<PAGE>
                                                                     EXHIBIT 4.2

                               GLOBAL CERTIFICATE

      THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE OR OTHER APPLICABLE SECURITIES LAW,
AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (OTHER THAN THE EXEMPTION CONTAINED IN SECTION 3(A)(2) THEREOF)
AND ANY STATE OR OTHER APPLICABLE SECURITIES LAW. EACH PURCHASER OF THIS NOTE IS
HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
DATE HEREOF AND THE LAST DATE ON WHICH STERLING BANK (THE "BANK") OR ANY
"AFFILIATE" OF THE BANK WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY: (A) TO THE BANK; (B) SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (OTHER THAN THE EXEMPTION
CONTAINED IN SECTION 3(A)(2) THEREOF), SUBJECT TO THE RIGHT OF THE BANK PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (C) OR (D) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) PURSUANT TO CLAUSE (C) TO REQUIRE THAT
THE TRANSFEROR DELIVER TO THE BANK A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN
THE FORM OF ANNEX A TO THE OFFERING CIRCULAR DATED APRIL 3, 2003. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
<PAGE>
      THIS SECURITY IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THIS SECURITY IS UNSECURED
AND IS INELIGIBLE TO SERVE AS COLLATERAL FOR ANY LOAN BY THE BANK, AND THE
OBLIGATIONS OF THE BANK EVIDENCED BY THIS SECURITY ARE, TO THE EXTENT AND IN THE
MANNER SET FORTH IN SECTION 5 HEREOF, SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT
TO THE BANK'S OBLIGATIONS TO ITS DEPOSITORS AND THE BANK'S OTHER OBLIGATIONS TO
ITS GENERAL CREDITORS AND TO ITS SECURED CREDITORS.

      THIS SECURITY IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
(THE "DEPOSITORY"), 55 WATER STREET, NEW YORK, NEW YORK OR ITS NOMINEE, AND MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY UNLESS AND UNTIL
THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE
FORM. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE OR TO ANY PERSON IS WRONGFUL,
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                                  STERLING BANK

                        7.375% Subordinated Note due 2013

$50,000,000                                                       April 10, 2003
No. 1
CUSIP: 85916D BH7

      For value received, STERLING BANK, a Texas state chartered banking
association (together with any successor pursuant to the provisions hereof, the
"Bank"), hereby promises to pay to Cede & Co., or registered assigns at Cede &
Co.'s offices at 55 Water Street, New York, New York or at such other office as
Cede & Co. may from time to time designate in writing to the Bank, the principal
sum of $50,000,000 on April 15, 2013 (the "Date of Maturity"), or on such
earlier date as the principal hereof may become due in accordance with the
provisions hereof, and to pay interest on said principal sum from time to time
outstanding, from the date hereof until payment of said principal sum has been
made or duly provided for, at the rate of 7.375% per


                                       2
<PAGE>
annum, payable semi-annually in arrears on April 15 and October 15 of each year,
commencing on October 15, 2003 (each an "Interest Payment Date"). Payments of
principal and interest hereunder shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts and shall be made immediately available to
the Holder hereof. Interest payments on this Security shall be the amount of
interest accrued to, but excluding, the relevant Interest Payment Date or Date
of Maturity, as the case may be. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.

      If any Interest Payment Date or Date of Maturity of this Security would
otherwise be a day which is not a business day (as defined below), the related
payment of principal of or interest on this Security shall be postponed to the
next day which is a business day with the same force and effect as if made on
the date such payment were due, and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or Date of
Maturity, as the case may be. The term "business day" means any day that is not
a Saturday or Sunday, and that is not a day on which commercial banks in New
York, New York or Houston, Texas are required or permitted by applicable law or
regulation to be closed. Except as provided above, interest on this Security
will accrue on holidays and on all days the Bank is not open for business.

      Reference is made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as though fully set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Fiscal and Paying Agent by the manual signature of one of its authorized
signatories, this Security shall not be valid or obligatory for any purpose.

                                       3
<PAGE>
      IN WITNESS WHEREOF, the Bank has caused this Security to be duly executed
and attested as of the date first mentioned above.

