Person to whom principal is paid. In the event that any Debt Security or
      portion thereof is called for redemption and the redemption date is subsequent
      to a regular record date with respect to any Interest Payment Date and either
      on
      or prior to such Interest Payment Date, interest on such Debt Security will
      be
      paid upon presentation and surrender of such Debt Security.

     

    Any
      interest on any Debt Security, other than Deferred Interest, that is payable,
      but is not punctually paid or duly provided for by the Company, on any Interest
      Payment Date (herein called "Defaulted Interest") shall forthwith cease to
      be
      payable to the registered holder on the relevant regular record date by virtue
      of having been such holder, and such Defaulted Interest shall be paid by the
      Company to the Persons in whose names such Debt Securities (or their respective
      Predecessor Securities) are registered at the close of business on a special
      record date for the payment of such Defaulted Interest, which shall be fixed
      in
      the following manner: the Company shall notify the Trustee in writing of the
      amount of Defaulted Interest proposed to be paid on each such Debt Security
      and
      the date of the proposed payment, and at the same time the Company shall deposit
      with the Trustee an amount of money equal to the aggregate amount proposed
      to be
      paid in respect of such Defaulted Interest or shall make arrangements reasonably
      satisfactory to the Trustee for such deposit prior to the date of the proposed
      payment, such money when deposited to be held in trust for the benefit of the
      Persons entitled to such Defaulted Interest as 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 fifteen nor less than ten days
      prior to the date of the proposed payment and not less than ten days after
      the
      receipt by the Trustee of the notice of the proposed payment. The Trustee shall
      promptly notify the Company of such special record date and, in the name and
      at
      the expense of the Company, shall cause notice of the proposed payment of such
      Defaulted Interest and the special record date therefor to be mailed, first
      class postage prepaid, to each Securityholder at his or her address as it
      appears in the Debt Security Register, not less than ten days prior to such
      special record date. Notice of the proposed payment of such Defaulted Interest
      and the special record date therefor having been mailed as aforesaid, such
      Defaulted Interest shall be paid to the Persons in whose names such Debt
      Securities (or their respective Predecessor Securities) are registered on such
      special record date and thereafter the Company shall have no further payment
      obligation in respect of the Defaulted Interest.

     

    
      
        
        

      

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

     

    The
      term
      "regular record date" as used in this Indenture shall mean the fifteenth day
      prior to the applicable Interest Payment Date whether or not such date is a
      Business Day.

     

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

     

    SECTION
      2.09.   Cancellation
      of Debt Securities Paid, etc.

     

    All
      Debt
      Securities surrendered for the purpose of payment, redemption, exchange or
      registration of transfer, shall, if surrendered to the Company or any Paying
      Agent, be surrendered to the Trustee and promptly canceled by it, or, if
      surrendered to the Trustee, shall be promptly canceled by it, and no Debt
      Securities shall be issued in lieu thereof except as expressly permitted by
      any
      of the provisions of this Indenture. The Trustee shall dispose of all canceled
      Debt Securities in accordance with its customary practices, unless the Company
      otherwise directs the Trustee in writing, in which case the Trustee shall
      dispose of such Debt Securities as directed by the Company. If the Company
      shall
      acquire any of the Debt Securities, however, such acquisition shall not operate
      as a redemption or satisfaction of the indebtedness represented by such Debt
      Securities unless and until the same are surrendered to the Trustee for
      cancellation.

     

    SECTION
      2.10.   Computation
      of Interest.

     

    (a)  The
      amount of interest payable for any Interest Payment Period will be computed
      on
      the basis of a 360-day year and the actual number of days elapsed in the
      relevant interest period; provided,
      however,
      that
      upon the occurrence of a Special Event Redemption pursuant to Section 10.02
      the
      amounts payable pursuant to this Indenture shall be calculated as set forth
      in
      the definition of Special Redemption Price.

     

    (b)  LIBOR,
      for any Interest Payment Period, shall be determined by the Calculation Agent
      in
      accordance with the following provisions:

     

    (1)  On
      the
      second LIBOR Business Day (provided, that on such day commercial banks are
      open
      for business (including dealings in

     foreign
      currency deposits) in London (a "LIBOR Banking Day"), and otherwise the next
      preceding LIBOR Business Day that is also a LIBOR

     Banking
      Day) prior to March 15, June 15, September 15 and December 15 (or, with respect
      to the first Interest Payment Period, on June 26, 2006) 

     (each
      such day, a "LIBOR Determination Date" for the following Interest Payment
      Period), the Calculation Agent shall obtain the rate for three-

     month
      U.S. Dollar deposits in Europe, which appears on Telerate Page 3750 (as defined
      in the International Swaps and Derivatives Association, 

     Inc.
      2000 Interest Rate and Currency Exchange Definitions) or such other page as
      may
      replace such Telerate Page 3750 on the Moneyline

     Telerate,
      Inc. service (or such

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

       

      other
        service or services as may be nominated by the British Banker's Association
        as
        the information vendor for the purpose of displaying London Interbank offered
        rates for U.S. dollar deposits), as of 11:00 a.m. (London time) on such LIBOR
        Determination Date, and the rate so obtained shall be LIBOR for such Interest
        Payment Period. "LIBOR Business Day" means any day that is not a Saturday,
        Sunday or other day on which commercial banking institutions in The City
        of New
        York or Chicago, Illinois are authorized or obligated by law or executive
        order
        to be closed. If such rate is superseded on Telerate Page 3750 by a corrected
        rate before 12:00 noon (London time) on the same LIBOR Determination Date,
        the
        corrected rate as so substituted will be LIBOR for that Interest Payment
        Period.

    

     

    (2)  If,
      on
      any LIBOR Determination Date, such rate does not appear on Telerate Page 3750
      or
      such other page as may replace such 

    Telerate
      Page 3750 on the Moneyline Telerate, Inc. service (or such other service or
      services as may be nominated by the British Banker's

    Association
      as the information vendor for the purpose of displaying London Interbank offered
      rates for U.S. dollar deposits), the Calculation 

    Agent
      shall determine the arithmetic mean of the offered quotations of the Reference
      Banks (as defined below) to leading banks in the London

    Interbank
      market for three-month U.S. Dollar deposits in Europe (in an amount determined
      by the Calculation Agent) by reference to requests for

    quotations
      as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date
      made by the Calculation Agent to the Reference 

    Banks. 
      If,
      on
      any LIBOR Determination Date, at least two of the Reference Banks provide such
      quotations, LIBOR shall equal the arithmetic 

    mean
      of
      such
quotations.
      If, on any LIBOR Determination Date, only one or none of the Reference Banks
      provide such a quotation, LIBOR shall

    be
      deemed
      to
be
      the
      arithmetic mean of the offered quotations that at least two leading banks in
      the
      City of New York (as selected by the 

    Calculation Agent)
      are quoting
      on the relevant LIBOR Determination Date for three-month U.S. Dollar deposits
      in
      Europe at approximately 11:00

     a.m.
      (London time)
      (in
      an amount
      determined by the Calculation Agent). As used herein, "Reference Banks" means
      four major banks in the 

     London
      Interbank market
      selected
      by the Calculation Agent.

     

    (3)  If
      the
      Calculation Agent is required but is unable to determine a rate in accordance
      with at least one of the procedures provided

    above,
      LIBOR for the applicable Interest Payment Period shall be LIBOR in effect for
      the immediately preceding Interest Payment Period.

     

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

     

    (d)  As
      soon
      as practicable following each LIBOR Determination Date, but in no event later
      than the 30th day following such LIBOR Determination Date, the
      Calculation

     

    
      
        
        

      

      
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      Agent
        shall notify, in writing, the Company, the Institutional Trustee and the
        Paying
        Agent of the applicable Interest Rate in effect for the related Interest
        Payment
        Period. The Calculation Agent shall, upon the request of the holder of any
        Debt
        Securities, provide the Interest Rate then in effect. All calculations made
        by
        the Calculation Agent in the absence of manifest error shall be conclusive
        for
        all purposes and binding on the Company and the Holders of the Debt Securities.
        Any error in a calculation of the Interest Rate by the Calculation Agent
        may be
        corrected at any time by the delivery of notice of such corrected Interest
        Rate
        as provided above. The Paying Agent shall be entitled to rely on information
        received from the Calculation Agent or the Company as to the Interest Rate.
        The
        Company shall, from time to time, provide any necessary information to the
        Paying Agent relating to any original issue discount and interest on the
        Debt
        Securities that is included in any payment and reportable for taxable income
        calculation purposes. Failure to notify the Company, the Institutional Trustee
        or the Paying Agent of the applicable Interest Rate shall not affect the
        obligation of the Company to make payment on Debentures at such Interest
        Rate.

    

     

    SECTION
      2.11.   Extension
      of Interest Payment Period.

     

    As
      long
      as it is acting in good faith, and so long as no Event of Default pursuant
      to
      paragraphs (c), (e) or (f) of Section 5.01 of the Indenture has occurred and
      is
      continuing the Company shall have the right, from time to time and without
      causing an Event of Default, to defer payments of interest on the Debt
      Securities by extending the interest distribution period on the Debt Securities
      at any time and from time to time during the term of the Debt Securities, for
      up
      to twenty consecutive quarterly periods (each such extended interest
      distribution period, an "Extension Period"), during which Extension Period
      no
      interest shall be due and payable (except any Additional Interest that may
      be
      due and payable). No Extension Period may end on a date other than an Interest
      Payment Date. During any Extension Period, interest will continue to accrue
      on
      the Debt Securities, and interest on such accrued interest (such accrued
      interest and interest thereon referred to herein as "Deferred Interest") will
      accrue at an annual rate equal to the Interest Rate applicable during such
      Extension Period, compounded quarterly from the date such Deferred Interest
      would have been payable were it not for the Extension Period, to the extent
      permitted by law. No interest or Deferred Interest shall be due and payable
      during an Extension Period, except at the end thereof. At the end of any such
      Extension Period the Company shall pay all Deferred Interest then accrued and
      unpaid on the Debt Securities; provided,
      however,
      that no
      Extension Period may extend beyond the Maturity Date, Redemption Date (to the
      extent redeemed) or Special Redemption Date; and provided further,
      however,
      that
      during any such Extension Period, the Company shall be subject to the
      restrictions set forth in Section 3.08 of this Indenture. Prior to the
      termination of any Extension Period, the Company may further extend such period,
      provided,
      that
      such period together with all such previous and further consecutive extensions
      thereof shall not exceed twenty consecutive quarterly periods, or extend beyond
      the Maturity Date, Redemption Date (to the extent redeemed) or Special
      Redemption Date. Upon the termination of any Extension Period and upon the
      payment of all Deferred Interest, the Company may commence a new Extension
      Period, subject to the foregoing requirements. No interest or Deferred Interest
      shall be due and payable during an Extension Period, except at the end thereof,
      but Deferred Interest shall accrue upon each installment of interest that would
      otherwise have been due and payable during such Extension Period until such
      installment is paid. The Company must give the Trustee notice of its election
      to
      begin any
      Extension Period or
      extend
      an Extension Period ("Notice") not
      later
      than the related regular

     

    
      
        
        

      

      
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      record
        date for the relevant Interest Payment Date. The Notice shall describe why
        the
        Company has elected to begin an Extension Period. The Notice shall acknowledge
        and affirm the Company's understanding that it is prohibited from issuing
        dividends and other distributions during the Extension Period. Upon receipt
        of
        the Notice, an Initial Purchaser shall have the right, at its sole discretion,
        to disclose the name of the Company, the fact that the Company has elected
        to
        begin an Extension Period and other information that such Initial Purchaser,
        at
        its sole discretion, deems relevant to the Company's election to begin an
        Extension Period. The Trustee shall give notice of the Company's election
        to
        begin a new Extension Period to the Securityholders.  

    

     

    SECTION
      2.12.   CUSIP
      Numbers.

     

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

     

    SECTION
      2.13.   Income
      Tax Certification. 

     

    As
      a
      condition to the payment of any principal of or interest on the Debt Securities
      without the imposition of withholding tax, the Trustee shall require the
      previous delivery of properly completed and signed applicable U.S. federal
      income tax certifications (generally, an Internal Revenue Service Form W-9
      (or
      applicable successor form) in the case of a person that is a "United States
      person" within the meaning of Section 7701 (a)(30) of the Code (under and as
      defined in the Declaration) or an Internal Revenue Service Form W-8 (or
      applicable successor form) in the case of a person that is not a "United States
      person" within the meaning of Section 7701(a)(30) of the Code, and any other
      certification acceptable to it to enable the Trustee or any Paying Agent to
      determine their respective duties and liabilities with respect to any taxes
      or
      other charges that they may be required to pay, deduct or withhold in respect
      of
      such Debt Securities.

     

    SECTION
      2.14.   Global
      Debentures.

