EXHIBIT 4.2





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                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  BY AND AMONG

                         U.S. BANK NATIONAL ASSOCIATION,
                            AS INSTITUTIONAL TRUSTEE,

                              CARVER BANCORP, INC.,
                                   AS SPONSOR,

                                       AND

                          LINDA DUNN, WILLIAM GRAY AND
                                 DEBORAH WRIGHT,
                               AS ADMINISTRATORS,

                         DATED AS OF SEPTEMBER 17, 2003



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                                                   TABLE OF CONTENTS
                                                   -----------------
                                                                                                               PAGE

<S>                        <C>
ARTICLE I INTERPRETATION AND DEFINITIONS..........................................................................1
         Section 1.1.      DEFINITIONS............................................................................1

ARTICLE II ORGANIZATION...........................................................................................7
         Section 2.1.      NAME...................................................................................7
         Section 2.2.      OFFICE.................................................................................7
         Section 2.3.      PURPOSE................................................................................7
         Section 2.4.      AUTHORITY..............................................................................7
         Section 2.5.      TITLE TO PROPERTY OF THE TRUST.........................................................7
         Section 2.6.      POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE AND THE ADMINISTRATORS..................8
         Section 2.7.      PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL TRUSTEE.....................11
         Section 2.8.      POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE........................................12
         Section 2.9.      CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL TRUSTEE AND
                           ADMINISTRATORS........................................................................13
         Section 2.10.     CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE...............................................14
         Section 2.11.     EXECUTION OF DOCUMENTS................................................................16
         Section 2.12.     NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES................................16
         Section 2.13.     DURATION OF TRUST.....................................................................16
         Section 2.14.     MERGERS...............................................................................17

ARTICLE III SPONSOR..............................................................................................18
         Section 3.1.      SPONSOR'S PURCHASE OF COMMON SECURITIES...............................................18
         Section 3.2.      RESPONSIBILITIES OF THE SPONSOR.......................................................18
         Section 3.3.      EXPENSES..............................................................................18
         Section 3.4.      RIGHT TO PROCEED......................................................................19

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..............................................................19
         Section 4.1.      INSTITUTIONAL TRUSTEE; ELIGIBILITY....................................................19
         Section 4.2.      ADMINISTRATORS........................................................................20
         Section 4.3.      APPOINTMENT, REMOVAL AND RESIGNATION OF INSTITUTIONAL TRUSTEE AND
                           ADMINISTRATORS........................................................................20
         Section 4.4.      INSTITUTIONAL TRUSTEE VACANCIES.......................................................21
         Section 4.5.      EFFECT OF VACANCIES...................................................................21
         Section 4.6.      MEETINGS OF THE INSTITUTIONAL TRUSTEE AND THE ADMINISTRATORS..........................21
         Section 4.7.      DELEGATION OF POWER...................................................................22
         Section 4.8.      CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS...................................22

ARTICLE V DISTRIBUTIONS..........................................................................................22
         Section 5.1.      DISTRIBUTIONS.........................................................................22

ARTICLE VI ISSUANCE OF SECURITIES................................................................................22
         Section 6.1.      GENERAL PROVISIONS REGARDING SECURITIES...............................................22
         Section 6.2.      PAYING AGENT, TRANSFER AGENT AND REGISTRAR............................................23
         Section 6.3.      FORM AND DATING.......................................................................23
         Section 6.4.      MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.....................................24
         Section 6.5.      TEMPORARY SECURITIES..................................................................24
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         Section 6.6.      CANCELLATION..........................................................................24
         Section 6.7.      RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS...........................................25

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST.................................................................26
         Section 7.1.      DISSOLUTION AND TERMINATION OF TRUST..................................................26

ARTICLE VIII TRANSFER OF INTERESTS...............................................................................27
         Section 8.1.      GENERAL...............................................................................27
         Section 8.2.      TRANSFER PROCEDURES AND RESTRICTIONS..................................................28
         Section 8.3.      DEEMED SECURITY HOLDERS...............................................................30

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.....................30
         Section 9.1.      LIABILITY.............................................................................30
         Section 9.2.      EXCULPATION...........................................................................30
         Section 9.3.      FIDUCIARY DUTY........................................................................31
         Section 9.4.      INDEMNIFICATION.......................................................................31
         Section 9.5.      OUTSIDE BUSINESSES....................................................................33
         Section 9.6.      COMPENSATION; FEE.....................................................................33

ARTICLE X ACCOUNTING.............................................................................................34
         Section 10.1.     FISCAL YEAR...........................................................................34
         Section 10.2.     CERTAIN ACCOUNTING MATTERS............................................................34
         Section 10.3.     BANKING...............................................................................35
         Section 10.4.     WITHHOLDING...........................................................................35

ARTICLE XI AMENDMENTS AND MEETINGS...............................................................................35
         Section 11.1.     AMENDMENTS............................................................................35
         Section 11.2.     MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN CONSENT......................36

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE.............................................................38
         Section 12.1.     REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE...............................38

ARTICLE XIII MISCELLANEOUS.......................................................................................38
         Section 13.1.     NOTICES...............................................................................38
         Section 13.2.     GOVERNING LAW.........................................................................39
         Section 13.3.     INTENTION OF THE PARTIES..............................................................39
         Section 13.4.     HEADINGS..............................................................................40
         Section 13.5.     SUCCESSORS AND ASSIGNS................................................................40
         Section 13.6.     PARTIAL ENFORCEABILITY................................................................40
         Section 13.7.     COUNTERPARTS..........................................................................40
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Annex I....................Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement



                                       ii
<PAGE>



                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                                       OF

                            CARVER STATUTORY TRUST I

                               SEPTEMBER 17, 2003

         AMENDED AND RESTATED DECLARATION OF TRUST ("DECLARATION") dated and
effective as of September 17, 2003, by the Institutional Trustee (as defined
herein), the Administrators (as defined herein), the Sponsor (as defined herein)
and by the holders, from time to time, of undivided beneficial interests in the
assets of the Trust (as defined herein) to be issued pursuant to this
Declaration;

         WHEREAS, the Institutional Trustee, the Administrators and the Sponsor
established Carver Statutory Trust I (the "TRUST"), a statutory trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of September 8, 2003 (the "ORIGINAL DECLARATION"), and a Certificate of Trust
filed with the Secretary of State of the State of Connecticut on September 8,
2003 (the "CERTIFICATE OF TRUST"), for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain debentures of the
Debenture Issuer (as defined herein);

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

         WHEREAS, the Institutional Trustee, the Administrators and the Sponsor,
by this Declaration, amend and restate each and every term and provision of the
Original Declaration;

         NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
the Institutional Trustee declares that all assets contributed to the Trust will
be held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration. The
parties hereto hereby agree as follows:

                                   ARTICLE I

                         INTERPRETATION AND DEFINITIONS

         SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:

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

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

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

         (d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified; and



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<PAGE>


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

         "ADDITIONAL INTEREST" has the meaning set forth in the Indenture.

         "ADMINISTRATIVE ACTION" has the meaning set forth in paragraph 4(a) of
Annex I.