                                  STERLING BANK

                                  By:          /s/ J. Downey Bridgwater
                                           -------------------------------------
                                  Name:    J. Downey Bridgwater
                                  Title:   President and Chief Executive Officer

Attest:


  /s/ James W. Goolsby, Jr.
--------------------------------------------------------------
Name:    James W. Goolsby, Jr.
Title:   Senior Vice President and General Counsel

This Security is one of the Subordinated Notes referred to in the Fiscal and
Paying Agency Agreement referred to herein:

DEUTSCHE BANK TRUST COMPANY AMERICAS
         as Fiscal and Paying Agent

By:      /s/ Dorothy Robinson
    ----------------------------------------------------------
Name:     Dorothy Robinson
Title:    Vice President

Dated:  April 10, 2003



                                       4
<PAGE>
      1. This Security is one of the duly authorized issue of securities of the
Bank, designated as its "7.375% Subordinated Notes due 2013" (each a "Security,"
and collectively the "Securities"), initially limited in aggregate principal
amount to $50,000,000. The Bank, for the benefit of the Holders from time to
time of the Securities, has entered into a Fiscal and Paying Agency Agreement,
dated as of April 10, 2003 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Fiscal and Paying Agency Agreement"),
between the Bank and Deutsche Bank Trust Company Americas ("Deutsche Bank"), as
Fiscal and Paying Agent. Copies of the Fiscal and Paying Agency Agreement are on
file and available for inspection at the offices of the Fiscal and Paying Agent
located at Deutsche Bank Trust Company Americas, Attn: Corporate Trust & Agency
Services, or at such other place or places as the Fiscal and Paying Agent shall
designate by notice to the person in whose name this Security is registered (the
"Holder") on the Security Register (as defined in Section 3 of this Security).
Deutsche Bank or any duly appointed successor Fiscal and Paying Agent acting in
such capacity is herein called the "Fiscal and Paying Agent."

      The Bank may, in accordance with the terms of the Fiscal and Paying Agency
Agreement, reopen the issue of Securities and issue additional principal amounts
of the Securities or establish additional terms of the Securities.

      Payments of principal and interest payable at maturity will be made in
immediately available funds, upon presentation and surrender of this Security,
at the corporate trust office of the Fiscal and Paying Agent in New York, New
York, or at such other place or places as the Fiscal and Paying Agent shall
designate by notice to the Holder, provided that this Security is presented to
the Fiscal and Paying Agent in time for the Fiscal and Paying Agent to make such
payments in such funds in accordance with its normal procedures and subject to
such terms and conditions as the Fiscal and Paying Agent may impose consistent
with the Fiscal and Paying Agency Agreement. Payments of interest (other than
interest payable at stated maturity or any interest that is not punctually paid
or duly provided for on any Interest Payment Date ("Defaulted Interest")) shall
be paid by check, mailed to the Holder at its address specified in the Security
Register on the Record Date (as defined below) or to such other address in the
United States as the Holder shall designate to the Fiscal and Paying Agent in
writing not later than the relevant Record Date. Notwithstanding the foregoing,
payments of interest to the Depository or its nominee shall be made by wire
transfer in immediately available funds and if any other Holder hereof owns
$1,000,000 or more in aggregate principal amount of the Securities, such Holder
may elect to receive payments of interest (other than interest payable at stated
maturity) by wire transfer of immediately available funds to a bank account in
the United States designated by the Holder in a written notice received by the
Fiscal and Paying Agent not later than 15 calendar days prior to the applicable
Interest Payment Date. Interest payable on any Interest Payment Date shall be
payable to the person in whose name this Security is registered at the close of
business 15 calendar days prior to the applicable Interest Payment Date (such
date being referred to herein as the "Regular Record Date" for such Interest
Payment Date), notwithstanding the subsequent cancellation of this Security
prior to such Interest Payment Date, except that any Defaulted Interest will be
paid to the person in whose name this Security is registered on a Special Record
Date fixed by the Fiscal and Paying Agent (a "Special Record Date"). The terms
Regular Record Date and Special Record Date are referred to hereinafter
collectively as the "Record Date." To the extent permitted by applicable law,
interest

                                       5
<PAGE>
shall accrue, at the rate at which interest accrues on the principal of this
Security, on any amount of principal of or interest on this Security not paid
when due.