     

    (a)  Upon
      the
      election of the holder of Outstanding Debt Securities, which election need
      not
      be in writing, the Debt Securities owned by such holder shall be issued in
      the
      form of one or more Global Debentures registered in the name of the Depositary
      or its nominee. Each Global Debenture issued under this Indenture shall be
      registered in the name of the Depositary designated by the Company for such
      Global Debenture or a nominee thereof and delivered to such Depositary or a
      nominee thereof or custodian therefor, and each such Global Debenture shall
      constitute a single Debt Security for all purposes of this
      Indenture.

     

    (b)  Notwithstanding
      any other provision in this Indenture, no Global Debenture may be exchanged
      in
      whole or in part for Debt Securities registered, and no transfer

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

       

      of
        a
        Global Debenture in whole or in part may be registered, in the name of any
        Person other than the Depositary for such Global Debenture or a nominee thereof
        unless (i) such Depositary advises the Trustee and the Company in writing
        that
        such Depositary is no longer willing or able to properly discharge its
        responsibilities as Depositary with respect to such Global Debenture, and
        no
        qualified successor is appointed by the Company within ninety (90) days of
        receipt by the Company of such notice, (ii) such Depositary ceases to be
        a
        clearing agency registered under the Exchange Act and no successor is appointed
        by the Company within ninety (90) days after obtaining knowledge of such
        event,
        (iii) the Company executes and delivers to the Trustee a company order stating
        that the Company elects to terminate the book-entry system through the
        Depositary or (iv) an Event of Default shall have occurred and be continuing.
        Upon the occurrence of any event specified in clause (i), (ii), (iii) or
        (iv)
        above, the Trustee shall notify the Depositary and instruct the Depositary
        to
        notify all owners of beneficial interests in such Global Debenture of the
        occurrence of such event and of the availability of Debt Securities to such
        owners of beneficial interests requesting the same. Upon the issuance of
        such
        Debt Securities and the registration in the Debt Security Register of such
        Debt
        Securities in the names of such owners of the beneficial interests therein,
        the
        Trustee shall recognize such owners of beneficial interests as
        Holders.

    

     

    (c)  If
      any
      Global Debenture is to be exchanged for other Debt Securities or canceled in
      part, or if another Debt Security is to be exchanged in whole or in part for
      a
      beneficial interest in any Global Debenture, then either (i) such Global
      Debenture shall be so surrendered for exchange or cancellation as provided
      in
      this Article
      II
      or (ii)
      the principal amount thereof shall be reduced or increased by an amount equal
      to
      the portion thereof to be so exchanged or canceled, or equal to the principal
      amount of such other Debt Security to be so exchanged for a beneficial interest
      therein, as the case may be, by means of an appropriate adjustment made on
      the
      records of the Debt Security registrar, whereupon the Trustee, in accordance
      with the applicable depository procedures, shall instruct the Depositary or
      its
      authorized representative to make a corresponding adjustment to its records.
      Upon any such surrender or adjustment of a Global Debenture by the Depositary,
      accompanied by registration instructions, the Company shall execute and the
      Trustee shall authenticate and deliver any Debt Securities issuable in exchange
      for such Global Debenture (or any portion thereof) in accordance with the
      instructions of the Depositary. The Trustee shall not be liable for any delay
      in
      delivery of such instructions and may conclusively rely on, and shall be fully
      protected in relying on, such instructions.

     

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

     

    (e)  Debt
      Securities distributed to holders of Book-Entry Capital Securities (as defined
      in the Trust Agreement) upon the dissolution of the Trust shall be distributed
      in the form of one or more Global Debentures registered in the name of a
      Depositary or its nominee, and deposited with the Debt Securities registrar,
      as
      custodian for such Depositary, or with such Depositary, for credit by the
      Depositary to the respective accounts of the beneficial owners of the Debt
      Securities represented thereby (or such other accounts as they may direct).
      Debt
      Securities

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

       

      distributed
        to holders of Capital Securities other than Book-Entry Capital Securities
        upon
        the dissolution of the Trust shall not be issued in the form of a Global
        Debenture or any other form intended to facilitate book-entry trading in
        beneficial interests in such Debt Securities.

    

     

    (f)  The
      Depositary or its nominee, as the registered owner of a Global Debenture, shall
      be the Holder of such Global Debenture for all purposes under this Indenture
      and
      the Debt Securities, and owners of beneficial interests in a Global Debenture
      shall hold such interests pursuant to the Applicable Depository Procedures.
      Accordingly, any such owner's beneficial interest in a Global Debenture shall
      be
      shown only on, and the transfer of such interest shall be effected only through,
      records maintained by the Depositary or its nominee or its Depositary
      Participants. The Debt Securities registrar and the Trustee shall be entitled
      to
      deal with the Depositary for all purposes of this Indenture relating to a Global
      Debenture (including the payment of principal and interest thereon and the
      giving of instructions or directions by owners of beneficial interests therein
      and the giving of notices) as the sole Holder of the Debt Security and shall
      have no obligations to the owners of beneficial interests therein. Neither
      the
      Trustee nor the Debt Securities registrar shall have any liability in respect
      of
      any transfers affected by the Depositary.

     

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

     

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

     

    ARTICLE
      III  

     

    PARTICULAR
      COVENANTS OF THE COMPANY

     

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

     

    (a)  The
      Company covenants and agrees that it will duly and punctually pay or cause
      to be
      paid all payments due on the Debt Securities at the place, at the respective
      times and in the manner provided in this Indenture and the Debt Securities.
      At
      the option of the Company, each installment of interest on the Debt Securities
      may be paid (i) by mailing checks for such

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

       

      interest
        payable to the order of the holders of Debt Securities entitled thereto as
        they
        appear on the Debt Security Register or (ii) by wire transfer to any account
        with a banking institution located in the United States designated by such
        holders to the Paying Agent no later than the related record date.
        Notwithstanding anything to the contrary contained in this Indenture or any
        Debt
        Security, if the Trust or the Trustee of the Trust is the holder of any Debt
        Security, then all payments in respect of such Debt Security shall be made
        by
        the Company in immediately available funds when due. 

    

     

    (b)  The
      Company and each of the Holders will treat the Debt Securities as indebtedness,
      and the amounts, other than payments of principal, payable in respect of the
      principal amount of such Debt Securities as interest, for all U.S. federal
      income tax purposes. All payments in respect of the Securities will be made
      free
      and clear of U.S. withholding tax to any beneficial owner thereof that has
      provided (i) an Internal Revenue Service Form W-9 or W-8BEN (or any substitute
      or successor form) establishing its U.S. or non-U.S. status for U.S. federal
      income tax purposes, or and establishing a complete exemption from U.S.
      withholding tax, or (ii) any other applicable form establishing a complete
      exemption from U.S. withholding tax.

     

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

     

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

     

     

    SECTION
      3.02.   Offices
      for Notices and Payments, etc.

     

    So
      long
      as any of the Debt Securities remain outstanding, the Company will maintain
      an
      office or agency where the Debt Securities may be presented for payment, an
      office or agency where the Debt Securities may be presented for registration
      of
      transfer and for exchange as provided in this Indenture and an office or agency
      where notices and demands to or upon the Company in respect of the Debt
      Securities or of this Indenture may be served. The Company hereby appoints
      the
      Trustee at LaSalle Bank National Association, CDO Trust Services Group, Attn:
      Greg Myers, 135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603 -
      PEBK
      Capital Trust II as
      such
      office or agency. In case the Company shall fail to maintain any such office
      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.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      3.03.   Appointments
      to Fill Vacancies in Trustee's Office.

     

    The
      Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
      will appoint, in the manner provided in Section 6.09, a Trustee, so that there
      shall at all times be a Trustee hereunder.

     

    SECTION
      3.04.   Provision
      as to Paying Agent.

     

    (a)  If
      the
      Company shall appoint a Paying Agent other than the Trustee, it will cause
      such
      Paying Agent to execute and deliver to the Trustee an instrument in which such
      agent shall agree with the Trustee, subject to the provision of this Section
      3.04:

     

    (1)  that
      it
      will hold all sums held by it as such agent for the payment of all payments
      due
      on the Debt Securities (whether such sums 

    have
      been
      paid to it by the Company or by any other obligor on the Debt Securities) in
      trust for the benefit of the holders of the Debt Securities;

     

    (2)  that
      it
      will give the Trustee prompt written notice of any failure by the Company (or
      by
      any other obligor on the Debt Securities) to

    make
      any
      payment on the Debt Securities when the same shall be due and payable;
      and

     

    (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.

     

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

     

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

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (e)  The
      Company hereby initially appoints the Trustee to act as Paying Agent (the
      "Paying Agent").

     

    SECTION
      3.05.   Certificate
      to Trustee.

     

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

     

    SECTION
      3.06.   Additional
      Interest.

     

    If
      and
      for so long as the Trust is the holder of all Debt Securities and is subject
      to
      or otherwise required to pay, or is required to withhold from distributions
      to
      holders of Trust Securities, any additional taxes (including withholding taxes),
      duties, assessments or other governmental charges as a result of a Tax Event,
      the Company will pay such additional amounts (the "Additional Interest") on
      the
      Debt Securities as shall be required so that the net amounts received and
      retained by the Trust for distribution to holders of Trust Securities after
      paying all taxes (including withholding taxes), duties, assessments or other
      governmental charges will be equal to the amounts the Trust would have received
      and retained for distribution to holders of Trust Securities after paying all
      taxes (including withholding taxes on distributions to holders of Trust
      Securities), duties, assessments or other governmental charges if no such
      additional taxes, duties, assessments or other governmental charges had been
      imposed. Whenever in this Indenture or the Debt Securities there is a reference
      in any context to the payment of principal of or premium, if any, or interest
      on
      the Debt Securities, such mention shall be deemed to include mention of payments
      of the Additional Interest provided for in this paragraph to the extent that,
      in
      such context, Additional Interest is, was or would be payable in respect thereof
      pursuant to the provisions of this paragraph and express mention of the payment
      of Additional Interest (if applicable) in any provisions hereof shall not be
      construed as excluding Additional Interest in those provisions hereof where
      such
      express mention is not made; provided,
      however,
      that,
      notwithstanding anything to the contrary contained in this Indenture or any
      Debt
      Security, the deferral of the payment of interest during an Extension Period
      pursuant to Section 2.11 shall not defer the payment of any Additional Interest
      that may be due and payable.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.07.   Compliance
      with Consolidation Provisions.

     

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

     

    SECTION
      3.08.   Limitation
      on Dividends.

     

    If
      Debt
      Securities are initially issued to the Trust or a trustee of such Trust in
      connection with the issuance of Trust Securities by the Trust (regardless of
      whether Debt Securities continue to be held by such Trust) and (i) there shall
      have occurred and be continuing an Event of Default, (ii) the Company shall
      be
      in default with respect to its payment of any obligations under the Capital
      Securities Guarantee or (iii) the Company shall have given notice of its
      election to defer payments of interest on the Debt Securities by extending
      the
      interest distribution period as provided herein and such period, or any
      extension thereof, shall have commenced and be continuing, then the Company
      may
      not (A) declare or pay any dividends or distributions on, or redeem, purchase,
      acquire, or make a liquidation payment with respect to, any of the Company's
      capital stock or (B) make any payment of principal of or interest or premium,
      if
      any, on or repay, repurchase or redeem any debt securities of the Company that
      rank pari
      passu
      in all
      respects with or junior in interest to the Debt Securities or (C) make any
      payment under any guarantees of the Company that rank pari
      passu
      in all
      respects with or junior in interest to the Capital Securities Guarantee (other
      than (a) repurchases, redemptions or other acquisitions of shares of capital
      stock of the Company (I) in connection with any employment contract, benefit
      plan or other similar arrangement with or for the benefit of one or more
      employees, officers, directors or consultants, (II) in connection with a
      dividend reinvestment or stockholder stock purchase plan or (III) in connection
      with the issuance of capital stock of the Company (or securities convertible
      into or exercisable for such capital stock), as consideration in an acquisition
      transaction entered into prior to the occurrence of (i), (ii)
      or (iii)
      above, (b) as a result of any exchange, reclassification, combination or
      conversion of any class or series of the Company's capital stock (or any capital
      stock of a subsidiary of the Company) for any class or series of the Company's
      capital stock or of any class or series of the Company's indebtedness for any
      class or series of the Company's capital stock, (c) the purchase of fractional
      interests in shares of the Company's capital stock pursuant to the conversion
      or
      exchange provisions of such capital stock or the security being converted or
      exchanged, (d) any declaration of a dividend in connection with any
      stockholder's rights plan, or the issuance of rights, stock or other property
      under any stockholder's rights plan, or the redemption or repurchase of rights
      pursuant thereto, or (e) any dividend in the form of stock, warrants, options
      or
      other rights where the dividend stock or the stock issuable upon exercise of
      such warrants, options or other rights is the same stock as that on which the
      dividend is being paid or ranks pari
      passu
      with or
      junior to such stock).

     

    SECTION
      3.09.   Covenants
      as to the Trust.