         "ADMINISTRATORS" means each of Linda Dunn, William Gray and Deborah
Wright, solely in such Person's capacity as Administrator of the Trust created
and continued hereunder and not in such Person's individual capacity, or such
Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.

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

         "AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person.

         "BANKRUPTCY EVENT" means, with respect to any Person:

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

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

         "BUSINESS DAY" means any day other than Saturday, Sunday or any other
day on which banking institutions in New York City or Hartford, Connecticut are
permitted or required by any applicable law or executive order to close.

         "CAPITAL SECURITIES" has the meaning set forth in paragraph 1(a) of
Annex I.

         "CAPITAL SECURITY CERTIFICATE" means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibit A-1.

         "CAPITAL TREATMENT EVENT" has the meaning set forth in paragraph 4(a)
of Annex I.

         "CERTIFICATE" means any certificate evidencing Securities.

         "CLOSING DATE" has the meaning set forth in the Placement Agreement.

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

         "COMMON SECURITIES" has the meaning set forth in paragraph 1(b) of
Annex I.



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<PAGE>

         "COMMON SECURITY CERTIFICATE" means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.

         "COMPANY INDEMNIFIED PERSON" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.

         "CORPORATE TRUST OFFICE" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103.

         "COUPON RATE" has the meaning set forth in paragraph 2(a) of Annex I.

         "COVERED PERSON" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.

         "CREDITOR" has the meaning set forth in Section 3.3.

         "DEBENTURE ISSUER" means Carver Bancorp, Inc., a Delaware corporation,
in its capacity as issuer of the Debentures under the Indenture.

         "DEBENTURE TRUSTEE" means U.S. Bank National Association, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.

         "DEBENTURES" means the Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2033 to be issued by the Debenture Issuer under the
Indenture.

         "DEFAULTED INTEREST" has the meaning set forth in the Indenture.

         "DETERMINATION DATE" has the meaning set forth in paragraph 4(a) of
Annex I.

         "DIRECT ACTION" has the meaning set forth in Section 2.8(d).

         "DISTRIBUTION" means a distribution payable to Holders of Securities in
accordance with Section 5.1.

         "DISTRIBUTION PAYMENT DATE" has the meaning set forth in paragraph 2(b)
of Annex I.

         "DISTRIBUTION PERIOD" has the meaning set forth in paragraph 2(a) of
Annex I.

         "DISTRIBUTION RATE" means, for the period beginning on (and including)
the date of original issuance and ending on (but excluding) December 17, 2003,
the rate per annum of 4.19%, and for the period beginning on (and including)
December 17, 2003 and thereafter, the Coupon Rate.

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

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



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

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

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

         "EXTENSION PERIOD" has the meaning set forth in paragraph 2(b) of Annex
I.

         "FEDERAL RESERVE" has the meaning set forth in paragraph 3 of Annex I.

         "FIDUCIARY INDEMNIFIED PERSON" shall mean the Institutional Trustee,
any Affiliate of the Institutional Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee.

         "FISCAL YEAR" has the meaning set forth in Section 10.1.

         "GUARANTEE" means the guarantee agreement to be dated as of the Closing
Date, of the Sponsor in respect of the Capital Securities.

         "HOLDER" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.

         "INDEMNIFIED PERSON" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

         "INDENTURE" means the Indenture dated as of the Closing Date, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.

         "INDENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in
the Indenture.

         "INSTITUTIONAL TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 4.1.

         "INTEREST" means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.

         "INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.

         "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.

         "INVESTMENT COMPANY EVENT" has the meaning set forth in paragraph 4(a)
of Annex I.



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         "LIQUIDATION" has the meaning set forth in paragraph 3 of Annex I.

         "LIQUIDATION DISTRIBUTION" has the meaning set forth in paragraph 3 of
Annex I.

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

         "MATURITY DATE" has the meaning set forth in paragraph 4(a) of Annex I.

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

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

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

         (c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

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

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

         "PAYING AGENT" has the meaning specified in Section 6.2.

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

         "PLACEMENT AGREEMENT" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.

         "PROPERTY ACCOUNT" has the meaning set forth in Section 2.8(c).

         "PRO RATA" has the meaning set forth in paragraph 8 of Annex I.

         "QUORUM" means a majority of the Administrators or, if there are only
two Administrators, both of them.

         "REDEMPTION DATE" has the meaning set forth in paragraph 4(a) of Annex
I.

         "REDEMPTION/DISTRIBUTION NOTICE" has the meaning set forth in paragraph
4(e) of Annex I.



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         "REDEMPTION PRICE" has the meaning set forth in paragraph 4(a) of Annex
I.

         "REGISTRAR" has the meaning set forth in Section 6.2.

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

         "RESTRICTED SECURITIES LEGEND" has the meaning set forth in Section
8.2(b).

         "RULE 3A-5" means Rule 3a-5 under the Investment Company Act.

         "RULE 3A-7" means Rule 3a-7 under the Investment Company Act.

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

         "SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.

         "SPECIAL EVENT" has the meaning set forth in paragraph 4(a) of Annex I.

         "SPECIAL REDEMPTION DATE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "SPECIAL REDEMPTION PRICE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "SPONSOR" means Carver Bancorp, Inc., a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.

         "STATUTORY TRUST ACT" means Chapter 615 of Title 34 of the Connecticut
General Statutes, Sections 500, et seq. as may be amended from time to time.

         "SUCCESSOR ENTITY" has the meaning set forth in Section 2.14(b).

         "SUCCESSOR INSTITUTIONAL TRUSTEE" has the meaning set forth in Section
4.3(a).

         "SUCCESSOR SECURITIES" has the meaning set forth in Section 2.14(b).

         "SUPER MAJORITY" has the meaning set forth in paragraph 5(b) of Annex
I.

         "TAX EVENT" has the meaning set forth in paragraph 4(a) of Annex I.

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

         "3-MONTH LIBOR" has the meaning set forth in paragraph 4(a) of Annex I.



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         "TRANSFER AGENT" has the meaning set forth in Section 6.2.

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

         "TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.

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

                                   ARTICLE II

                                  ORGANIZATION

         SECTION 2.1. NAME. The Trust is named "Carver Statutory Trust I," as
such name may be modified from time to time by the Administrators following
written notice to the Holders of the Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Administrators.

         SECTION 2.2. OFFICE. The address of the principal office of the Trust
is c/o U.S. Bank National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103. On at least 10 Business Days written notice to the
Holders of the Securities, the Administrators may designate another principal
office, which shall be in a state of the United States or in the District of
Columbia.

         SECTION 2.3. PURPOSE. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures, (c) to facilitate direct investment in the
assets of the Trust through issuance of the Common Securities and the Capital
Securities and (d) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.

         SECTION 2.4. AUTHORITY. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Institutional Trustee acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Institutional Trustee to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Institutional Trustee as set forth in this Declaration. The Administrators shall
have only those ministerial duties set forth herein with respect to
accomplishing the purposes of the Trust and are not intended to be trustees or
fiduciaries with respect to the Trust or the Holders. The Institutional Trustee
shall have the right, but shall not be obligated except as provided in Section
2.6, to perform those duties assigned to the Administrators.