      2. Until the date on which all of the Securities shall have been
surrendered or delivered to the Fiscal and Paying Agent for cancellation or
destruction, or become due and payable and a sum sufficient to pay the principal
of and interest on all of the Securities shall have been made available for
payment and either paid to the registered Holders of the Securities or returned
to the Bank as provided herein and in the Fiscal and Paying Agency Agreement,
the Fiscal and Paying Agent shall at all times maintain an office or agency in
New York, New York, where Securities may be presented or surrendered for payment
or for transfer or exchange.

      3. As provided in the Fiscal and Paying Agency Agreement and subject to
certain limitations set forth therein, this Security is transferable in whole or
in part, and may be exchanged for a like aggregate principal amount of
Securities of other authorized denominations, by the Holder in person, or by its
attorney duly authorized in writing, at the office of the Fiscal and Paying
Agent maintained for such purpose. The Fiscal and Paying Agent shall maintain a
register providing for the registration of the Securities and any exchange or
transfer thereof (the "Security Register"). Upon surrender or presentation of
this Security for exchange or registration of transfer, and subject to certain
limitations set forth in the Fiscal and Paying Agency Agreement, the Bank shall
execute and the Fiscal and Paying Agent shall authenticate and deliver in
exchange therefor a Security or Securities, each in minimum denominations of
$250,000 or any amount in excess thereof which is an integral multiple of $1,000
which has or have an aggregate principal amount equal to the aggregate principal
amount of this Security being transferred or exchanged and is or are registered
in such name or names requested by the Holder. Any Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Fiscal and Paying Agent) be duly endorsed, or accompanied by a written
instrument of transfer with such evidence of due authorization and guarantee of
signature as may reasonably be required by the Fiscal and Paying Agent in form
satisfactory to the Fiscal and Paying Agent, duly executed by the Holder or his
or her attorney duly authorized in writing, and with such tax identification
number or other information for each person in whose name a Security is to be
issued as the Fiscal and Paying Agent may reasonably request to comply with
applicable law. No exchange or registration of transfer of this Security shall
be made after the fifteenth calendar day immediately preceding the Date of
Maturity.

      Owners of beneficial interests in this Security shall not be entitled to
receive certificated Securities in registered form and shall not be considered
holders of Securities unless (i) the Depository notifies the Bank in writing
that it is no longer willing or able to continue as a depository for the
Securities or if the Depository ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, and a successor depository is
not appointed by the Bank within ninety days after the effective date of the
Depository's ceasing to act as depository for the Securities, (ii) the Bank, at
its option, notifies the Fiscal and Paying Agent in writing that it elects to
cause the issuance of Securities in certificated form, or (iii) any event shall
have happened and be continuing which, after notice or lapse of time, or both,
would constitute an Event of Default with respect to the Securities. In the
event of such occurrences, upon the surrender of this Security by the Depository
or a successor depository of the Securities, the Bank will execute, and the
Fiscal and Paying Agent will, upon receipt of instructions in writing from the
Bank, authenticate and deliver Securities of like tenor and terms in
certificated form to each person that


                                       6
<PAGE>
the Depository or a successor depository identifies as the beneficial owner of
an interest in this Security in an aggregate principal amount equal to the
aggregate principal amount of this Security then outstanding, in exchange for
this Security.

      This Security or portions hereof may be transferred or exchanged only in
principal amounts of not less than $250,000 and integral multiples of $1,000 in
excess thereof. Any transfer, exchange or other disposition of this Security in
a block having an aggregate principal amount of less than $250,000 shall be
deemed to be void and of no legal effect whatsoever, any such transferee shall
be deemed not to be the Holder or owner of any beneficial interest in this
Security for any purpose, including but not limited to the receipt of interest
payable on this Security, and such transferee shall be deemed to have no
interest whatsoever in this Security.

      No service charge (other than any cost of delivery) shall be imposed for
any exchange or registration of transfer of this Security, but the Bank or the
Fiscal and Paying Agent may require the payment of a sum sufficient to cover any
stamp or other tax or governmental charge that may be imposed in connection
therewith (or presentation of evidence that such tax or charge has been paid).

      The Bank and the Fiscal and Paying Agent may treat the person in whose
name this Security is registered in the Security Register as the absolute owner
of this Security for the purpose of receiving payments of principal of and
interest on this Security and for all other purposes whatsoever, and the Bank
and the Fiscal and Paying Agent shall not be affected by a notice to the
contrary.