     

    For
      so
      long as such Trust Securities remain outstanding, the Company shall maintain
      100% ownership of the Common Securities; provided,
      however,
      that
      any permitted successor of the Company under this Indenture that is a U.S.
      Person may succeed to the Company's ownership of such Common Securities. The
      Company, as owner of the Common

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

       

      Securities,
        shall use commercially reasonable efforts to cause the Trust (a) to remain
        a
        statutory trust, except in connection with a distribution of Debt Securities
        to
        the holders of Trust Securities in liquidation of the Trust, the redemption
        of
        all of the Trust Securities or certain mergers, consolidations or amalgamations,
        each as permitted by the Declaration, (b) to otherwise continue to be classified
        as a grantor trust for United States federal income tax purposes and (c)
        to
        cause each holder of Trust Securities to be treated as owning an undivided
        beneficial interest in the Debt Securities.

    

     

    ARTICLE
      IV  

     

    LISTS
      AND
      REPORTS BY THE COMPANY AND THE TRUSTEE

     

    SECTION
      4.01.   Securityholders'
      Lists.

     

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

     

    (a)  on
      each
      regular record date for an Interest Payment Date, a list, in such form as the
      Trustee may reasonably require, of the names and addresses of the
      Securityholders of the Debt Securities as of such record date; and

     

    (b)  at
      such
      other times as the Trustee may request in writing, within 30 days after the
      receipt by the Company of any such request, a list of similar form and content
      as of a date not more than 15 days prior to the time such list is furnished,
      except that no such lists need be furnished under this Section 4.01 so long
      as
      the Trustee is in possession thereof by reason of its acting as Debt Security
      registrar.

     

    SECTION
      4.02.   Preservation
      and Disclosure of Lists.

     

    (a)  The
      Trustee shall preserve, in as current a form as is reasonably practicable,
      all
      information as to the names and addresses of the holders of Debt Securities
      (1)
      contained in the most recent list furnished to it as provided in Section 4.01
      or
      (2) received by it in the capacity of Debt Securities registrar (if so acting)
      hereunder. The Trustee may destroy any list furnished to it as provided in
      Section 4.01 upon receipt of a new list so furnished.

     

    (b)  In
      case
      three or more holders of Debt Securities (hereinafter referred to as
      "applicants") apply in writing to the Trustee and furnish to the Trustee
      reasonable proof that each such applicant has owned a Debt Security for a period
      of at least six months preceding the date of such application, and such
      application states that the applicants desire to communicate with other holders
      of Debt Securities with respect to their rights under this Indenture or under
      such Debt Securities and is accompanied by a copy of the form of proxy or other
      communication which such applicants propose to transmit, then the Trustee shall
      within five Business Days after the receipt of such application, at the election
      of the Company, 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 4.02, or

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    (2)  inform
      such applicants as to the approximate number of holders of Debt Securities
      whose
      names and addresses appear in the

    information
      preserved at the time by the Trustee in accordance with the provisions of
      subsection (a) of this Section 4.02,
      and as
      to the

    approximate
      cost of mailing to such Securityholders the form of proxy or other
      communication, if any, specified in such application.

     

    If
      the
      Company shall elect not to afford such applicants access to such information,
      the Trustee shall, upon the written request of such applicants, mail to each
      Securityholder of Debt Securities whose name and address appear in the
      information preserved at the time by the Trustee in accordance with the
      provisions of subsection (a) of this Section 4.02 a copy of the form of proxy
      or
      other communication which is specified in such request with reasonable
      promptness after a tender to the Trustee of the material to be mailed and of
      payment, or provision for the payment, of the reasonable expenses of mailing,
      unless within five days after such tender, the Trustee shall mail to such
      applicants, and file with the Securities and Exchange Commission, if permitted
      or required by applicable law, together with a copy of the material to be
      mailed, a written statement of the Company to the effect that such mailing
      would
      be contrary to the best interests of the holders of all Debt Securities, as
      the
      case may be, or would be in violation of applicable law. Such written statement
      shall specify the basis of such opinion. If said Commission, as permitted or
      required by applicable law, after opportunity for a hearing upon the objections
      specified in the written statement so filed, shall enter an order refusing
      to
      sustain any of such objections or if, after the entry of an order sustaining
      one
      or more of such objections, said Commission shall find, after notice and
      opportunity for hearing, that all the objections so sustained have been met
      and
      shall enter an order so declaring, the Trustee shall mail copies of such
      material to all such Securityholders with reasonable promptness after the entry
      of such order and the renewal of such tender; otherwise the Trustee shall be
      relieved of any obligation or duty to such applicants respecting their
      application.

     

    (c)  Each
      and
      every holder of Debt Securities, by receiving and holding the same, agrees
      with
      the Company and the Trustee that neither the Company nor the Trustee nor any
      Paying Agent shall be held accountable by reason of the disclosure of any such
      information as to the names and addresses of the holders of Debt Securities
      in
      accordance with the provisions of subsection (b) of this Section 4.02,
      regardless of the source from which such information was derived, and that
      the
      Trustee shall not be held accountable by reason of mailing any material pursuant
      to a request made under said subsection (b).

     

    SECTION
      4.03.  Financial
      and Other Information.

     

      The
      Company shall deliver to each Securityholder (1) each Report on Form 10-K and
      Form 10-Q prepared by the Company and filed with the Securities and Exchange
      Commission in accordance with the Exchange Act within 7 days after the filing
      thereof, (2) if the Company is not then (y) subject to Section 13 or 15(d)
      of
      the Exchange Act or (z) exempt from reporting pursuant to Rule 12g3-2(b)
      thereunder, the Company shall be required to provide within 45 days of the
      end
      of each calendar quarterly period and 90 days after the end of each calendar
      year, the information required to be provided by Rule 144A(d)(4) under the
      Securities Act and (3) within 30 days after the end of the fiscal year of the
      Company, Form 1099 or such other annual U.S. federal income tax information
      statement required by the Code containing such

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

       

      information
        with regard to the Debt Securities held by such holder as is required by
        the
        Code and the income tax regulations of the U.S. Treasury
        thereunder.

    

     

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

     

    ARTICLE
      V  

     

    REMEDIES
      OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

     

    SECTION
      5.01.   Events
      of Default.

     

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

     

    (a)  the
      Company defaults in the payment of any interest upon any Debt Security when
      it
      becomes due and payable (unless the Company has elected and may defer interest
      payments pursuant to Section 2.11), and continuance of such default for a period
      of 30 days; for the avoidance of doubt, an extension of any interest
      distribution period by the Company in accordance with Section 2.11 of this
      Indenture shall not constitute a default under this clause 5.01(a);
      or

     

    (b)  the
      Company defaults in the payment of all or any part of the principal of (or
      premium, if any, on) any Debt Securities as and when the same shall become
      due
      and payable either at maturity, upon redemption, by declaration of acceleration
      pursuant to Section 5.01 of this Indenture or otherwise; or

     

    (c)  the
      Company defaults in the payment of any interest upon any Debt Security when
      it
      becomes due and payable following the nonpayment of any such interest for 20
      or
      more consecutive quarterly periods; or

     

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

     

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

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    If
      an
      Event of Default specified under clause (c) of this Section 5.01 occurs and
      is
      continuing with respect to the Debt Securities, then, and in each and every
      such
      case, unless the principal of the Debt Securities shall have already become
      due
      and payable, either the Trustee or the holders of not less than 25% in aggregate
      principal amount of the Debt Securities then outstanding hereunder, by notice
      in
      writing to the Company (and to the Trustee if given by Securityholders), may
      declare the entire principal of the Debt Securities and any premium and interest
      accrued, but unpaid, thereon, if any, to be due and payable immediately, and
      upon any such declaration the same shall become immediately due and payable.
      If
      an Event of Default specified under clause (e) or (f) of this Section 5.01
      occurs, then, in each and every such case, the entire principal amount of the
      Debt Securities and any premium and interest accrued, but unpaid, thereon shall
      ipso
      facto become
      immediately due and payable without further action. Notwithstanding anything
      to
      the contrary in this Section 5.01, if at any time during the period in which
      this Indenture remains in force and effect, the Company ceases or elects to
      cease to be subject to the supervision and regulations of the Federal Reserve,
      OTS, OCC or similar regulatory authority overseeing bank, thrift, savings and
      loan or financial holding companies or similar institutions requiring
      specifications for the treatment of capital similar in nature to the capital
      adequacy guidelines under the Federal Reserve rules and regulations, then the
      first sentence of this paragraph shall be deemed to include clauses (a), (b)
      and
      (d) under this Section 5.01 as an Event of Default resulting in an acceleration
      of payment of the Debt Securities to the same extent as provided herein for
      clause (c).

     

    With
      respect to clause (d) of this Section 5.01, the Company agrees that in the
      event
      of a breach by the Company of its covenants or agreements mentioned therein,
      any
      remedy at law or in damages may prove inadequate and therefore the Company
      agrees that the Trustee shall be entitled to injunctive relief against the
      Company in the event of any breach or threatened breach by the Company, in
      addition to any other relief (including damages) available to the Trustee under
      this Indenture or under law.

     

    The
      foregoing provisions, however, are subject to the condition that if, at any
      time
      after the principal of the Debt Securities 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

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

       

      as
        hereinafter provided, (i) the Company shall pay or shall deposit with the
        Trustee a sum sufficient to pay all matured installments of interest upon
        all
        the Debt Securities and all payments on the Debt Securities which shall have
        become due otherwise than by acceleration (with interest upon all such payments
        and Deferred Interest, to the extent permitted by law) and such amount as
        shall
        be sufficient to cover reasonable compensation to the Trustee and each
        predecessor Trustee, their respective agents, attorneys and counsel, and
        all
        other amounts due to the Trustee pursuant to Section 6.06, if any, and (ii)
        all
        Events of Default under this Indenture, other than the non-payment of the
        payments on Debt Securities which shall have become due by acceleration,
        shall
        have been cured, waived or otherwise remedied as provided herein, and in
        each
        and every such case the holders of a majority in aggregate principal amount
        of
        the Debt Securities then outstanding, by written notice to the Company and
        to
        the Trustee, may waive all defaults and rescind and annul such 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; provided, however, that if the Debt Securities are held by the Trust
        or
        a trustee of the Trust, such waiver or rescission and annulment shall not
        be
        effective until the holders of a majority in aggregate liquidation amount
        of the
        outstanding Capital Securities of the Trust shall have consented to such
        waiver
        or rescission and annulment.

    

     

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

     

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

     

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

     

    In
      case
      there shall be pending proceedings for the bankruptcy or for the reorganization
      of the Company or any other obligor on the Debt Securities under Bankruptcy
      Law,
      or in case a receiver or trustee shall have been appointed for the property
      of
      the Company or such other obligor, or in the case of any other similar judicial
      proceedings relative to the

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

       

      Company
        or other obligor upon the Debt Securities, or to the creditors or property
        of
        the Company or such other obligor, the Trustee, irrespective of whether the
        principal of the Debt Securities shall then be due and payable as therein
        expressed or by declaration of acceleration or otherwise and irrespective
        of
        whether the Trustee shall have made any demand pursuant to the provisions
        of
        this Section 5.02, shall be entitled and empowered, by intervention in such
        proceedings or otherwise, to file and prove a claim or claims for the whole
        amount of principal and interest owing and unpaid in respect of the Debt
        Securities and, in case of any judicial proceedings, to file such proofs
        of
        claim and other papers or documents as may be necessary or advisable in order
        to
        have the claims of the Trustee (including any claim for reasonable compensation
        to the Trustee and each predecessor Trustee, and their respective agents,
        attorneys and counsel, and for reimbursement of all other amounts due to
        the
        Trustee under Section 6.06) and of the Securityholders allowed in such judicial
        proceedings relative to the Company or any other obligor on the Debt Securities,
        or to the creditors or property of the Company or such other obligor, unless
        prohibited by applicable law and regulations, to vote on behalf of the holders
        of the Debt Securities in any election of a trustee or a standby trustee
        in
        arrangement, reorganization, liquidation or other bankruptcy or insolvency
        proceedings or Person performing similar functions in comparable proceedings,
        and to collect and receive any moneys or other property payable or deliverable
        on any such claims, and to distribute the same after the deduction of its
        charges and expenses; and any receiver, assignee or trustee in bankruptcy
        or
        reorganization is hereby authorized by each of the Securityholders to make
        such
        payments to the Trustee, and, in the event that the Trustee shall consent
        to the
        making of such payments directly to the Securityholders, to pay to the Trustee
        such amounts as shall be sufficient to cover reasonable compensation to the
        Trustee, each predecessor Trustee and their respective agents, attorneys
        and
        counsel, and all other amounts due to the Trustee under Section
        6.06.

    

     

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

     

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

     

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

     

    SECTION
      5.03.   Application
      of Moneys Collected by Trustee.

     

    Any
      moneys collected by the Trustee shall be applied in the following order, at
      the
      date or dates specified pursuant hereto for the distribution of such moneys,
      upon presentation

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

       

      of
        the
        several Debt Securities in respect of which moneys have been collected, and
        stamping thereon the payment, if only partially paid, and upon surrender
        thereof
        if fully paid:

    

     

    First:
      To the
      payment of costs and expenses incurred by, and reasonable fees of, the Trustee,
      its agents, attorneys and counsel, and of all other amounts due to the Trustee
      under Section 6.06;

     

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

     

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

     

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

     

    SECTION
      5.04.   Proceedings
      by Securityholders.