         SECTION 2.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.



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<PAGE>

         SECTION 2.6. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE AND THE
ADMINISTRATORS.

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

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

                           (A) the issuance and sale of the Securities;

                           (B) to cause the Trust to enter into, and to execute
                  and deliver on behalf of the Trust, such agreements as may be
                  necessary or desirable in connection with the purposes and
                  function of the Trust, including agreements with the Paying
                  Agent;

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

                           (D) the sending of notices (other than notices of
                  default), and other information regarding the Securities and
                  the Debentures to the Holders in accordance with this
                  Declaration;

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

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

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

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

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

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



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<PAGE>

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

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

                           (A) the establishment of the Property Account;

                           (B) the receipt of the Debentures;

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

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

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

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

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

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

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

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

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



                                       9
<PAGE>

         (b) So long as this Declaration remains in effect, the Trust (or the
Institutional Trustee or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, neither the Institutional Trustee
nor the Administrators may cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Declaration, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected (x) to
cause the Trust to fail or cease to qualify as a "grantor trust" for United
States federal income tax purposes or (y) to require the trust to register as an
Investment Company under the Investment Company Act, (iv) incur any indebtedness
for borrowed money or issue any other debt or (v) take or consent to any action
that would result in the placement of a lien on any of the Trust Property. The
Institutional Trustee shall, at the sole cost and expense of the Trust, defend
all claims and demands of all Persons at any time claiming any lien on any of
the Trust Property adverse to the interest of the Trust or the Holders in their
capacity as Holders.

         (c) In connection with the issuance and sale of the Capital Securities,
the Sponsor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):

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

                  (ii) the determination of the States in which to take
         appropriate action to qualify or register for sale all or part of the
         Capital Securities and the determination of any and all such acts,
         other than actions which must be taken by or on behalf of the Trust,
         and the advice to the Administrators of actions they must take on
         behalf of the Trust, and the preparation for execution and filing of
         any documents to be executed and filed by the Trust or on behalf of the
         Trust, as the Sponsor deems necessary or advisable in order to comply
         with the applicable laws of any such States in connection with the sale
         of the Capital Securities;

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

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

         (d) Notwithstanding anything herein to the contrary, the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust will not (i) be deemed to be an Investment Company
required to be registered under the Investment Company Act, and (ii) fail to be
classified as a "grantor trust" for United States federal income tax purposes.
The Administrators and the Holders of a Majority in liquidation amount of the
Common Securities shall not take any action inconsistent with the treatment of
the Debentures as indebtedness of the Debenture Issuer for United States federal
income tax purposes. In this connection, the Administrators and the Holders of a
Majority in liquidation amount of the Common Securities are authorized to take
any action, not inconsistent with applicable laws, the Certificate of Trust or
this Declaration, as amended from time to time, that each of the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities
determines in their discretion to be necessary or desirable for such purposes.



                                       10
<PAGE>

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

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

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

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

         SECTION 2.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL
TRUSTEE.

         (a) The Trust shall not, and the Institutional Trustee shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:

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

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

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

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

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

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

                  (vii) carry on any "trade or business" as that phrase is used
         in the Code; or

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



                                       11
<PAGE>

         SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

         (a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.3. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.

         (b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators.

         (c) The Institutional Trustee shall:

                  (i) establish and maintain a segregated non-interest bearing
         trust account (the "PROPERTY ACCOUNT") in the name of and under the
         exclusive control of the Institutional Trustee, and maintained in the
         Institutional Trustee's trust department, on behalf of the Holders of
         the Securities and, upon the receipt of payments of funds made in
         respect of the Debentures held by the Institutional Trustee, deposit
         such funds into the Property Account and make payments, or cause the
         Paying Agent to make payments, to the Holders of the Capital Securities
         and Holders of the Common Securities from the Property Account in
         accordance with Section 5.1. Funds in the Property Account shall be
         held uninvested until disbursed in accordance with this Declaration;

                  (ii) engage in such ministerial activities as shall be
         necessary or appropriate to effect the redemption of the Capital
         Securities and the Common Securities to the extent the Debentures are
         redeemed or mature; and

                  (iii) upon written notice of distribution issued by the
         Administrators in accordance with the terms of the Securities, engage
         in such ministerial activities as shall be necessary or appropriate to
         effect the distribution of the Debentures to Holders of Securities upon
         the occurrence of certain circumstances pursuant to the terms of the
         Securities.

         (d) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust which arises out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee's duties and obligations under this Declaration; PROVIDED, HOWEVER, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of the
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "DIRECT ACTION") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of the Capital Securities to the extent of any payment made by
the Debenture Issuer to such Holder of the Capital Securities in such Direct
Action; PROVIDED, HOWEVER, that no Holder of the Common Securities may exercise
such right of subrogation so long as an Event of Default with respect to the
Capital Securities has occurred and is continuing.

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



                                       12
<PAGE>

                  (i) the Trust has been completely liquidated and the proceeds
         of the liquidation distributed to the Holders of the Securities
         pursuant to the terms of the Securities and this Declaration; or

                  (ii) a Successor Institutional Trustee has been appointed
         and has accepted that appointment in accordance with Section 4.3.

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

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

         SECTION 2.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.7), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

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

         (c) All payments made by the Institutional Trustee or a Paying Agent in
respect of the Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Institutional Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its




                                       13
<PAGE>

acceptance of a Security, agrees that it will look solely to the revenue and
proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Institutional Trustee and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This Section 2.9(c) does not limit the liability of the Institutional Trustee
expressly set forth elsewhere in this Declaration.

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

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

                  (ii) the Institutional Trustee shall not be liable with
         respect to any action taken or omitted to be taken by it in good faith
         in accordance with the direction of the Holders of not less than a
         Majority in liquidation amount of the Capital Securities or the Common
         Securities, as applicable, relating to the time, method and place of
         conducting any proceeding for any remedy available to the Institutional
         Trustee, or exercising any trust or power conferred upon the
         Institutional Trustee under this Declaration;

                  (iii) the Institutional Trustee's sole duty with respect to
         the custody, safekeeping and physical preservation of the Debentures
         and the Property Account shall be to deal with such property in a
         similar manner as the Institutional Trustee deals with similar property
         for its fiduciary accounts generally, subject to the protections and
         limitations on liability afforded to the Institutional Trustee under
         this Declaration;

                  (iv) the Institutional Trustee shall not be liable for any
         interest on any money received by it except as it may otherwise agree
         in writing with the Sponsor; and money held by the Institutional
         Trustee need not be segregated from other funds held by it except in
         relation to the Property Account maintained by the Institutional
         Trustee pursuant to Section 2.8(c)(i) and except to the extent
         otherwise required by law; and

                  (v) the Institutional Trustee shall not be responsible for
         monitoring the compliance by the Administrators or the Sponsor with
         their respective duties under this Declaration, nor shall the
         Institutional Trustee be liable for any default or misconduct of the
         Administrators or the Sponsor.

         SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject to the
provisions of Section 2.9:

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

         (b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained



                                       14
<PAGE>

herein, or (iii) the Institutional Trustee is unsure of the application of any
provision of this Declaration, then, except as to any matter as to which the
Holders of Capital Securities are entitled to vote under the terms of this
Declaration, the Institutional Trustee may deliver a notice to the Sponsor
requesting the Sponsor's written instructions as to the course of action to be
taken and the Institutional Trustee shall take such action, or refrain from
taking such action, as the Institutional Trustee shall be instructed in writing,
in which event the Institutional Trustee shall have no liability except for its
own negligence or willful misconduct;

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

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

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

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

         (g) the Institutional Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any of the Holders pursuant to this Declaration, unless such
Holders shall have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; PROVIDED,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 6.7), to
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs;

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

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

         (j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action



                                       15
<PAGE>

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

         (k) except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;

         (l) when the Institutional Trustee incurs expenses or renders services
in connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;

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

         (n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and

         (o) no provision of this Declaration shall be deemed to impose any duty
or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.

         SECTION 2.11. EXECUTION OF DOCUMENTS. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute on behalf of the
Trust any documents that the Institutional Trustee or the Administrators, as the
case may be, have the power and authority to execute pursuant to Section 2.6.

         SECTION 2.12. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Institutional Trustee does not assume any
responsibility for their correctness. The Institutional Trustee makes no
representations as to the value or condition of the property of the Trust or any
part thereof. The Institutional Trustee makes no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.

         SECTION 2.13. DURATION OF TRUST. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.



                                       16
<PAGE>


         SECTION 2.14. MERGERS.

         (a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 2.14(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of
Annex I.

         (b) The Trust may, with the consent of the Institutional Trustee which
consent may not be unreasonably withheld and without the consent of the Holders
of the Capital Securities, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state; provided
that:

                  (i) if the Trust is not the surviving entity, such successor
         entity (the "SUCCESSOR ENTITY") either:

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

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

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

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

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

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

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

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

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



                                       17
<PAGE>

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

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

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

                  (ix) prior to such merger, consolidation, amalgamation or
         replacement, the Institutional Trustee shall have received an Officers'
         Certificate of the Administrators and an opinion of counsel, each to
         the effect that all conditions precedent under this Section 2.14(b) to
         such transaction have been satisfied.

         (c) Notwithstanding Section 2.14(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.

                                   ARTICLE III

                                     SPONSOR

         SECTION 3.1. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust, at the same time
as the Capital Securities are sold.

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

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

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

         SECTION 3.3. EXPENSES. In connection with the offering, sale and
issuance of the Debentures to the Trust and in connection with the sale of the
Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer,
shall:

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

         (b) be responsible for and shall pay all debts and obligations (other
than with respect to the Securities) and all costs and expenses of the Trust,
the offering, sale and issuance of the Securities (including fees to the
placement agents in connection therewith), the costs and expenses (including


                                       18
<PAGE>

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

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

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

         SECTION 3.4. RIGHT TO PROCEED. The Sponsor acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

                                   ARTICLE IV

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

         SECTION 4.1. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

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

                  (i) not be an Affiliate of the Sponsor;

                  (ii) not offer or provide credit or credit enhancement to the
         Trust; and

                  (iii) be a banking corporation or trust company organized and
         doing business under the laws of the United States of America or any
         state thereof or the District of Columbia, authorized under such laws
         to exercise corporate trust powers, having a combined capital and
         surplus of at least 50 million U.S. dollars ($50,000,000.00), and
         subject to supervision or examination by Federal, state, or District of
         Columbia authority. If such corporation publishes reports of condition
         at least annually, pursuant to law or to the requirements of the
         supervising or examining authority referred to above, then for the
         purposes of this Section 4.1(a)(iii), the combined capital and surplus
         of such corporation shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

         (b) If at any time the Institutional Trustee shall cease to be eligible
to so act under Section 4.1(a), the Institutional Trustee shall immediately
resign in the manner and with the effect set forth in Section 4.3(a).



                                       19
<PAGE>

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

         (d) The initial Institutional Trustee shall be U.S. Bank National
Association.

         SECTION 4.2. ADMINISTRATORS. Each Administrator shall be a U.S. Person,
21 years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be Linda Dunn, William Gray and Deborah Wright. There shall
at all times be at least one Administrator. Except where a requirement for
action by a specific number of Administrators is expressly set forth in this
Declaration and except with respect to any action the taking of which is the
subject of a meeting of the Administrators, any action required or permitted to
be taken by the Administrators may be taken by, and any power of the
Administrators may be exercised by, or with the consent of, any one such
Administrator.

         SECTION 4.3. APPOINTMENT, REMOVAL AND RESIGNATION OF INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a) Notwithstanding anything to the contrary in this Declaration, no
resignation or removal of the Institutional Trustee and no appointment of a
Successor Institutional Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Institutional Trustee in
accordance with the applicable requirements of this Section 4.3.

         Subject to the immediately preceding paragraph, the Institutional
Trustee may resign at any time by giving written notice thereof to the Holders
of the Securities and by appointing a Successor Institutional Trustee. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements, its expenses and charges to serve as the successor
Institutional Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expense and charges (the "SUCCESSOR
INSTITUTIONAL TRUSTEE"). If the instrument of acceptance by the Successor
Institutional Trustee required by this Section 4.3 shall not have been delivered
to the Institutional Trustee within 60 days after the giving of such notice of
resignation or delivery of the instrument of removal, the Institutional Trustee
may petition, at the expense of the Trust, any Federal, state or District of
Columbia court of competent jurisdiction for the appointment of a Successor
Institutional Trustee. Such court may thereupon, after prescribing such notice,
if any, as it may deem proper, appoint a Successor Institutional Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.3.

         The Institutional Trustee may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Institutional Trustee (in its individual capacity and on behalf of the Trust) if
an Event of Default shall have occurred and be continuing. If the Institutional
Trustee shall be so removed, the Holders of Capital Securities, by act of the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding delivered to the Institutional Trustee, shall promptly appoint a
Successor Institutional Trustee, and such Successor Institutional Trustee shall
comply with the applicable requirements of this Section 4.3. If no Successor
Institutional Trustee shall have been so appointed by the Holders of a Majority
in liquidation amount of the Capital Securities and accepted appointment in the
manner required by this Section 4.3, within 30 days after delivery of an
instrument of removal, any Holder who has been a Holder of the Securities for at
least 6 months may, on behalf of himself and all others similarly situated,
petition any Federal, state or District of Columbia court of competent
jurisdiction for the appointment of the Successor Institutional Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Institutional Trustee.



                                       20
<PAGE>

         The Institutional Trustee shall give notice of its resignation and
removal and each appointment of a Successor Institutional Trustee to all Holders
in the manner provided in Section 13.1(d) and shall give notice to the Sponsor.
Each notice shall include the name of the Successor Institutional Trustee and
the address of its Corporate Trust Office.