4.    PREPAYMENT AND NON-CONVERSION.


      (a) This Security is not subject to redemption, call or prepayment at the
option of the Bank, or to repayment at the option of the Holder, prior to the
Date of Maturity.

      (b) This Security is not convertible into the common stock or any other
security of the Bank.

5.    SUBORDINATION; RIGHTS OF FDIC.

      (a) The indebtedness of the Bank evidenced by this Security, including the
obligations of the Bank to pay the principal hereof and interest hereunder, is
unsecured and subordinate and junior in right of payment to the Bank's
obligations to its depositors, its obligations under bankers' acceptances and
letters of credit, and its obligations to its general unsecured creditors and to
its secured creditors (except for obligations that are specifically designated
as ranking on a parity with or junior to this Security) whether now outstanding
or hereafter incurred, in that in the event of any insolvency, receivership,
conservatorship, reorganization, readjustment of debt, marshalling of assets and
liabilities or similar proceedings or any liquidation or winding-up of or
relating to the Bank, whether voluntary or involuntary, all such obligations
(except obligations which rank on a parity with or are junior to this Security)
shall be entitled to be paid in full before any payment shall be made on account
of the principal of or interest on this Security. In the event of any such
proceeding, after payment in full of all sums owing with respect to such prior
obligations, the Holder of this Security, together with the holders of any
obligations of the Bank ranking on a parity with this Security, shall be
entitled to be paid


                                       7
<PAGE>
from the remaining assets of the Bank the unpaid principal and interest hereon
and thereon before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Bank ranking junior to this Security. Nothing herein shall impair the
obligation of the Bank, which is absolute and unconditional, to pay the
principal of and interest on this Security in accordance with its terms.

      (b) Notwithstanding any other provisions of this Security, including
Sections 5, 6 and 7 hereof, it is expressly understood and agreed that the FDIC
or any other receiver or conservator of the Bank shall have the right in the
performance of its legal duties, and as part of any transaction or plan of
reorganization or liquidation designed to protect or further the continued
existence of the Bank or the rights of any parties or agencies with an interest
in, or claim against, the Bank or its assets, to transfer or direct the transfer
of the obligations of this Security to any bank or bank holding company selected
by such official which shall expressly assume the obligation of the due and
punctual payment of the unpaid principal of and interest on this Security and
the due and punctual performance of all covenants and conditions hereof; and the
completion of such transfer and assumption shall serve to supersede and void any
default acceleration or subordination which may have occurred or which may occur
due or related to such transaction, plan, transfer or assumption, pursuant to
the provisions of this Security, and shall serve to return the Holder hereof to
the same position, other than for substitution of the obligor, it would have
occupied had no default, acceleration or subordination occurred; except that any
interest and principal previously due, other than by reason of acceleration, and
not paid shall, in the absence of a contrary agreement by the Holder, be deemed
to be immediately due and payable as of the date of such transfer and
assumption, together with interest thereon from its original due date at the
rate provided for herein.

      (c) This Security and any Securities issued subsequently hereto will rank
pari passu among themselves and pari passu, in the event of a liquidation or
similar proceeding with respect to the Bank, whether voluntary or involuntary,
with all other present or future unsecured subordinated debt obligations of the
Bank other than subordinated debt obligations of the Bank that by their express
terms rank junior to this Security.

      (d) This Security contains no limitation on the amount of debt, deposits
or other obligations that rank senior to this Security that may be hereafter
incurred or assumed by the Bank.

      (e) Notwithstanding any other provisions of this Security, the Bank shall
not make any payment of (i) any interest on this Security while it remains in
default in the payment of any assessment due to the FDIC if and to the extent it
would be prohibited from doing so by 12 U.S.C. Section 1828(b), (ii) any
interest due or principal repayable without the prior written approval of the
Commissioner of the Texas Department of Banking, when the Bank is in a
"hazardous condition or is insolvent" (as defined in Section 31.002(a) of the
Texas Banking Act, or any successor provision) or which would cause the Bank to
be in a "hazardous condition or insolvent," as determined in all cases by the
Banking Commissioner of Texas, and (iii) any principal or interest without the
approval of the FDIC, beginning 60 days after the Bank becomes "critically
undercapitalized," as that term is defined in 12 U.S.C. Section 1831o(b)(1)(E)
and the rules and regulations promulgated thereto.