     

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

     

    Notwithstanding
      any other provisions in this Indenture, however, the right of any holder of
      any
      Debt Security to receive payment of the principal of, premium, if any, and
      interest on such Debt Security when due, or to institute suit for the
      enforcement of any such payment, shall not be impaired or affected without
      the
      consent of such holder. For the protection and enforcement of the provisions
      of
      this Section, each and every Securityholder and the Trustee shall be entitled
      to
      such relief as can be given either at law or in equity.

     

    SECTION
      5.05.   Proceedings
      by Trustee.

     

    In
      case
      of an Event of Default 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.

     

    
      
        
        

      

      
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    SECTION
      5.06.   Remedies
      Cumulative and Continuing.

     

    Except
      as
      otherwise provided in Section 2.06, all powers and remedies given by this
      Article V to the Trustee or to the Securityholders shall, to the extent
      permitted by law, be deemed cumulative and not exclusive of any other powers
      and
      remedies available to the Trustee or the holders of the Debt Securities, by
      judicial proceedings or otherwise, to enforce the performance or observance
      of
      the covenants and agreements contained in this Indenture or otherwise
      established with respect to the Debt Securities, and no delay or omission of
      the
      Trustee or of any holder of any of the Debt Securities to exercise any right
      or
      power accruing upon any Event of Default occurring and continuing as aforesaid
      shall impair any such right or power, or shall be construed to be a waiver
      of
      any such default or an acquiescence therein; and, subject to the provisions
      of
      Section 5.04, every power and remedy given by this Article V or by law to the
      Trustee or to the Securityholders may be exercised from time to time, and as
      often as shall be deemed expedient, by the Trustee or by the
      Securityholders.

     

    SECTION
      5.07.   Direction
      of Proceedings and Waiver of Defaults by Majority of
      Securityholders.

     

    The
      holders of a majority in aggregate principal amount of the Debt Securities
      affected (voting as one class) at the time outstanding and, if the Debt
      Securities are held by the Trust or a trustee of the Trust, the holders of
      a
      majority in aggregate liquidation amount of the outstanding Capital Securities
      of the Trust shall have the right to direct the time, method and place of
      conducting any proceeding for any remedy available to the Trustee, or exercising
      any trust or power conferred on the Trustee with respect to such Debt
      Securities; provided,
      however,
      that if
      the Debt Securities are held by the Trust or a trustee of the Trust, such time,
      method and place or such exercise, as the case may be, may not be so directed
      until the holders of a majority in aggregate liquidation amount of the
      outstanding Capital Securities of the Trust shall have directed such time,
      method and place or such exercise, as the case may be; provided, further, that
      (subject to the provisions of Section 6.01) the Trustee shall have the right
      to
      decline to follow any such direction if the Trustee being advised by counsel
      shall determine that the action so directed would be unjustly prejudicial to
      the
      holders not taking part in such direction or if the Trustee being advised by
      counsel determines that the action or proceeding so directed may not lawfully
      be
      taken or if a Responsible Officer of the Trustee shall determine that the action
      or proceedings so directed would involve the Trustee in personal liability.
      Prior to any declaration of acceleration, or ipso facto acceleration, of the
      maturity of the Debt Securities, the holders of a majority in aggregate
      principal amount of the Debt Securities at the time outstanding may on behalf
      of
      the holders of all of the Debt Securities waive (or modify any previously
      granted waiver of) any past default or Event of Default and its consequences,
      except a default (a) in the payment of principal of, premium, if any, or
      interest on any of the Debt Securities, (b) in respect of covenants or
      provisions hereof which cannot be modified or amended without the consent of
      the
      holder of each Debt Security affected, or (c) in respect of the covenants
      contained in Section 3.09; provided,
      however,
      that if
      the Debt Securities are held by the Trust or a trustee of the Trust, such waiver
      or modification to such waiver shall not be effective until the holders of
      a
      majority in Liquidation Amount of the Trust Securities of the Trust shall have
      consented to such waiver or modification to such waiver; provided,
      further,
      that if
      the consent of the holder of each outstanding Debt Security is required, such
      waiver or modification to such waiver shall not be effective until each holder
      of the outstanding Capital Securities of the Trust shall have
      consented

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

       

      to
        such
        waiver or modification to such waiver. Upon any such waiver or modification
        to
        such waiver, the Default or Event of Default covered thereby shall be deemed
        to
        be cured for all purposes of this Indenture and the Company, the Trustee
        and the
        holders of the Debt Securities shall be restored to their former positions
        and
        rights hereunder, respectively; but no such waiver or modification to such
        waiver shall extend to any subsequent or other Default or Event of Default
        or
        impair any right consequent thereon. Whenever any Default or Event of Default
        hereunder shall have been waived as permitted by this Section 5.07, said
        Default
        or Event of Default shall for all purposes of the Debt Securities and this
        Indenture be deemed to have been cured and to be not
        continuing.

    

     

    SECTION
      5.08.   Notice
      of Defaults.

     

    The
      Trustee shall, within 90 days after a Responsible Officer of the Trustee shall
      have actual knowledge or received written notice of the occurrence of a Default
      with respect to the Debt Securities, mail to all Securityholders, as the names
      and addresses of such holders appear upon the Debt Security Register, notice
      of
      all Defaults with respect to the Debt Securities actually known to the Trustee,
      unless such defaults shall have been cured before the giving of such notice
      (the
      term "defaults" for the purpose of this Section 5.08 being hereby defined to
      be
      the events specified in subsections (a), (b), (c), (d), (e), (f) and (g) of
      Section 5.01, not including periods of grace, if any, provided for therein);
      provided,
      that,
      except in the case of default in the payment of the principal of, premium,
      if
      any, or interest on any of the Debt Securities, the Trustee shall be protected
      in withholding such notice if and so long as a Responsible Officer of the
      Trustee in good faith determines that the withholding of such notice is in
      the
      interests of the Securityholders.

     

    SECTION
      5.09.   Undertaking
      to Pay Costs.

     

    All
      parties to this Indenture agree, and each holder of any Debt Security by such
      holder's acceptance thereof shall be deemed to have agreed, that any court
      may
      in its discretion require, in any suit for the enforcement of any right or
      remedy under this Indenture, or in any suit against the Trustee for any action
      taken or omitted by it as Trustee, the filing by any party litigant in such
      suit
      of an undertaking to pay the costs of such suit, and that such court may in
      its
      discretion assess reasonable costs, including reasonable attorneys' fees and
      expenses, against any party litigant in such suit, having due regard to the
      merits and good faith of the claims or defenses made by such party litigant;
      but
      the provisions of this Section 5.09 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 Debt Securities (or, if such Debt Securities are held by the Trust or a
      trustee of the Trust, more than 10% in liquidation amount of the outstanding
      Capital Securities), to any suit instituted by any Securityholder for the
      enforcement of the payment of the principal of (or premium, if any) or interest
      on any Debt Security against the Company on or after the same shall have become
      due and payable, or to any suit instituted in accordance with Section
      14.12.

     

    
      
        
        

      

      
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    ARTICLE
      VI  

     

    CONCERNING
      THE TRUSTEE

     

    SECTION
      6.01.   Duties
      and Responsibilities of Trustee.

     

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

     

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

     

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

     

    (1)  the
      duties and obligations of the Trustee with respect to the Debt Securities shall
      be determined solely by the express provisions of 

    this
      Indenture, and the Trustee shall not be liable except for the performance of
      such duties and obligations with respect to the Debt Securities as

    are
      specifically set forth in this Indenture, and no implied covenants or
      obligations shall be read into this Indenture against the Trustee;
      and

     

    (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 on their face to the requirements of this 

    Indenture;

     

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

     

    (c)  the
      Trustee shall not be liable with respect to any action taken or omitted to
      be
      taken by it in good faith, in accordance with the direction of the
      Securityholders pursuant to Section 5.07, relating to the time, method and
      place
      of conducting any proceeding for any remedy available to the Trustee, or
      exercising any trust or power conferred upon the Trustee, under this
      Indenture;

     

    
      
        
        

      

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

     

    (e) in
      the
      absence of bad faith on the part of the Trustee, the Trustee may seek and rely
      on reasonable instructions from the Company.

     

    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.

     

    SECTION
      6.02.   Reliance
      on Documents, Opinions, etc.

     

    Except
      as
      otherwise provided in Section 6.01:

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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      their
        exercise, as a prudent person would exercise or use under the circumstances
        in
        the conduct of such person's own affairs;

    

     

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

     

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

     

    SECTION
      6.03.   No
      Responsibility for Recitals, etc.

     

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

     

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

     

    The
      Trustee or any Authenticating Agent or any Paying Agent or any transfer agent
      or
      any Debt Security registrar, in its individual or any other capacity, may become
      the owner or pledgee of Debt Securities with the same rights it would have
      if it
      were not Trustee, Authenticating Agent, Paying Agent, transfer agent or Debt
      Security registrar.

     

    SECTION
      6.05.   Moneys
      to be Held in Trust.

     

    Subject
      to the provisions of Section 12.04, all moneys received by the Trustee or any
      Paying Agent shall, until used or applied as herein provided, be held in trust
      for the purpose for which they were received, but need not be segregated from
      other funds except to the extent required by law. The Trustee and any Paying
      Agent shall be under no liability for interest on any money received by it
      hereunder except as otherwise agreed in writing with the Company. So long as
      no
      Event of Default shall have occurred and be continuing, all interest allowed
      on
      any such moneys, if any, shall be paid from time to time to the Company upon
      the
      written order of

     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

       

      the
        Company, signed by the Chairman of the Board of Directors, the President,
        the
        Chief Operating Officer, a Vice President, the Treasurer or an Assistant
        Treasurer of the Company.

    

     

    SECTION
      6.06.   Compensation
      and Expenses of Trustee.

     

    Other
      than as provided in the Fee Agreement of even date herewith between Cohen Bros.
      & Company, the Trustee and the Company, the Company covenants and agrees to
      pay to the Trustee from time to time, and the Trustee shall be entitled to,
      such
      compensation as shall be agreed to in writing between the Company and the
      Trustee (which shall not be limited by any provision of law in regard to the
      compensation of a trustee of an express trust), and the Company will pay or
      reimburse the Trustee upon its written request for all documented reasonable
      expenses, disbursements and advances incurred or made by the Trustee in
      accordance with any of the provisions of this Indenture (including the
      reasonable compensation and the reasonable expenses and disbursements of its
      counsel and of all Persons not regularly in its employ) except any such expense,
      disbursement or advance that arises from its negligence, willful misconduct
      or
      bad faith. The Company also covenants to indemnify each of the Trustee
      (including in its individual capacity) and any predecessor Trustee (and its
      officers, agents, directors and employees) for, and to hold it harmless against,
      any and all loss, damage, claim, liability or expense including taxes (other
      than taxes based on the income of the Trustee), except to the extent such loss,
      damage, claim, liability or expense results from the negligence, willful
      misconduct or bad faith of such indemnitee, arising out of or in connection
      with
      the acceptance or administration of this Trust, including the costs and expenses
      of defending itself against any claim or liability in the premises. The
      obligations of the Company under this Section 6.06 to compensate and indemnify
      the Trustee and to pay or reimburse the Trustee for documented expenses,
      disbursements and advances shall constitute additional indebtedness hereunder.
      Such additional indebtedness shall be secured by (and the Company hereby grants
      and pledges to the Trustee) a lien prior to that of the Debt Securities upon
      all
      property and funds held or collected by the Trustee as such, except funds held
      in trust for the benefit of the holders of particular Debt
      Securities.

     

    Without
      prejudice to any other rights available to the Trustee under applicable law,
      when the Trustee incurs expenses or renders services in connection with an
      Event
      of Default specified in subsections (e), (f) or (g) of Section 5.01, the
      expenses (including the reasonable charges and expenses of its counsel) and
      the
      compensation for the services are intended to constitute expenses of
      administration under any applicable federal or state bankruptcy, insolvency
      or
      other similar law.

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      6.07.   Officers'
      Certificate as Evidence.

     

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

     

    SECTION
      6.08.   Eligibility
      of Trustee.

     

    The
      Trustee hereunder shall at all times be a U.S. Person that is a banking
      corporation or national banking association organized and doing business under
      the laws of the United States of America or any state thereof or of the District
      of Columbia and authorized under such laws to exercise corporate trust powers,
      having a combined capital and surplus of at least fifty million U.S. dollars
      ($50,000,000) and subject to supervision or examination by federal, state,
      or
      District of Columbia authority. If such corporation or national banking
      association publishes reports of condition at least annually, pursuant to law
      or
      to the requirements of the aforesaid supervising or examining authority, then
      for the purposes of this Section 6.08 the combined capital and surplus of such
      corporation or national banking association shall be deemed to be its combined
      capital and surplus as set forth in its most recent records of condition so
      published.