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

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

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

         SECTION 4.4. INSTITUTIONAL TRUSTEE VACANCIES. If the Institutional
Trustee ceases to hold office for any reason a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Institutional Trustee shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a trustee appointed in accordance with Section 4.3.

         SECTION 4.5. EFFECT OF VACANCIES. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of the Institutional Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration.

         SECTION 4.6. MEETINGS OF THE INSTITUTIONAL TRUSTEE AND THE
ADMINISTRATORS. Meetings of the Administrators shall be held from time to time
upon the call of an Administrator. Regular meetings of the Administrators may be
held in person in the United States or by telephone, at a place (if applicable)
and time fixed by resolution of the Administrators. Notice of any in-person
meetings of the Institutional Trustee with the Administrators or meetings of the
Administrators shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the
Institutional Trustee with the Administrators or meetings of the Administrators
or any committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less
than 24 hours before a meeting. Notices shall contain a brief statement of the
time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of the Institutional Trustee or an Administrator, as the
case may be, at a meeting shall constitute a waiver of notice of such meeting
except where the Institutional Trustee or an Administrator, as the case may be,
attends a meeting for the




                                       21
<PAGE>

express purpose of objecting to the transaction of any activity on the grounds
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Institutional Trustee or the
Administrators, as the case may be, may be taken at a meeting by vote of the
Institutional Trustee or a majority vote of the Administrators present (whether
in person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Institutional Trustee or the Administrators. Meetings of the
Institutional Trustee and the Administrators together shall be held from time to
time upon the call of the Institutional Trustee or an Administrator.

         SECTION 4.7. DELEGATION OF POWER.

         (a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 that is
a U.S. Person his or her power for the purpose of executing any documents
contemplated in Section 2.6; and

         (b) the Administrators shall have power to delegate from time to time
to such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.

         SECTION 4.8. CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
Person into which the Institutional Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Institutional Trustee shall be a party,
or any Person succeeding to all or substantially all the corporate trust
business of the Institutional Trustee shall be the successor of the
Institutional Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.

                                    ARTICLE V

                                  DISTRIBUTIONS

         SECTION 5.1. DISTRIBUTIONS. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "DISTRIBUTION") of such amounts to Holders.

                                   ARTICLE VI

                             ISSUANCE OF SECURITIES

         SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.

         (a) The Administrators shall, on behalf of the Trust, issue one series
of capital securities substantially in the form of Exhibit A-1 representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I and one series of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I. The Trust shall issue no securities or other interests
in the assets of the Trust other than the Capital Securities




                                       22
<PAGE>

and the Common Securities. The Capital Securities rank PARI PASSU to, and
payment thereon shall be made Pro Rata with, the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to payment in respect of Distributions and payments
upon liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Capital Securities as set forth in Annex I.

         (b) The Certificates shall be signed on behalf of the Trust by one or
more Administrators. Such signature shall be the facsimile or manual signature
of any Administrator. In case any Administrator of the Trust who shall have
signed any of the Securities shall cease to be such Administrator before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator, and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
facsimile or manual signature of an Authorized Officer of the Institutional
Trustee. Such signature shall be conclusive evidence that the Capital Security
has been authenticated under this Declaration. Upon written order of the Trust
signed by one Administrator, the Institutional Trustee shall authenticate the
Capital Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated.

         (c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

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

         (e) Every Person, by virtue of having become a Holder in accordance
with the terms of this Declaration, shall be deemed to have expressly assented
and agreed to the terms of, and shall be bound by, this Declaration and the
Guarantee.

         SECTION 6.2. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. The Trust
shall maintain in Hartford, Connecticut, an office or agency where the Capital
Securities may be presented for payment ("PAYING AGENT"), and an office or
agency where Securities may be presented for registration of transfer or
exchange (the "TRANSFER AGENT"). The Trust shall keep or cause to be kept at
such office or agency a register for the purpose of registering Securities,
transfers and exchanges of Securities, such register to be held by a registrar
(the "REGISTRAR"). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co-Transfer Agents in such
other locations as it shall determine. The term "PAYING AGENT" includes any
additional paying agent, the term "REGISTRAR" includes any additional registrar
or co-Registrar and the term "TRANSFER AGENT" includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.

         SECTION 6.3. FORM AND DATING. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common




                                       23
<PAGE>

Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates may be typed, printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Administrators, as
conclusively evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation and
such legends or endorsements required by law, stock exchange rule, agreements to
which the Trust is subject if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Sponsor). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in Exhibit
A-1 to the Institutional Trustee in writing. Each Capital Security shall be
dated on or before the date of its authentication. The terms and provisions of
the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent
applicable, the Institutional Trustee, the Administrators and the Sponsor, by
their execution and delivery of this Declaration, expressly agree to such terms
and provisions and to be bound thereby. Capital Securities will be issued only
in blocks having a stated liquidation amount of not less than $100,000.00 and
any multiple of $1,000.00 in excess thereof.

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

         SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If:

         (a) any mutilated Certificates should be surrendered to the Registrar,
or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and

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

then, in the absence of notice that such Certificate shall have been acquired by
a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

         SECTION 6.5. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Administrators consider
appropriate for temporary Securities. Without unreasonable delay, the
Administrators shall prepare and, in the case of the Capital Securities, the
Institutional Trustee shall authenticate, definitive Securities in exchange for
temporary Securities.

         SECTION 6.6. CANCELLATION. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The



                                       24
<PAGE>

Administrators may not issue new Securities to replace Securities that have been
paid or that have been delivered to the Institutional Trustee for cancellation.

         SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.

         (a) The legal title to the Trust Property is vested exclusively in the
Institutional Trustee (in its capacity as such) in accordance with Section 2.5,
and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights.

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

         At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of a Majority
in liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:

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

                           (A) all overdue installments of interest on all of
                  the Debentures,

                           (B) any accrued Additional Interest on all of the
                  Debentures,

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

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

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

         The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest on
the Debentures (unless such default or Indenture Event of Default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Debenture
Trustee) or a default under the Indenture or an Indenture Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the

                                       25
<PAGE>

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

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

         (c) Except as otherwise provided in paragraphs (a) and (b) of this
Section 6.7, the Holders of at least a Majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon.

                                   ARTICLE VII

                      DISSOLUTION AND TERMINATION OF TRUST

         SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.

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

                  (i) unless earlier dissolved, on September 17, 2038, the
         expiration of the term of the Trust;

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

                  (iii) upon the filing of a certificate of dissolution or its
         equivalent with respect to the Sponsor (other than in connection with a
         merger, consolidation or similar transaction not prohibited by the
         Indenture, this Declaration or the Guarantee, as the case may be) or
         upon the revocation of the charter of the Sponsor and the expiration of
         90 days after the date of revocation without a reinstatement thereof;

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



                                       26
<PAGE>

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

                  (vi) when all of the Securities shall have been called for
         redemption and the amounts necessary for redemption thereof shall have
         been paid to the Holders in accordance with the terms of the
         Securities; or

                  (vii) before the issuance of any Securities, with the consent
         of the Institutional Trustee and the Sponsor.