                                       8
<PAGE>
6.    EVENTS OF DEFAULT; REMEDIES.

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

               (i) the Bank shall consent to the appointment of a receiver or
other similar official (other than a conservator) in any liquidation,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Bank or of or relating to all or
substantially all of the property of the Bank; or

               (ii) the Bank suffers to be entered a decree or order of a court
or agency or supervisory authority for the appointment of a receiver or other
similar official (other than a conservator) in any liquidation, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Bank, or of or relating to all or
substantially all of the property of the Bank, or for the winding up or
liquidation of the Bank, and such decree or order shall remain in force,
undischarged or unstayed for a period of 60 days.

      If an Event of Default shall occur, the Holder may, at its option, by
written notice to the Bank and the Fiscal and Paying Agent, declare this
Security to be, and upon such declaration, unless, in accordance with the terms
of the Fiscal and Paying Agent Agreement, the Fiscal and Paying Agent shall have
received notice from the Bank that all Events of Default have been cured by the
Bank or waived by the Holder of this Security, the principal of and interest on
this Security shall become immediately due and payable; provided, however, that
no repayment by acceleration or otherwise of this Security, other than at the
Date of Maturity, may be made without the prior written approval of the FDIC and
the Banking Commissioner of Texas.

      There is no right of acceleration in the case of a default in the payment
of principal or interest on the Securities or the performance of any other
obligation of the Bank under the Fiscal and Paying Agency Agreement or contained
herein.

      The Fiscal and Paying Agency Agreement provides that the Bank will
promptly notify the Fiscal and Paying Agent of an Event of Default upon the
occurrence thereof, and the Fiscal and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the Holders of the
Securities.

7.    MERGER; CONSOLIDATION.

      Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation, bank or other legal entity (collectively,
"corporation") or shall prevent any sale, conveyance, transfer or lease of the
property of the Bank to any other corporation; provided, however, that any such
consolidation, merger, sale or conveyance shall be upon the condition that: (i)
the newly-formed corporation, or the corporation to which such sale or
conveyance shall have been made, shall not be in default in the performance or
observance of any of the terms of the Securities to be observed or performed by
the Bank; and (ii) the surviving corporation (if other than the Bank), or the
corporation to which such sale or conveyance shall have been made, shall be a
corporation organized under the laws of the United States or any state thereof
or the District of


                                       9
<PAGE>
Columbia and shall expressly assume the obligation for the payment of the
principal and interest on the Securities. In case of any such consolidation,
merger, sale, conveyance, transfer or lease, and upon the assumption by the
successor corporation of the performance of all of the covenants in the
Securities to be performed or observed by the Bank, such successor corporation
shall succeed to the Bank with the same effect as if it had been named in the
Securities as the Bank and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants in
the Securities and may be liquidated and dissolved.

      8. All notices to the Bank under this Security shall be in writing and
addressed to the Bank at 2550 North Loop West, Suite 600, Houston, Texas 77092,
Attention: Stephen C. Raffaele, Executive Vice President and Chief Financial
Officer, or to such other address as the Bank may notify the Holder. All notices
to the Fiscal and Paying Agent shall be in writing and addressed to the Fiscal
and Paying Agent at the office of the Fiscal and Paying Agent at Deutsche Bank
Trust Company Americas, Attn: Corporate Trust and Agency Services, 60 Wall
Street, New York, New York 10005. All notices to the Holder shall be in writing
and sent by first-class mail to the Holder at his, her or its address as set
forth in the Security Register.

      9. In acting under the Fiscal and Paying Agency Agreement, the Fiscal and
Paying Agent is acting solely as the agent of the Bank and does not assume any
obligation or relationship of agency or trust with the Holder except as
specifically described herein or therein. Under the terms of the Fiscal and
Paying Agency Agreement, the Bank may rescind the designation of any Fiscal and
Paying Agent and appoint a new Fiscal and Paying Agent in respect of the
Securities or undertake to perform at the Bank the functions of the Fiscal and
Paying Agent or change the address of a Fiscal and Paying Agent to another
location in New York, New York. The Bank shall notify, or cause the Fiscal and
Paying Agent to notify, the Holders of Securities of the removal or appointment
of any Fiscal and Paying Agent or the undertaking of the Bank to perform at the
Bank the functions of the Fiscal and Paying Agent.