     

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

     

    In
      case
      at any time the Trustee shall cease to be eligible in accordance with the
      provisions of this Section 6.08, the Trustee shall resign immediately in the
      manner and with the effect specified in Section 6.09.

     

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

     

    SECTION
      6.09.   Resignation
      or Removal of Trustee, Calculation Agent, Paying Agent or Debt Security
      Registrar.

     

    (a)  The
      Trustee, or any trustee or trustees hereafter appointed, the Calculation Agent,
      the Paying Agent and any Debt Security Registrar may at any time resign by
      giving written notice of such resignation to the Company and by mailing notice
      thereof, at the Company's expense, to the holders of the Debt Securities at
      their addresses as they shall appear on the Debt Security Register. Upon
      receiving such notice of resignation, the Company shall promptly appoint a
      successor or successors by written instrument, in duplicate, executed by
      order

     

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

       

      of
        its
        Board of Directors, one copy of which instrument shall be delivered to the
        resigning party and one copy to the successor. If no successor 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
        party
        may petition any court of competent jurisdiction for the appointment of a
        successor, or any Securityholder who has been a bona fide holder of a Debt
        Security or Debt Securities for at least six months may, subject to the
        provisions of Section 5.09, on behalf of himself or herself and all others
        similarly situated, petition any such court for the appointment of a successor.
        Such court may thereupon, after such notice, if any, as it may deem proper
        and
        prescribe, appoint a successor.

    

     

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

     

    (1)  the
      Trustee shall fail to comply with the provisions of the last paragraph of
      Section 6.08 after written request therefor by the

     Company
      or by any Securityholder who has been a bona fide holder of a Debt Security
      or
      Debt Securities for at least six months,

     

    (2)  the
      Trustee shall cease to be eligible in accordance with the provisions of Section
      6.08 and shall fail to resign after written request

     therefor
      by the Company or by any such Securityholder, or

     

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

     property
      shall be appointed, or any public officer shall take charge or control of the
      Trustee or of its property or affairs for the purpose of 

     rehabilitation,
      conservation or liquidation,

     

    then,
      in
      any such case, the Company may remove the Trustee and appoint a successor
      Trustee by written instrument, in duplicate, executed by order of the Board
      of
      Directors, one copy of which instrument shall be delivered to the Trustee so
      removed and one copy to the successor Trustee, or, subject to the provisions
      of
      Section 5.09, if no successor Trustee shall have been so appointed and have
      accepted appointment within 30 days of the occurrence of any of (1), (2) or
      (3)
      above, any Securityholder who has been a bona fide holder of a Debt Security
      or
      Debt Securities for at least six months may, on behalf of himself or herself
      and
      all others similarly situated, petition any court of competent jurisdiction
      for
      the removal of the Trustee and the appointment of a successor Trustee. Such
      court may thereupon, after such notice, if any, as it may deem proper and
      prescribe, remove the Trustee and appoint a successor Trustee.

     

    (c)  Upon
      prior written notice to the Company and the Trustee, the holders of a majority
      in aggregate principal amount of the Debt Securities at the time outstanding
      may
      at any time remove the Trustee and nominate a successor Trustee, which shall
      be
      deemed appointed as successor Trustee unless within ten Business Days after
      such
      nomination the Company objects thereto, in which case or in the case of a
      failure by such holders to nominate a successor Trustee, the Trustee so removed
      or any Securityholder, upon the terms and conditions and otherwise as in
      subsection (a) of this Section 6.09 provided, may petition any court of
      competent jurisdiction for an appointment of a successor.

     

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

     

    (d)  Any
      resignation or removal of the Trustee, the Calculation Agent, the Paying Agent
      and any Debt Security Registrar and appointment of a successor pursuant to
      any
      of the provisions of this Section 6.09 shall become effective upon acceptance
      of
      appointment by the successor as provided in Section 6.10.

     

    SECTION
      6.10.   Acceptance
      by Successor.

     

    Any
      successor Trustee, Calculation Agent, Paying Agent or Debt Security Registrar
      appointed as provided in Section 6.09 shall execute, acknowledge and deliver
      to
      the Company and to its predecessor an instrument accepting such appointment
      hereunder, and thereupon the resignation or removal of the retiring party shall
      become effective and such successor, without any further act, deed or
      conveyance, shall become vested with all the rights, powers, duties and
      obligations with respect to the Debt Securities of its predecessor hereunder,
      with like effect as if originally named herein; but, nevertheless, on the
      written request of the Company or of the successor, the party ceasing to act
      shall, upon payment of the amounts then due it pursuant to the provisions of
      Section 6.06, execute and deliver an instrument transferring to such successor
      all the rights and powers of the party so ceasing to act and shall duly assign,
      transfer and deliver to such successor all property and money held by such
      retiring party hereunder. Upon reasonable request of any such successor, the
      Company shall execute any and all instruments in writing for more fully and
      certainly vesting in and confirming to such successor all such rights and
      powers. Any party ceasing to act shall, nevertheless, retain a lien upon all
      property or funds held or collected to secure any amounts then due it pursuant
      to the provisions of Section 6.06.

     

    If
      a
      successor Trustee is appointed, the Company, the retiring Trustee and the
      successor Trustee shall execute and deliver an indenture supplemental hereto
      which shall contain such provisions as shall be deemed necessary or desirable
      to
      confirm that all the rights, powers, trusts and duties of the retiring Trustee
      with respect to the Debt Securities 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 6.10
      unless at the time of such acceptance such successor Trustee shall be eligible
      and qualified under the provisions of Section 6.08.

     

    In
      no
      event shall a retiring Trustee, Calculation Agent, Paying Agent or Debt Security
      Registrar be liable for the acts or omissions of any successor
      hereunder.

     

    Upon
      acceptance of appointment by a successor Trustee, Calculation Agent, Paying
      Agent or Debt Security Registrar as provided in this Section 6.10, the Company
      shall mail notice of the succession to the holders of Debt Securities at their
      addresses as they shall appear on the Debt Security Register. If the Company
      fails to mail such notice within ten

     

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

       

      Business
        Days after the acceptance of appointment by the successor, the successor
        shall
        cause such notice to be mailed at the expense of the Company.

    

     

    SECTION
      6.11.   Succession
      by Merger, etc.

     

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

     

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

     

    SECTION
      6.12.   Authenticating
      Agents.

     

    There
      may
      be one or more Authenticating Agents appointed by the Trustee upon the request
      of the Company with power to act on its behalf and subject to its direction
      in
      the authentication and delivery of Debt Securities issued upon exchange or
      registration of transfer thereof as fully to all intents and purposes as though
      any such Authenticating Agent had been expressly authorized to authenticate
      and
      deliver Debt Securities; provided, that the Trustee shall have no liability
      to
      the Company for any acts or omissions of the Authenticating Agent with respect
      to the authentication and delivery of Debt Securities. Any such Authenticating
      Agent shall at all times be a Person 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 and being subject to
      supervision or examination by federal, state, territorial or District of
      Columbia authority. If such Person 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 Person
      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
      Person into which any Authenticating Agent may be merged or converted or with
      which it may be consolidated, or any Person resulting from any merger,
      consolidation or conversion to which any Authenticating Agent shall be a party,
      or any Person succeeding to all

     

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

       

      or
        substantially all of the corporate trust business of any Authenticating Agent,
        shall be the successor of such Authenticating Agent hereunder, if such successor
        Person is otherwise eligible under this Section 6.12 without the execution
        or
        filing of any paper or any further act on the part of the parties hereto
        or such
        Authenticating Agent.

    

     

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

     

    Other
      than as provided in the Fee Agreement of even date herewith between Cohen Bros.
      & Company, the Company and the Trustee, the Company agrees to pay to any
      Authenticating Agent from time to time reasonable compensation for its services.
      Any Authenticating Agent shall have no responsibility or liability for any
      action taken by it as such in accordance with the directions of the Trustee
      and
      shall receive such reasonable indemnity as it may require against the costs,
      expenses and liabilities incurred in furtherance of its duties under this
      Section 6.12.

     

    ARTICLE
      VII  

     

    CONCERNING
      THE SECURITYHOLDERS

     

    SECTION
      7.01.   Action
      by Securityholders.

     

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

     

    
      
        
        

      

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

     

    SECTION
      7.02.   Proof
      of Execution by Securityholders.

     

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

     

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

     

    SECTION
      7.03.   Who
      Are Deemed Absolute Owners.

     

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

     

    
      
        
        

      

      
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    SECTION
      7.04.   Debt
      Securities Owned by Company Deemed Not Outstanding.

     

    In
      determining whether the holders of the requisite aggregate principal amount
      of
      Debt Securities have concurred in any direction, consent or waiver under this
      Indenture, Debt Securities which are owned by the Company or any other obligor
      on the Debt Securities or by any Person directly or indirectly controlling
      or
      controlled by or under direct or indirect common control with the Company (other
      than the Trust) or any other obligor on the Debt Securities shall be disregarded
      and deemed not to be outstanding for the purpose of any such determination;
      provided,
      that
      for the purposes of determining whether the Trustee shall be protected in
      relying on any such direction, consent or waiver, only Debt Securities which
      a
      Responsible Officer of the Trustee actually knows are so owned shall be so
      disregarded. Debt Securities so owned which have been pledged in good faith
      may
      be regarded as outstanding for the purposes of this Section 7.04 if the pledgee
      shall establish to the satisfaction of the Trustee the pledgee's right to vote
      such Debt Securities and that the pledgee is not the Company or any such other
      obligor or Person directly or indirectly controlling or controlled by or under
      direct or indirect common control with the Company or any such other obligor.
      In
      the case of a dispute as to such right, any decision by the Trustee taken upon
      the advice of counsel shall be full protection to the Trustee.

     

    SECTION
      7.05.   Revocation
      of Consents; Future Securityholders Bound.

     

    At
      any
      time prior to (but not after) the evidencing to the Trustee, as provided in
      Section 7.01, of the taking of any action by the holders of the percentage
      in
      aggregate principal amount of the Debt Securities specified in this Indenture
      in
      connection with such action, any holder (in cases where no record date has
      been
      set pursuant to Section 7.01) or any holder as of an applicable record date
      (in
      cases where a record date has been set pursuant to Section 7.01) of a Debt
      Security (or any Debt Security issued in whole or in part in exchange or
      substitution therefor) the serial number of which is shown by the evidence
      to be
      included in the Debt Securities the holders of which have consented to such
      action may, by filing written notice with the Trustee at the Principal Office
      of
      the Trustee and upon proof of holding as provided in Section 7.02, revoke such
      action so far as concerns such Debt Security (or so far as concerns the
      principal amount represented by any exchanged or substituted Debt Security).
      Except as aforesaid any such action taken by the holder of any Debt Security
      shall be conclusive and binding upon such holder and upon all future holders
      and
      owners of such Debt Security, and of any Debt Security issued in exchange or
      substitution therefor or on registration of transfer thereof, irrespective
      of
      whether or not any notation in regard thereto is made upon such Debt Security
      or
      any Debt Security issued in exchange or substitution therefor.

     

    ARTICLE
      VIII  

     

    SECURITYHOLDERS'
      MEETINGS

     

    SECTION
      8.01.   Purposes
      of Meetings.

     

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

     

    
      
        
        

      

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

     

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

     

    (c)  to
      consent to the execution of an indenture or indentures supplemental hereto
      pursuant to the provisions of Section 9.02; or

     

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

     

    SECTION
      8.02.   Call
      of Meetings by Trustee.

     

    The
      Trustee may at any time call a meeting of Securityholders to take any action
      specified in Section 8.01, to be held at such time and at such place in Chicago,
      Illinois as the Trustee shall determine. Notice of every meeting of the
      Securityholders, setting forth the time and the place of such meeting and in
      general terms the action proposed to be taken at such meeting, shall be mailed
      to holders of Debt Securities affected at their addresses as they shall appear
      on the Debt Securities Register. Such notice shall be mailed not less than
      20
      nor more than 180 days prior to the date fixed for the meeting.

     

    SECTION
      8.03.   Call
      of Meetings by Company or Securityholders.

     

    In
      case
      at any time the Company pursuant to a Board Resolution, or the holders of at
      least 10% in aggregate principal amount of the Debt Securities, as the case
      may
      be, then outstanding, shall have requested the Trustee to call a meeting of
      Securityholders, by written request setting forth in reasonable detail the
      action proposed to be taken at the meeting, and the Trustee shall not have
      mailed the notice of such meeting within 20 days after receipt of such request,
      then the Company or such Securityholders may determine the time and the place
      in
      for such meeting and may call such meeting to take any action authorized in
      Section 8.01, by mailing notice thereof as provided in Section
      8.02.

     

    SECTION
      8.04.   Qualifications
      for Voting.

     

    To
      be
      entitled to vote at any meeting of Securityholders a Person shall be (a) a
      holder of one or more Debt Securities 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 Debt Securities. The only Persons who shall be entitled
      to
      be present or to speak at any meeting of Securityholders shall be the Persons
      entitled to vote at such meeting and their counsel and any representatives
      of
      the Trustee and its counsel and any representatives of the Company and its
      counsel.