         (b) As soon as is practicable after the occurrence of an event referred
to in Section 7.1(a), and after satisfaction of liabilities to creditors of the
Trust as required by applicable law, including of the Statutory Trust Act, and
subject to the terms set forth in Annex I, the Institutional Trustee shall
terminate the Trust by filing a certificate of cancellation with the Secretary
of State of the State of Connecticut.

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

                                  ARTICLE VIII

                              TRANSFER OF INTERESTS

         SECTION 8.1. GENERAL.

         (a) Subject to Section 8.1(c), where Capital Securities are presented
to the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Capital Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfer and exchanges, the Trust shall issue and the Institutional Trustee
shall authenticate Capital Securities at the Registrar's request.

         (b) Upon issuance of the Common Securities, the Sponsor shall acquire
and retain beneficial and record ownership of the Common Securities and for so
long as the Securities remain outstanding, the Sponsor shall maintain 100%
ownership of the Common Securities; PROVIDED, HOWEVER, that any permitted
successor of the Sponsor, in its capacity as Debenture Issuer, under the
Indenture that is a U.S. Person may succeed to the Sponsor's ownership of the
Common Securities.

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

         (d) The Registrar shall provide for the registration of Securities and
of transfers of Securities, which will be effected without charge but only upon
payment (with such indemnity as the Registrar may require) in respect of any tax
or other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Securities, the Registrar shall
cause one or more new Securities of the same tenor to be issued in the name of
the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or


                                       27
<PAGE>

such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.6. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.

         (e) The Trust shall not be required (i) to issue, register the transfer
of, or exchange any Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

         SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

         (a) The Capital Securities shall bear the Restricted Securities Legend,
which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel satisfactory to
the Trustee, as may be reasonably required by the Trust, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of the Securities Act. Upon
provision of such satisfactory evidence, the Institutional Trustee, at the
written direction of the Trust, shall authenticate and deliver Capital
Securities that do not bear the legend.

         (b) Except as permitted by Section 8.2(a), each Capital Security shall
bear a legend (the "RESTRICTED SECURITIES LEGEND") in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS
         OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
         INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
         TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
         ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
         OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
         AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY
         BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
         THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A
         REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
         SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
         A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
         REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR
         RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A
         NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
         OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
         (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
         SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
         THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
         AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
         WITH A




                                       28
<PAGE>

         VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
         VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
         EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
         SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
         SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
         CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
         ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
         OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING
         THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
         SECURITIES ACT.

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

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

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



                                       29
<PAGE>

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

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

         (e) All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Capital Securities surrendered upon such registration of transfer or
exchange.

         SECTION 8.3. DEEMED SECURITY HOLDERS. The Trust, the Administrators,
the Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar
may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Institutional
Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have actual
or other notice thereof.

                                   ARTICLE IX

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

         SECTION 9.1. LIABILITY.

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

                  (i) personally liable for the return of any portion of the
         capital contributions (or any return thereon) of the Holders of the
         Securities which shall be made solely from assets of the Trust; or

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

         (b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.

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

         SECTION 9.2. EXCULPATION.

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




                                       30
<PAGE>

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

         SECTION 9.3. FIDUCIARY DUTY.

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

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

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

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

         SECTION 9.4. INDEMNIFICATION.

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



                                       31
<PAGE>

         (b) The Sponsor shall indemnify, to the full extent permitted by law,
any Indemnified Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor arising out of or in connection with
the acceptance or administration of this Declaration by reason of the fact that
he is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; PROVIDED, HOWEVER, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

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

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

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

         (f) The Institutional Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its own choosing in
any action, suit or any other proceeding for which it is




                                       32
<PAGE>

indemnified under paragraphs (a) and (b) of this Section 9.4, without affecting
its right to indemnification hereunder or waiving any rights afforded to it
under this Declaration or applicable law.

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

         (h) The Sponsor or the Trust may purchase and maintain insurance on
behalf of any Person who is or was an Indemnified Person against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Sponsor would have the power to indemnify
him against such liability under the provisions of this Section 9.4.

         (i) For purposes of this Section 9.4, references to "the Trust" shall
include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.

         (j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, (i) continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person; and (ii) survive the termination or expiration
of this Declaration or the earlier removal or resignation of an Indemnified
Person.

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

         SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:



                                       33
<PAGE>

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

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

         The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
the Institutional Trustee.

         No Institutional Trustee may claim any lien or charge on any property
of the Trust as a result of any amount due pursuant to this Section 9.6.

                                    ARTICLE X

                                   ACCOUNTING

         SECTION 10.1. FISCAL YEAR. The fiscal year ("FISCAL YEAR") of the Trust
shall be the calendar year, or such other year as is required by the Code.

         SECTION 10.2. CERTAIN ACCOUNTING MATTERS.

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

         (b) The Administrators shall cause to be duly prepared and delivered to
each of the Holders of Securities Form 1099 or such other annual United States
federal income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such statements within 30 days after the end of each Fiscal Year
of the Trust.

         (c) The Administrators, at the Sponsor's expense, shall cause to be
duly prepared at the principal office of the Sponsor in the United States, as
`United States' is defined in Section 7701(a)(9) of the Code (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.



                                       34
<PAGE>

         SECTION 10.3. BANKING. The Trust shall maintain in the United States,
as defined for purposes of Treasury Regulations section 301.7701-7, one or more
bank accounts in the name and for the sole benefit of the Trust; PROVIDED,
HOWEVER, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.

         SECTION 10.4. WITHHOLDING. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.

                                   ARTICLE XI

                             AMENDMENTS AND MEETINGS

         SECTION 11.1. AMENDMENTS.

         (a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Institutional Trustee and, if
the amendment affects the rights, powers, duties, obligations or immunities of
the Administrators, the Administrators.

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

                  (i) the Institutional Trustee shall have first received

                           (A) an Officers' Certificate from each of the Trust
                  and the Sponsor that such amendment is permitted by, and
                  conforms to, the terms of this Declaration (including the
                  terms of the Securities); and

                           (B) an opinion of counsel (who may be counsel to the
                  Sponsor or the Trust) that such amendment is permitted by, and
                  conforms to, the terms of this Declaration (including the
                  terms of the Securities); and

                  (ii) the result of such amendment would not be to

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



                                       35
<PAGE>

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

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

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

         (e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the Securities.

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

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

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

                  (i) cure any ambiguity;

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

                  (iii) add to the covenants, restrictions or obligations of the
         Sponsor; or

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

         PROVIDED, HOWEVER, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.

         SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.