      10. The Securities are issuable without interest coupons and in minimum
denominations of $250,000 or any amount in excess thereof which is an integral
multiple of $1,000.

      11. In the event of the failure by the Bank to make payment of principal
of or interest on this Security (and, in the case of payment of interest, such
failure to pay shall have continued for 5 days), the Bank will, upon demand of
the Holder of this Security, pay to the Holder of this Security the whole amount
then due and payable (without acceleration) on this Security for principal and
interest with interest on the overdue principal and interest at the rate borne
by this Security, to the extent permitted by applicable law. If the Bank fails
to pay such amount upon such demand, the Holder of this Security may, among
other things, institute a judicial proceeding for the collection.

      12. The Fiscal and Paying Agency Agreement provides, in certain limited
circumstances, for the modification of the rights of the holders of the
Securities by the Bank without the consent of the holders of the Securities,
except that the consent of all holders of outstanding Securities affected
thereby is required in order to change the Date of Maturity of the Securities,
to change the definition of Interest Payment Date or reduce the principal amount
of or the rate of interest on the Securities, or to change the coin or currency
in which any Security or the


                                       10
<PAGE>
interest thereon is payable, to change the place of payment where principal of
or interest on the Securities is payable to a place outside New York, New York,
to impair the right of the holders of the Securities to institute suit for the
enforcement of payments of principal of or interest or other amounts on the
Securities on or after the Date of Maturity or due date therefor, to modify the
subordination provisions of the Securities in any manner adverse to the holders
of Securities or to modify the provisions of the Fiscal and Paying Agency
Agreement governing the amendment thereof and of the Securities.

13.   MISCELLANEOUS.

      (a) This Security shall be governed by, and construed in accordance with,
the laws of the State of New York.

      (b) Notwithstanding anything contained in Section 6 hereof (other than the
second and third to last paragraphs thereof) the Holder of this Security (i) may
exercise all remedies otherwise permitted by applicable law upon an Event of
Default, subject only to the rights, if any, of the Bank's depositors and the
holders of any indebtedness of the Bank which is senior to the indebtedness of
the Bank evidenced by this Security, and (ii) for the purpose of determining (A)
the persons entitled to participate in any distribution of the Bank's assets,
(B) the holders of any such senior indebtedness or any other indebtedness due of
the Bank, (C) the amounts of any such indebtedness or payable thereon, (D) the
amount or amounts to be paid or distributed with respect to any of the
foregoing, and (E) any other facts pertinent to the same or to Section 6 hereof,
may rely upon any order or decree issued by any court of competent jurisdiction
(including, without limitation, any order or decree for any payment or
distribution of the Bank's assets) before which any proceeding is brought, or
any certificate of any liquidating trustee, agent or other person making any
distribution to such holder.

      (c) All captions are for convenience only and shall not affect the meaning
of the provisions to which they relate.

      (d) This Security and each of its terms shall be binding upon and inure to
the benefit of the Bank, the Holders, the Depository or its nominee, the Fiscal
and Paying Agent and their respective successors and assigns.

      (e) Except as otherwise expressly required herein, the Bank waives demand,
presentment for payment, notice of non-payment, notice of protest, and all other
notices.

      (f) Any consent or waiver given by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

      14. No reference herein to the Fiscal and Paying Agency Agreement and no
provision of this Security shall alter or impair the obligation of the Bank,
which is absolute and unconditional, to pay the principal of and interest on
this Security at the times, place and rate, and in the coin or currency, herein
prescribed. No failure or delay on the part of the Holder in exercising any
right under this Security shall impair any such right or operate as a waiver
thereof. No waiver of any such rights shall be effective unless given in
writing.



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<PAGE>
      15. Any depository institution, as that term is defined in section 3(c)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)), to which this Security
is issued shall be deemed to have agreed by acquiring this Security that any
rights of such institution to offset all or any portion of the indebtedness
represented by this Security against any indebtedness or other obligations of
such institution to the Bank under applicable law are hereby waived by such
institution.

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