     

    
      
        
        

      

      
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    SECTION
      8.05.   Regulations.

     

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

     

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

     

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

     

    SECTION
      8.06.   Voting.

     

    The
      vote
      upon any resolution submitted to any meeting of holders of Debt Securities
      with
      respect to which such meeting is being held shall be by written ballots on
      which
      shall be subscribed the signatures of such holders or of their representatives
      by proxy and the serial number or numbers of the Debt Securities held or
      represented by them. The permanent chairman of the meeting shall appoint two
      inspectors of votes who shall count all votes cast at the meeting for or against
      any resolution and who shall make and file with the secretary of the meeting
      their verified written reports in triplicate of all votes cast at the meeting.
      A
      record in duplicate of the proceedings of each meeting of Securityholders shall
      be prepared by the secretary of the meeting and there shall be attached to
      said
      record the original reports of the inspectors of votes on any vote by ballot
      taken thereat and affidavits by one or more Persons having knowledge of the
      facts setting forth a copy of the notice of the meeting and showing that said
      notice was mailed as provided in Section 8.02. The record shall show the serial
      numbers of the Debt Securities voting in favor of or against any resolution.
      The
      record shall be signed and verified by the affidavits of the permanent chairman
      and secretary of the meeting and one of the duplicates shall be delivered to
      the
      Company and the other to the Trustee to be preserved by the Trustee, the latter
      to have attached thereto the ballots voted at the meeting. Any record so signed
      and verified shall be conclusive evidence of the matters therein stated.

     

    
      
        
        

      

      
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    SECTION
      8.07.   Quorum;
      Actions.

     

    The
      Persons entitled to vote a majority in outstanding principal amount of the
      Debt
      Securities 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 outstanding
      principal amount of the Debt Securities, the Persons holding or representing
      such specified percentage in outstanding principal amount of the Debt Securities
      will constitute a quorum. In the absence of a quorum within 30 minutes of the
      time appointed for any such meeting, the meeting shall, if convened at the
      request of Securityholders, be dissolved. In any other case the meeting may
      be
      adjourned for a period of not less than 10 days as determined by the permanent
      chairman of the meeting prior to the adjournment of such meeting. In the absence
      of a quorum at any such adjourned meeting, such adjourned meeting may be further
      adjourned for a period of not less than 10 days as determined by the permanent
      chairman of the meeting prior to the adjournment of such adjourned meeting.
      Notice of the reconvening of any adjourned meeting shall be given as provided
      in
      Section 8.02, except that such notice need be given only once not less than
      five
      days prior to the date on which the meeting is scheduled to be reconvened.
      Notice of the reconvening of an adjourned meeting shall state expressly the
      percentage, as provided above, of the outstanding principal amount of the Debt
      Securities which shall constitute a quorum.

     

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

     

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

     

    SECTION
      8.08.   Written
      Consent Without a Meeting.

     

    Whenever
      under this Indenture, Securityholders are required or permitted to take any
      action by vote, such action may be taken without a meeting on written consent,
      setting forth the action so taken, signed by the Securityholders of all
      outstanding Debt Securities entitled to vote thereon. No consent shall be
      effective to take the action referred to therein unless, within sixty days
      of
      the earliest dated consent delivered in the manner required by this paragraph
      to
      the Trustee, written consents signed by a sufficient number of Securityholders
      to take action are delivered to the Trustee at its Principal Office. Delivery
      made to the Trustee at its Principal Office, shall be by hand or by certificated
      or registered mail, return receipt requested. Written

     

    
      
        
        

      

      
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      consent
        thus given by the Securityholders of such number of Debt Securities as is
        required hereunder, shall have the same effect as a valid vote of
        Securityholders of such number of Debt Securities.

    

     

    ARTICLE
      IX  

     

    SUPPLEMENTAL
      INDENTURES

     

    SECTION
      9.01.   Supplemental
      Indentures without Consent of Securityholders.

     

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

     

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

     

    (b)  to
      add to
      the covenants of the Company such further covenants, restrictions or conditions
      for the protection of the holders of Debt Securities as the Board of Directors
      shall consider to be for the protection of the holders of such Debt Securities,
      and to make the occurrence, or the occurrence and continuance, of a Default
      in
      any of such additional covenants, restrictions or conditions a Default or an
      Event of Default permitting the enforcement of all or any of the several
      remedies provided in this Indenture as herein set forth; provided,
      however,
      that in
      respect of any such additional covenant, restriction or condition such
      supplemental indenture may provide for a particular period of grace after
      default (which period may be shorter or longer than that allowed in the case
      of
      other defaults) or may provide for an immediate enforcement upon such default
      or
      may limit the remedies available to the Trustee upon such default;

     

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

     

    (d)  to
      add
      to, delete from, or revise the terms of Debt Securities, including, without
      limitation, any terms relating to the issuance, exchange, registration or
      transfer of Debt Securities, including to provide for transfer procedures and
      restrictions substantially similar to those applicable to the Capital
      Securities, as required by Section 2.05 (for purposes of assuring that no
      registration of Debt Securities is required under the Securities Act of 1933,
      as
      amended); provided, that any such action shall not adversely affect the
      interests of the holders of the Debt Securities then outstanding (it being
      understood, for purposes of this proviso, that transfer restrictions on Debt
      Securities substantially similar to those applicable to Capital Securities
      shall
      not be deemed to adversely affect the holders of the Debt
      Securities);

     

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

     

    
      
        
        

      

      
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      provisions
        of this Indenture as shall be necessary to provide for or facilitate the
        administration of the trusts hereunder by more than one Trustee, pursuant
        to the
        requirements of Section 6.10;

    

     

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

     

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

     

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

     

    Any
      supplemental indenture authorized by the provisions of this Section 9.01 may
      be
      executed by the Company and the Trustee without the consent of the holders
      of
      any of the Debt Securities at the time outstanding, notwithstanding any of
      the
      provisions of Section 9.02.

     

    SECTION
      9.02.   Supplemental
      Indentures with Consent of Securityholders.

     

    With
      the
      consent (evidenced as provided in Section 7.01) of the holders of not less
      than
      a majority in aggregate principal amount of the Debt Securities at the time
      outstanding affected by such supplemental indenture, the Company, when
      authorized by a Board Resolution, and the Trustee may from time to time and
      at
      any time enter into an indenture or indentures supplemental hereto (which shall
      conform to the provisions of the Trust Indenture Act, then in effect, applicable
      to indentures qualified thereunder) for the purpose of adding any provisions
      to
      or changing in any manner or eliminating any of the provisions of this Indenture
      or of any supplemental indenture or of modifying in any manner the rights of
      the
      holders of the Debt Securities; provided,
      however,
      that no
      such supplemental indenture shall without such consent of the holders of each
      Debt Security then outstanding and affected thereby (i) change the Maturity
      Date
      of any Debt Security, or reduce the principal amount thereof or any premium
      thereon, or reduce the rate (or manner of calculation of the rate) or extend
      the
      time of payment of interest thereon, or reduce (other than as a result of the
      maturity or earlier redemption of any such Debt Security in accordance with
      the
      terms of this Indenture and such Debt Security) or increase the aggregate
      principal amount of Debt Securities then outstanding, or change any of the
      redemption provisions, or make the principal thereof or any interest or premium
      thereon payable in any coin or currency other than United States Dollars, or
      impair or affect the right of any Securityholder to institute suit for payment
      thereof or impair the right of repayment, if any, at the option of the holder,
      or (ii) reduce the aforesaid percentage of Debt Securities the holders of which
      are required to consent to any such supplemental indenture; and provided,
      further,
      that if
      the Debt Securities are held by the Trust or a trustee of such trust, such
      supplemental indenture shall not be effective until the holders of a majority
      in
      Liquidation Amount of the outstanding Capital Securities shall have consented
      to
      such supplemental indenture; provided,
      further,
      that if
      the

     

    
      
        
        

      

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

    

     

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

     

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

     

    It
      shall
      not be necessary for the consent of the Securityholders under this Section
      9.02
      to approve the particular form of any proposed supplemental indenture, but
      it
      shall be sufficient if such consent shall approve the substance
      thereof.

     

    SECTION
      9.03.   Effect
      of Supplemental Indentures.

     

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

     

    SECTION
      9.04.   Notation
      on Debt Securities.

     

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

     

    
      
        
        

      

      
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    SECTION
      9.05.   Evidence
      of Compliance of Supplemental Indenture to be furnished to
      Trustee.

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, shall, in addition
      to the documents required by Section 14.06, receive an Officers' Certificate
      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
      10.01.   Optional
      Redemption.

     

    At
      any
      time the Company shall have the right, subject to the receipt by the Company
      of
      prior approval from any regulatory authority with jurisdiction over the Company
      if such approval is then required under applicable capital guidelines or
      policies of such regulatory authority, to redeem the Debt Securities, in whole
      or (provided that all accrued and unpaid interest has been paid on all Debt
      Securities for all Interest Periods terminating on or prior to such date) from
      time to time in part, on any March 15, June 15, September 15 or December 15
      on
      or after September 15, 2011 (“Redemption Date"), at the Redemption
      Price.

     

    SECTION
      10.02.   Special
      Event Redemption.

     

    If
      a
      Special Event shall occur and be continuing, the Company shall have the right,
      subject to the receipt by the Company of prior approval from any regulatory
      authority with jurisdiction over the Company if such approval is then required
      under applicable capital guidelines or policies of such regulatory authority,
      to
      redeem the Debt Securities, in whole or in part, at any time within 90 days
      following the occurrence of such Special Event (the "Special Redemption Date"),
      at the Special Redemption Price.

     

    SECTION
      10.03.   Notice
      of Redemption; Selection of Debt Securities.

     

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

     

    
      
        
        

      

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

     

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

     

    The
      Company will give the Trustee notice not less than 45 nor more than 60 days
      prior to the Redemption Date as to the Redemption Price at which the Debt
      Securities are to be redeemed and the aggregate principal amount of Debt
      Securities to be redeemed and the Trustee shall select, in such manner as in
      its
      sole discretion it shall deem appropriate and fair, the Debt Securities or
      portions thereof (in integral multiples of $1,000) to be redeemed.

     

    SECTION
      10.04.   Payment
      of Debt Securities Called for Redemption.

     

    If
      notice
      of redemption has been given as provided in Section 10.03, the Debt Securities
      or portions of Debt Securities with respect to which such notice has been given
      shall become due and payable on the Redemption Date or the Special Redemption
      Date (as the case may be) and at the place or places stated in such notice
      at
      the applicable redemption price, together with interest accrued to the date
      fixed for redemption, and on and after said Redemption Date or the Special
      Redemption Date (unless the Company shall default in the payment of such Debt
      Securities at the redemption price, together with unpaid interest accrued
      thereon to said date) interest on the Debt Securities or portions of Debt
      Securities so called for redemption shall cease to accrue. On presentation
      and
      surrender of such Debt Securities at a place of payment specified in said
      notice, such Debt Securities or the specified portions thereof shall be paid
      and
      redeemed by the Company at the applicable redemption price, together with unpaid
      interest accrued thereon to the Redemption Date or the Special Redemption Date
      (as the case may be).

     

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

     

    
      
        
        

      

      
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    ARTICLE
      XI  

     

    CONSOLIDATION,
      MERGER, SALE, CONVEYANCE AND LEASE

     

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

     

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

     

    SECTION
      11.02.   Successor
      Entity to be Substituted.

     

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

     

    
      
        
        

      

      
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      and
        interest on all of the Debt Securities and the due and punctual performance
        and
        observance of all of the covenants and conditions of this Indenture to be
        performed or observed by the Company, such successor entity shall succeed
        to and
        be substituted for the Company, with the same effect as if it had been named
        herein as the Company, and thereupon the predecessor entity shall be relieved
        of
        any further liability or obligation hereunder or upon the Debt Securities.
        Such
        successor entity thereupon may cause to be signed, and may issue either in
        its
        own name or in the name of the Company, any or all of the Debt Securities
        issuable hereunder which theretofore shall not have been signed by the Company
        and delivered to the Trustee or the Authenticating Agent; and, upon the order
        of
        such successor entity instead of the Company and subject to all the terms,
        conditions and limitations in this Indenture prescribed, the Trustee or the
        Authenticating Agent shall authenticate and deliver any Debt Securities which
        previously shall have been signed and delivered by the officers of the Company,
        to the Trustee or the Authenticating Agent for authentication, and any Debt
        Securities which such successor entity thereafter shall cause to be signed
        and
        delivered to the Trustee or the Authenticating Agent for that purpose. All
        the
        Debt Securities so issued shall in all respects have the same legal rank
        and
        benefit under this Indenture as the Debt Securities theretofore or thereafter
        issued in accordance with the terms of this Indenture as though all of such
        Debt
        Securities had been issued at the date of the execution
        hereof.

    

     

    SECTION
      11.03.   Opinion
      of Counsel to be Given to Trustee.