         (a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrators (or as provided in the terms of the Securities)
to consider and act on any matter on which




                                       36
<PAGE>

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

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

                  (i) notice of any such meeting shall be given to all the
         Holders of the Securities having a right to vote thereat at least 7
         days and not more than 60 days before the date of such meeting.
         Whenever a vote, consent or approval of the Holders of the Securities
         is permitted or required under this Declaration, such vote, consent or
         approval may be given at a meeting of the Holders of the Securities.
         Any action that may be taken at a meeting of the Holders of the
         Securities may be taken without a meeting if a consent in writing
         setting forth the action so taken is signed by the Holders of the
         Securities owning not less than the minimum amount of Securities in
         liquidation amount that would be necessary to authorize or take such
         action at a meeting at which all Holders of the Securities having a
         right to vote thereon were present and voting. Prompt notice of the
         taking of action without a meeting shall be given to the Holders of the
         Securities entitled to vote who have not consented in writing. The
         Administrators may specify that any written ballot submitted to the
         Holders of the Securities for the purpose of taking any action without
         a meeting shall be returned to the Trust within the time specified by
         the Administrators;

                  (ii) each Holder of a Security may authorize any Person to act
         for it by proxy on all matters in which a Holder of Securities is
         entitled to participate, including waiving notice of any meeting, or
         voting or participating at a meeting. No proxy shall be valid after the
         expiration of 11 months from the date thereof unless otherwise provided
         in the proxy. Every proxy shall be revocable at the pleasure of the
         Holder of the Securities executing it. Except as otherwise provided
         herein, all matters relating to the giving, voting or validity of
         proxies shall be governed by the General Corporation Law of the State
         of Connecticut relating to proxies, and judicial interpretations
         thereunder, as if the Trust were a Connecticut corporation and the
         Holders of the Securities were stockholders of a Connecticut
         corporation; each meeting of the Holders of the Securities shall be
         conducted by the Administrators or by such other Person that the
         Administrators may designate; and

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



                                       37
<PAGE>

                                   ARTICLE XII

                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

         SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The initial Institutional Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:

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

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

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

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

                                  ARTICLE XIII

                                  MISCELLANEOUS

         SECTION 13.1. NOTICES. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:

         (a) if given to the Trust, in care of the Administrators at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):

                  Carver Statutory Trust I
                  c/o Carver Bancorp, Inc.
                  75 West 125th Street
                  New York, New York 10027
                  Attention:  Chief Financial Officer
                  Telecopy:  212-426-6159

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



                                       38
<PAGE>

                  U.S. Bank National Association
                  225 Asylum Street, Goodwin Square
                  Hartford, Connecticut  06103
                  Attention:  Vice President, Corporate Trust Services Division
                  Telecopy:  860-241-6889

                  With a copy to:

                  U.S. Bank National Association
                  1 Federal Street - 3rd Floor
                  Boston, Massachusetts  02110
                  Attention:  Paul D. Allen, Corporate Trust Services Division
                  Telecopy:  617-603-6665

         (c) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):

                  Carver Bancorp, Inc.
                  75 West 125th Street
                  New York, New York 10027
                  Attention:  Chief Financial Officer
                  Telecopy:  212-426-6159

         (d) if given to any other Holder, at the address set forth on the books
and records of the Trust.

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

         SECTION 13.2. GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Connecticut and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Connecticut or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Connecticut; PROVIDED, HOWEVER,
that there shall not be applicable to the Trust, the Institutional Trustee or
this Declaration any provision of the laws (statutory or common) of the State of
Connecticut pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.

         SECTION 13.3. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.



                                       39
<PAGE>

         SECTION 13.4. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.

         SECTION 13.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Institutional Trustee shall bind and
inure to the benefit of their respective successors and assigns, whether or not
so expressed.

         SECTION 13.6. PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.

         SECTION 13.7. COUNTERPARTS. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Institutional Trustee and
Administrators to any of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE




                                       40
<PAGE>



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

                                  U.S. BANK NATIONAL ASSOCIATION,
                                  as Institutional Trustee


                                  By: /s/ Paul D. Allen
                                      ------------------------------------------
                                      Name:   Paul D. Allen
                                      Title:  Vice President


                                  CARVER BANCORP, INC., as Sponsor


                                  By: /s/ William C. Gray
                                      ------------------------------------------
                                      Name:   William C. Gray
                                      Title:  Chief Financial Officer


                                  CARVER STATUTORY TRUST I


                                  By: /s/ William Gray
                                      ------------------------------------------
                                      Administrator


                                  By: /s/ Linda Dunn
                                      ------------------------------------------
                                      Administrator


                                  By: /s/ Deborah Wright
                                      ------------------------------------------
                                      Administrator




                                       41
<PAGE>


                                     ANNEX I

                               TERMS OF SECURITIES

         Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of September 17, 2003 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):

         1. DESIGNATION AND NUMBER.

                  (a) 13,000 Floating Rate Capital Securities of Carver
Statutory Trust I (the "Trust"), with an aggregate stated liquidation amount
with respect to the assets of the Trust of thirteen million dollars
($13,000,000.00) and a stated liquidation amount with respect to the assets of
the Trust of $1,000.00 per Capital Security, are hereby designated for the
purposes of identification only as the "CAPITAL SECURITIES". The Capital
Security Certificates evidencing the Capital Securities shall be substantially
in the form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.

                  (b) 403 Floating Rate Common Securities of the Trust (the
"COMMON SECURITIES") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.

         2. DISTRIBUTIONS.

                  (a) Distributions will be payable on each Security for the
period beginning on (and including) the date of original issuance and ending on
(but excluding) December 17, 2003 at a rate per annum of 4.19% and shall bear
interest for each successive Distribution Period beginning on (and including)
December 17, 2003, and each succeeding Distribution Payment Date, and ending on
(but excluding) the next succeeding Distribution Payment Date (each, a
"Distribution Period") at a rate per annum equal to the 3-Month LIBOR,
determined as described below, plus 3.05% (the "COUPON RATE"), applied to the
stated liquidation amount thereof, such rate being the rate of interest payable
on the Debentures to be held by the Institutional Trustee. Distributions in
arrears will bear interest thereon compounded quarterly at the applicable
Distribution Rate (to the extent permitted by law). Distributions, as used
herein, include cash distributions and any such compounded distributions unless
otherwise noted. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds available therefor. The amount of the
Distribution payable for any Distribution Period will be calculated by applying
the Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period on the basis of the actual number of
days in the Distribution Period concerned divided by 360. All percentages
resulting from any calculations on the Capital Securities will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
..09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used
in or resulting from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward)).