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, shall receive,
      in
      addition to the Opinion of Counsel required by Section 9.05, an Opinion of
      Counsel as conclusive evidence that any consolidation, merger, sale, conveyance,
      transfer or other disposition, and any assumption, permitted or required by
      the
      terms of this Article XI complies with the provisions of this Article
      XI.

     

    ARTICLE
      XII  

     

    SATISFACTION
      AND DISCHARGE OF INDENTURE

     

    SECTION
      12.01.   Discharge
      of Indenture.

     

    When
      (a)
      the Company shall deliver to the Trustee for cancellation all Debt Securities
      theretofore authenticated (other than any Debt Securities which shall have
      been
      destroyed, lost or stolen and which shall have been replaced or paid as provided
      in Section 2.06) and not theretofore canceled, or (b) all the Debt Securities
      not theretofore canceled or delivered to the Trustee for cancellation shall
      have
      become due and payable, or are by their terms to become due and payable within
      one year or are to be called for redemption within one year under arrangements
      satisfactory to the Trustee for the giving of notice of redemption, and the
      Company shall deposit with the Trustee, in trust, funds, which shall be
      immediately due and payable, sufficient to pay at maturity or upon redemption
      all of the Debt Securities (other than any Debt Securities which shall have
      been
      destroyed, lost or stolen and which shall have been replaced or paid as provided
      in Section 2.06) not theretofore canceled or delivered to the Trustee for
      cancellation, including principal and premium, if any, and interest due or
      to
      become due to 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 Debt

     

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

       

      Securities
        (1) theretofore repaid to the Company in accordance with the provisions of
        Section 12.04, or (2) paid to any state or to the District of Columbia pursuant
        to its unclaimed property or similar laws, and if in the case of either clause
        (a) or clause (b) the Company shall also pay or cause to be paid all other
        sums
        payable hereunder by the Company, then this Indenture shall cease to be of
        further effect except for the provisions of Sections 2.05, 2.06, 3.01, 3.02,
        3.04, 6.06, 6.09 and 12.04 hereof, which shall survive until such Debt
        Securities shall mature or are redeemed, as the case may be, and are paid
        in
        full. Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and the Trustee,
        on demand of the Company accompanied by an Officers' Certificate and an Opinion
        of Counsel, each stating that all conditions precedent herein provided for
        relating to the satisfaction and discharge of this Indenture have been complied
        with, and at the cost and expense of the Company, shall execute proper
        instruments acknowledging satisfaction of and discharging this Indenture,
        the
        Company, however, hereby agreeing to reimburse the Trustee for any costs
        or
        expenses thereafter reasonably and properly incurred by the Trustee in
        connection with this Indenture or the Debt Securities.

    

     

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

     

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

     

    SECTION
      12.03.   Paying
      Agent to Repay Moneys Held.

     

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

     

    SECTION
      12.04.   Return
      of Unclaimed Moneys.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      XIII  

     

    IMMUNITY
      OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

     

    SECTION
      13.01.   Indenture
      and Debt Securities Solely Corporate Obligations.

     

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

     

    ARTICLE
      XIV  

     

    MISCELLANEOUS
      PROVISIONS

     

    SECTION
      14.01.   Successors.

     

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

     

    SECTION
      14.02.   Official
      Acts by Successor Entity.

     

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

     

    SECTION
      14.03.   Surrender
      of Company Powers.

     

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

     

    SECTION
      14.04.   Addresses
      for Notices, etc.

     

    Any
      notice or demand which by any provision of this Indenture is required or
      permitted to be given or served by the Trustee or by the Securityholders on
      the
      Company may be given or served in writing, duly signed by the party giving
      such
      notice, and shall be delivered by facsimile (which shall be followed by notice
      delivered or mailed by first class mail) or mailed by first class mail to the
      Company at:

     

    
      
        
        

      

      
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    Peoples
      Bancorp of North Carolina, Inc.

    518
      West
      C Street

    Newton,
      North Carolina 28658

    Attention:
      A. Joseph Lampron

    

    Any
      notice, direction, request or demand by any Securityholder or the Company to
      or
      upon the Trustee shall be deemed to have been sufficiently given or made, for
      all purposes, if given or made in writing at the office of LaSalle Bank National
      Association at:

     

    135
      South
      LaSalle Street, Suite 1511

    Chicago,
      Illinois 60603

    Attn:
      CDO
      Trust Services Group - PEBK Capital Trust II

     

    SECTION
      14.05.   Governing
      Law.

     

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

     

    SECTION
      14.06.   Evidence
      of Compliance with Conditions Precedent.

     

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

     

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

     

    SECTION
      14.07.   Non-Business
      Days.

     

    Notwithstanding
      anything to the contrary contained herein, if any Interest Payment Date, other
      than on the Maturity Date, any Redemption Date or the Special Redemption Date,
      falls on a day that is not a Business Day, then any interest payable will be
      paid on, and such Interest Payment Date will be moved to, the next succeeding
      Business Day, and additional interest will accrue for each day that such payment
      is delayed as a result thereof. If the Maturity

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

       

      Date,
        any
        Redemption Date or the Special Redemption Date falls on a day that is not
        a
        Business Day, then the principal, premium, if any, and/or interest payable
        on
        such date will be paid on the next succeeding Business Day, and no additional
        interest will accrue in respect of such payment made on such next succeeding
        Business Day (except that, if such Business Day falls in the next calendar
        year,
        such payment will be made on the immediately preceding Business
        Day).

    

     

    SECTION
      14.08.   Table
      of Contents, Headings, etc.

     

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

     

    SECTION
      14.09.   Execution
      in Counterparts.

     

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

     

    SECTION
      14.10.   Severability.

     

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

     

    SECTION
      14.11.   Assignment.

     

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

     

    SECTION
      14.12.   Acknowledgment
      of Rights.

     

    The
      Company acknowledges that, with respect to any Debt Securities held by the
      Trust
      or the Institutional Trustee of the Trust, if the Institutional Trustee of
      the
      Trust fails to enforce its rights under this Indenture as the holder of Debt
      Securities held as the assets of the Trust after the holders of a majority
      in
      Liquidation Amount of the Capital Securities of the Trust have so directed
      in
      writing such Institutional Trustee, a holder of record of such Capital
      Securities may to the fullest extent permitted by law institute legal
      proceedings directly against the Company to enforce such Institutional Trustee's
      rights under this Indenture without first instituting any legal proceedings
      against such Institutional Trustee or any other Person. Notwithstanding the
      foregoing, if an Event of Default has occurred and is continuing and such event
      is attributable to the failure of the Company to pay interest (or premium,
      if
      any) or

     

    
      
        
        

      

      
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      principal
        on the Debt Securities on the date such interest (or premium, if any) or
        principal is otherwise due and payable (or in the case of redemption, on
        the
        redemption date), the Company acknowledges that a holder of record of Capital
        Securities of the Trust may directly institute a proceeding against the Company
        for enforcement of payment to such holder directly of the principal of (or
        premium, if any) or interest on the Debt Securities having an aggregate
        principal amount equal to the aggregate Liquidation Amount of the Capital
        Securities of such holder on or after the respective due date specified in
        the
        Debt Securities.

    

     

    ARTICLE
      XV  

     

    SUBORDINATION
      OF DEBT SECURITIES

     

    SECTION
      15.01.   Agreement
      to Subordinate.

     

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

     

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

     

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

     

    SECTION
      15.02.   Default
      on Senior Indebtedness.

     

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

     

    In
      the
      event that, notwithstanding the foregoing, any payment shall be received by
      the
      Trustee when such payment is prohibited by the preceding paragraph of this
      Section 15.02, such payment shall, subject to Section 15.06, be held in trust
      for the benefit of, and shall be paid over or delivered to, the holders of
      Senior Indebtedness or their respective representatives, or to the trustee
      or
      trustees under any indenture pursuant to which any of such Senior Indebtedness
      may have been issued, as their respective interests may appear, but only to
      the
      extent that the holders of the Senior Indebtedness (or their representative
      or
      representatives or a trustee) notify the Trustee in writing within 90 days
      of
      such payment of the amounts then due and owing on the

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

       

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

    

     

    SECTION
      15.03.   Liquidation;
      Dissolution; Bankruptcy.

     

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

     

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

     

    For
      purposes of this Article XV, the words "cash, property or securities" shall
      not
      be deemed to include shares of stock of the Company as reorganized or
      readjusted, or securities of the Company or any other corporation provided
      for
      by a plan of reorganization or readjustment, the payment of which is
      subordinated at least to the extent provided in this Article XV with respect
      to
      the Debt Securities to the payment of all Senior Indebtedness of the Company,
      that may at the time be outstanding, provided,
      that
      (a) such Senior Indebtedness is assumed by the new corporation, if any,
      resulting from any such reorganization or readjustment, and (b) the rights
      of
      the holders of such Senior Indebtedness are not, without the consent of
      such

     

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

       

      holders,
        altered by such reorganization or readjustment. The consolidation of the
        Company
        with, or the merger of the Company into, another corporation or the liquidation
        or dissolution of the Company following the conveyance, transfer or other
        disposition of its property as an entirety, or substantially as an entirety,
        to
        another corporation upon the terms and conditions provided for in
        Article XI of this Indenture shall not be deemed a dissolution, winding-up,
        liquidation or reorganization for the purposes of this Section 15.03 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 15.02 or in this Section 15.03 shall apply
        to
        claims of, or payments to, the Trustee under or pursuant to Section 6.06
        of this
        Indenture.

    

     

    SECTION
      15.04.   Subrogation.

     

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

     

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

     

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

     

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

       

      distribution,
        the holders of Senior Indebtedness and other indebtedness of the Company,
        the
        amount thereof or payable thereon, the amount or amounts paid or distributed
        thereon and all other facts pertinent thereto or to this Article
        XV.

    

     

    SECTION
      15.05.   Trustee
      to Effectuate Subordination.

     

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

     

    SECTION
      15.06.   Notice
      by the Company.

     

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

     

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

     

    
      
        
        

      

      
        -63-

        
          

        

      

      
        
        

      

    

     

    SECTION
      15.07.   Rights
      of the Trustee, Holders of Senior Indebtedness.

     

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

     

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

     

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

     

    SECTION
      15.08.   Subordination
      May Not Be Impaired.

     

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

     

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

     

    LaSalle
      Bank National Association, in its capacity as Trustee, hereby accepts the trusts
      in this Indenture declared and provided, upon the terms and conditions herein
      above set forth.

     

     

     

    
      
        
        

      

      
        -64-

        
          

        

      

      
        
        

      

    

     

                                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.

    

      
        	 	
                Peoples
                  Bancorp of North Carolina, Inc.

              
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                A. Joseph Lampron
	 	Name:	 A.
                Joseph Lampron
	 	Title:	
                Executive
                  Vice President, Chief Financial

              
	 	 	
                Officer
                  and Corporate Treasurer

              

      

    

     

    
       

    

    

      
        	 	
                LaSalle
                  Bank National Association, as Trustee

              	 
	 	 	 	 
	 	 	 	 
	 	
                By:

              	/s/
                Suzanne Smith	
                 

              
	 	Name:	
                Suzanne
                  Smith

              	 
	 	Title:	
                Vice
                  President

              	 

      

    

     

            

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF JUNIOR SUBORDINATED DEBT SECURITY

     

    DUE
      2036

     

    [FORM
      OF FACE OF SECURITY]

     

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
      IS
      EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO
      RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER
      REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
      144A
      THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
      INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
      IN
      RELIANCE ON RULE 144A, (C) TO A "NON U.S. PERSON" IN AN "OFFSHORE TRANSACTION"
      PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED
      INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE
      501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
      OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
      AND
      NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
      IN
      VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
      COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
      (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
      AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE,
      A
      COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY
      BY
      ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
      RESTRICTIONS.

     

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

     

    THE
      HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
      WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, 

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

       

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

    

     

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

     

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

     

    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 THE CLAIMS OF DEPOSITORS AND
      THE
      CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS
      COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT
      SECURED.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    Form
      of
      Junior Subordinated Debt Security due 2036

     

    of

     

    Peoples
      Bancorp of North Carolina, Inc.

     

    Peoples
      Bancorp of North Carolina, Inc., a bank holding company incorporated in North
      Carolina (the "Company"), for value received promises to pay to LaSalle Bank
      National Association, not in its individual capacity but solely as Institutional
      Trustee for PEBK Capital Trust II, a Delaware statutory trust (the "Holder"),
      or
      registered assigns, the principal sum of Twenty Million Six Hundred Nineteen
      Thousand Dollars on September 15, 2036 and to pay interest on said principal
      sum
      from June 28, 2006, or from the most recent interest payment date (each such
      date, an "Interest Payment Date") to which interest has been paid or duly
      provided for, quarterly (subject to deferral as set forth herein) in arrears
      on
      March 15, June 15, September 15 and December 15 of each year commencing
      September 15, 2006, at a variable per annum rate equal to LIBOR (as defined
      in
      the Indenture) plus 1.63% (the "Interest Rate") (provided, however, that the
      Interest Rate for any Interest Payment Period may not exceed the highest rate
      permitted by New York law, as the same may be modified by United States law
      of
      general applicability) until the principal hereof shall have become due and
      payable, and on any overdue principal and (without duplication and to the extent
      that payment of such interest is enforceable under applicable law) on any
      overdue installment of interest at an annual rate equal to the Interest Rate
      in
      effect for each such Extension Period compounded quarterly. The amount of
      interest payable on any Interest Payment Date shall be computed on the basis
      of
      a 360-day year and the actual number of days elapsed in the relevant interest
      period. Notwithstanding anything to the contrary contained herein, if any
      Interest Payment Date, other than on the Maturity Date, any Redemption Date
      or
      the Special Redemption Date, falls on a day that is not a Business Day, then
      any
      interest payable will be paid on, and such Interest Payment Date will be moved
      to, the next succeeding Business Day, and additional interest will accrue for
      each day that such payment is delayed as a result thereof. If the Maturity
      Date,
      any Redemption Date or the Special Redemption Date falls on a day that is not
      a
      Business Day, then the principal, premium, if any, and/or interest payable
      on
      such date will be paid on the next succeeding Business Day, and no additional
      interest will accrue in respect of such payment made on such next succeeding
      Business Day (except that, if such Business Day falls in the next calendar
      year,
      such payment will be made on the immediately preceding Business Day). The
      interest installment so payable, and punctually paid or duly provided for,
      on
      any Interest Payment Date will, as provided in the Indenture, be paid to the
      Person in whose name this Debt Security (or one or more Predecessor Securities,
      as defined in said Indenture) is registered at the close of business on the
      regular record date for such interest installment, except that interest and
      any
      Deferred Interest payable on the Maturity Date shall be paid to the Person
      to
      whom principal is paid. Any such interest installment not punctually paid or
      duly provided for shall forthwith cease to be payable to the registered holders
      on such regular record date and may be paid to the Person in whose name this
      Debt Security (or one or more Predecessor Debt Securities) is registered at
      the
      close of business on a special record date to be fixed by the Trustee for the
      payment of such defaulted interest, notice whereof shall be given to the
      registered holders of the Debt Securities not less than 10 days prior to such
      special record date, all as more fully provided in the Indenture. The principal
      of and interest on this Debt Security shall be payable at the office or agency
      of the Trustee (or other Paying Agent appointed by the Company) maintained
      for
      that purpose in any coin or

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

       

      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 at the option of the Company by check mailed
        to
        the registered holder at such address as shall appear in the Debt Security
        Register or by wire transfer of immediately available funds to an account
        appropriately designated by the holder hereof. Notwithstanding the foregoing,
        so
        long as the holder of this Debt Security is the Institutional Trustee, payment
        of the principal of and premium, if any, and interest on this Debt Security
        shall be made in immediately available funds when due at such place and to
        such
        account as may be designated by the Institutional Trustee. All payments in
        respect of this Debt Security shall be payable in any coin or currency of
        the
        United States of America that at the time of payment is legal tender for
        payment
        of public and private debts.

    

     

    Upon
      submission of Notice (as defined in the Indenture) and so long as it is acting
      in good faith, and so long as no Event of Default pursuant to paragraphs (c),
      (e) or (f) of Section 5.01 of the Indenture has occurred and is continuing
      the Company shall have the right, from time to time and without causing an
      Event
      of Default, to defer payments of interest on the Debt Securities by extending
      the interest distribution period on the Debt Securities at any time and from
      time to time during the term of the Debt Securities, for up to 20 consecutive
      quarterly periods (each such extended interest distribution period, an
      "Extension Period"), during which Extension Period no interest shall be due
      and
      payable (except any Additional Interest that may be due and payable). During
      any
      Extension Period, interest will continue to accrue on the Debt Securities,
      and
      interest on such accrued interest (such accrued interest and interest thereon
      referred to herein as "Deferred Interest") will accrue at an annual rate equal
      to the Interest Rate applicable during such Extension Period, compounded
      quarterly from the date such Deferred Interest would have been payable were
      it
      not for the Extension Period, to the extent permitted by law. No Extension
      Period may end on a date other than an Interest Payment Date. At the end of
      any
      such Extension Period the Company shall pay all Deferred Interest then accrued
      and unpaid on the Debt Securities; provided,
      however,
      that no
      Extension Period may extend beyond the Maturity Date, Redemption Date (to the
      extent redeemed) or Special Redemption Date; and provided,
      further,
      however, during any such Extension Period, the Company may not (i) declare
      or
      pay any dividends or distributions on, or redeem, purchase, acquire, or make
      a
      liquidation payment with respect to, any of the Company's capital stock or
      (ii)
      make any payment of principal of or premium, if any, or interest on or repay,
      repurchase or redeem any debt securities of the Company that rank pari passu
      in
      all respects with or junior in interest to the Debt Securities or (iii) make
      any
      payment under any guarantees of the Company that rank in all respects
pari
      passu
      with or
      junior in respect to the Capital Securities Guarantee (other than (a)
      repurchases, redemptions or other acquisitions of shares of capital stock of
      the
      Company (A) in connection with any employment contract, benefit plan or other
      similar arrangement with or for the benefit of one or more employees, officers,
      directors or consultants, (B) in connection with a dividend reinvestment or
      stockholder stock purchase plan or (C) in connection with the issuance of
      capital stock of the Company (or securities convertible into or exercisable
      for
      such capital stock), as consideration in an acquisition transaction entered
      into
      prior to the applicable Extension Period, (b) as a result of any exchange,
      reclassification, combination or conversion of any class or series of the
      Company's capital stock (or any capital stock of a subsidiary of the Company)
      for any class or series of the Company's capital stock or of any class or series
      of the Company's indebtedness for any class or series of the Company's capital
      stock, (c) the purchase of fractional interests in shares of the Company's
      capital stock pursuant to the conversion or

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

       

      exchange
        provisions of such capital stock or the security being converted or exchanged,
        (d) any declaration of a dividend in connection with any stockholder's rights
        plan, or the issuance of rights, stock or other property under any stockholder's
        rights plan, or the redemption or repurchase of rights pursuant thereto,
        or (e)
        any dividend in the form of stock, warrants, options or other rights where
        the
        dividend stock or the stock issuable upon exercise of such warrants, options
        or
        other rights is the same stock as that on which the dividend is being paid
        or
        ranks pari
        passu
        with or
        junior to such stock). Prior to the termination of any Extension Period,
        the
        Company may further extend such Extension Period; provided,
        that no
        Extension Period (including all previous and further consecutive extensions
        that
        are part of such Extension Period) shall exceed 20 consecutive quarterly
        periods, or extend beyond the Maturity Date, Redemption Date (to the extent
        redeemed) or Special Redemption Date. Upon the termination of any Extension
        Period and upon the payment of all Deferred Interest, the Company may commence
        a
        new Extension Period, subject to the foregoing requirements. No interest
        or
        Deferred Interest shall be due and payable during an Extension Period, except
        at
        the end thereof, but Deferred Interest shall accrue upon each installment
        of
        interest that would otherwise have been due and payable during such Extension
        Period until such installment is paid. The Company must give the Trustee
        notice
        of its election to begin any Extension Period or extend an Extension Period
        (“Notice”) not later than the related regular record date for the relevant
        Interest Payment Date. The Notice shall describe why the Company has elected
        to
        begin an Extension Period. The Notice shall acknowledge and affirm the Company's
        understanding that it is prohibited from issuing dividends and other
        distributions during the Extension Period. Upon receipt of the Notice, an
        Initial Purchaser shall have the right, at its sole discretion, to disclose
        the
        name of the Company, the fact that the Company has elected to begin an Extension
        Period and other information that such Initial Purchaser, at its sole
        discretion, deems relevant to the Company's election to begin an Extension
        Period. The Trustee shall give notice of the Company's election to begin
        a new
        Extension Period to the Securityholders. 

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

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

     

    

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        	 	
                Peoples
                  Bancorp of North Carolina, Inc.

              
	 	 	 
	 	
                By:

              	
              
	 	Name:	
                 

              
	 	Title:	 
	 	 	 
	
                Dated:
                  _________________________, 2006

              	 	
                 

              

      

    

     

     

    CERTIFICATE
      OF AUTHENTICATION

     

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

     

    

      
        	 	
                LaSalle
                  Bank National Association, not in its

              
	 	
                individual
                  capacity but solely as Trustee

              
	 	 	 
	 	
                By:

              	 
	 	
              	
                Authorized
                  Signatory

              
	
                Dated:
                  _________________________, 2006

              	
              	
                 

              

      

    

     

     

     

     

     

     

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

     

    [FORM
      OF
      REVERSE OF SECURITY]

     

    This
      Debt
      Security is one of a duly authorized series of Debt Securities of the Company,
      all issued or to be issued pursuant to an Indenture (the "Indenture"), dated
      as
      of June 28, 2006, duly executed and delivered between the Company and LaSalle
      Bank National Association, as Trustee (the "Trustee"), to which Indenture and
      all indentures supplemental thereto reference is hereby made for a description
      of the rights, limitations of rights, obligations, duties and immunities
      thereunder of the Trustee, the Company and the holders of the Debt Securities
      (referred to herein as the "Debt Securities") of which this Debt Security is
      a
      part. The summary of the terms of this Debt Security contained herein does
      not
      purport to be complete and is qualified by reference to the
      Indenture.

     

    Upon
      the
      occurrence and continuation of a Tax Event, an Investment Company Event or
      a
      Capital Treatment Event (each a "Special Event"), this Debt Security may become
      due and payable, in whole or in part, at any time, within 90 days following
      the
      occurrence of such Tax Event, Investment Company Event or Capital Treatment
      Event (the "Special Redemption Date"), as the case may be, at the Special
      Redemption Price.

     

    The
      Company shall also have the right to redeem this Debt Security at the option
      of
      the Company, in whole or in part, on any March 15, June 15, September 15 or
      December 15 on or after September 15, 2011 (a "Redemption Date"), at the
      Redemption Price.

     

    Any
      redemption pursuant to either of the two preceding paragraphs will be made,
      subject to the receipt by the Company of prior approval from any regulatory
      authority with jurisdiction over the Company if such approval is then required
      under applicable capital guidelines or policies of such regulatory authority,
      upon not less than 30 days' nor more than 60 days' notice. If the Debt
      Securities are only partially redeemed by the Company, the Debt Securities
      will
      be redeemed pro
      rata
      or by
      lot or by any other method utilized by the Trustee.

     

    "Redemption
      Price" means 100% of the principal amount of the Debt Securities being redeemed
      plus accrued and unpaid interest on such Debt Securities to the Redemption
      Date.

     

    "Special
      Redemption Price" means, with respect to the redemption of any Debt Security
      following a Special Event, an amount in cash equal to 103.525% of the principal
      amount of Debt Securities to be redeemed prior to September 15, 2007 and
      thereafter equal to the percentage of the principal amount of the Debt
      Securities that is specified below for the Special Redemption Date plus, in
      each
      case, unpaid interest accrued thereon to the Special Redemption Date:

     

    
      	
              Special
                Redemption During the 

              12-Month
                Period Beginning September 15

            	
              Percentage
                of Principal Amount

            
	 	 
	
              2007

            	
              103.140%

            
	
              2008

            	
              102.355%

            
	
              2009

            	
              101.570%

            
	
              2010

            	
              100.785%

            
	
              2011
                and thereafter

            	
              100.000%

            
	 	 

    

     

     

    
      
        
        

      

      
        A-8

        
          

        

      

      
        
        

      

    

     

    In
      the
      event of redemption of this Debt Security in part only, a new Debt Security
      or
      Debt Securities for the unredeemed portion hereof will be issued in the name
      of
      the holder hereof upon the cancellation hereof.

     

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

     

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

     

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

     

    
      
        
        

      

      
        A-9

        
          

        

      

      
        
        

      

    

     

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

     

    Prior
      to
      due presentment for registration of transfer of this Debt Security, the Company,
      the Trustee, any Authenticating Agent, any Paying Agent, any transfer agent
      and
      the Debt Security registrar may deem and treat the registered holder hereof
      as
      the absolute owner hereof (whether or not this Debt Security shall be overdue
      and notwithstanding any notice of ownership or writing hereon) for the purpose
      of receiving payment of the principal of and premium, if any, and interest
      on
      this Debt Security and for all other purposes, and neither the Company nor
      the
      Trustee nor any Authenticating Agent nor any Paying Agent nor any transfer
      agent
      nor any Debt Security registrar shall be affected by any notice to the
      contrary.

     

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

     

    The
      Debt
      Securities are issuable only in registered certificated form without coupons.
      As
      provided in the Indenture and subject to certain limitations herein and therein
      set forth, Debt Securities are exchangeable for a like aggregate principal
      amount of Debt Securities of a different authorized denomination, as requested
      by the holder surrendering the same.

     

    All
      terms
      used in this Debt Security that are defined in the Indenture shall have the
      meanings assigned to them in the Indenture.

     

    THE
      LAW
      OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBT SECURITIES,
      WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
      OF THE GENERAL OBLIGATIONS LAW).

     

    

    

    
      
        
        

      

      
        A-10

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