                  (b) Distributions on the Securities will be cumulative, will
accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, quarterly in
arrears on March 17, June 17, September 17 and December 17 of each year, or if
such




                                      I-1
<PAGE>

day is not a Business Day, then the next succeeding Business Day, commencing on
December 17, 2003 (each a "DISTRIBUTION PAYMENT DATE") when, as and if available
for payment. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures, so long as no Indenture Event of Default
has occurred and is continuing, by deferring the payment of interest on the
Debentures for up to 20 consecutive quarterly periods (each an "EXTENSION
PERIOD") at any time and from time to time, subject to the conditions described
below, during which Extension Period no interest shall be due and payable.
During any Extension Period, interest will continue to accrue on the Debentures,
and interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded quarterly
from the date such interest would have been payable were it not for the
Extension Period, to the extent permitted by law (such interest referred to
herein as "ADDITIONAL INTEREST"). No Extension Period may end on a date other
than a Distribution Payment Date. At the end of any such Extension Period, the
Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); PROVIDED, HOWEVER, that
no Extension Period may extend beyond the Maturity Date and PROVIDED FURTHER,
HOWEVER, that during any such Extension Period, the Debenture Issuer and its
Affiliates shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Debenture Issuer's or its Affiliates' capital stock (other than payments of
dividends or distributions to the Debenture Issuer) or make any guarantee
payments with respect to the foregoing, or (ii) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Debenture Issuer or any Affiliate that rank PARI PASSU in all
respects with or junior in interest to the Debentures (other than, with respect
to clauses (i) and (ii) above, (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Debenture Issuer (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of any exchange or conversion of any class or
series of the Debenture Issuer's capital stock (or any capital stock of a
subsidiary of the Debenture Issuer) for any class or series of the Debenture
Issuer's capital stock or of any class or series of the Debenture Issuer's
indebtedness for any class or series of the Debenture Issuer's capital stock,
(c) the purchase of fractional interests in shares of the Debenture Issuer's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholders' rights plan, or the issuance of
rights, stock or other property under any stockholders' rights plan, or the
redemption or repurchase of rights pursuant thereto, (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks PARI PASSU with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, or (f) payments under the Capital Securities
Guarantee). Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period, provided that such period together with
all such previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be




                                      I-2
<PAGE>

paid on the dates payable (after giving effect to any Extension Period) to the
extent that the Trust has funds available for the payment of such distributions
in the Property Account of the Trust. The Trust's funds available for
Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

                  (c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. The relevant record dates shall be 15 days before the
relevant Distribution Payment Date. Distributions payable on any Securities that
are not punctually paid on any Distribution Payment Date, as a result of the
Debenture Issuer having failed to make a payment under the Debentures, as the
case may be, when due (taking into account any Extension Period), will cease to
be payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such payment date.

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

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

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



                                      I-3
<PAGE>

         If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical, in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

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

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

         4. REDEMPTION AND DISTRIBUTION.

                  (a) The Debentures will mature on September 17, 2033. The
Debentures may be redeemed by the Debenture Issuer, in whole or in part, at any
Distribution Payment Date on or after September 17, 2008, at the Redemption
Price. In addition, the Debentures may be redeemed by the Debenture Issuer at
the Special Redemption Price, in whole but not in part, at any Distribution
Payment Date, upon the occurrence and continuation of a Special Event within 120
days following the occurrence of such Special Event at the Special Redemption
Price, upon not less than 30 nor more than 60 days' notice to holders of such
Debentures so long as such Special Event is continuing. In each case, the right
of the Debenture Issuer to redeem the Debentures is subject to the Debenture
Issuer having received prior approval from the Federal Reserve (if the Debenture
Issuer is a bank holding company) or prior approval from the OTS (if the
Debenture Issuer is a savings and loan holding company), in each case if then
required under applicable capital guidelines or policies of the applicable
federal agency.

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



                                      I-4
<PAGE>

                  (1) the rate (expressed as a percentage per annum) for U.S.
         dollar deposits having a three-month maturity that appears on Telerate
         Page 3750 as of 11:00 a.m. (London time) on the related Determination
         Date (as defined below). "Telerate Page 3750" means the display
         designated as "Page 3750" on the Dow Jones Telerate Service or such
         other page as may replace Page 3750 on that service or such other
         service or services as may be nominated by the British Bankers'
         Association as the information vendor for the purpose of displaying
         London interbank offered rates for U.S. dollar deposits;

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

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

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

         If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.

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

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



                                      I-5
<PAGE>

Capital under applicable capital adequacy guidelines; PROVIDED FURTHER, HOWEVER,
that the distribution of Debentures in connection with the Liquidation of the
Trust shall not in and of itself constitute a Capital Treatment Event unless
such Liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event.

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

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

         "MATURITY DATE" means September 17, 2033.

         "REDEMPTION DATE" shall mean the date fixed for the redemption of
Capital Securities, which shall be any March 17, June 17, September 17 or
December 17 commencing September 17, 2008.

          "REDEMPTION PRICE" means 100% of the principal amount of the
Debentures being redeemed, plus accrued and unpaid Interest on such Debentures
to the Redemption Date.

         "SPECIAL EVENT" means a Tax Event, an Investment Company Event or a
Capital Treatment Event.

         "SPECIAL REDEMPTION DATE" means a date on which a Special Event
redemption occurs, which shall be any March 17, June 17, September 17 or
December 17 or, if such day is not a Business Day, then the next succeeding
Business Day.

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


        SPECIAL REDEMPTION DATE                  SPECIAL REDEMPTION PRICE

           December 17, 2003                             104.625%

             March 17, 2004                              104.300%

             June 17, 2004                               104.000%

           September 17, 2004                            103.650%

           December 17, 2004                             103.350%

             March 17, 2005                              103.000%



                                      I-6
<PAGE>

             June 17, 2005                               102.700%

           September 17, 2005                            102.350%

           December 17, 2005                             102.050%

             March 17, 2006                              101.700%

             June 17, 2006                               101.400%

           September 17, 2006                            101.050%

           December 17, 2006                             100.750%

             March 17, 2007                              100.450%

             June 17, 2007                               100.200%

   September 17, 2007 and thereafter                     100.000%


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

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

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



                                      I-7
<PAGE>

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

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

                  (e) REDEMPTION OR DISTRIBUTION PROCEDURES.

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

                           (ii) If the Securities are to be redeemed and the
         Trust gives a Redemption/ Distribution Notice, which notice may only be
         issued if the Debentures are redeemed as set out in this paragraph 4
         (which notice will be irrevocable), then, PROVIDED that the
         Institutional Trustee has a sufficient amount of cash in connection
         with the related redemption or maturity of the Debentures, the
         Institutional Trustee will pay the relevant Redemption Price or Special
         Redemption Price, as applicable, to the Holders of such Securities by
         check mailed to the address of each such Holder appearing on the books
         and records of the Trust on the Redemption Date. If a
         Redemption/Distribution Notice shall have been given and funds
         deposited as required then immediately prior to the close of business
         on the date of such deposit Distributions will cease to accrue on the
         Securities so called for redemption and all rights of Holders of such
         Securities so called for redemption will cease, except the right of the
         Holders of such Securities to receive the applicable Redemption Price
         or Special Redemption Price specified in paragraph 4(a), but without
         interest on such Redemption Price or Special Redemption Price. If
         payment of the Redemption Price or Special Redemption Price in respect
         of any Securities is improperly withheld or refused and not paid either
         by the Trust or by the Debenture Issuer as guarantor pursuant to the
         Guarantee, Distributions on such Securities will continue to accrue at
         the Distribution Rate from the original Redemption Date to the actual
         date of payment, in which case the actual payment date will be
         considered the date fixed for redemption for purposes of calculating
         the Redemption Price or Special Redemption Price. In the event of any
         redemption of the Capital Securities issued by the Trust in part, the
         Trust shall not be required to (i) issue, register the transfer of or
         exchange any Security during a period beginning at the opening of
         business 15 days before any selection for redemption of the Capital
         Securities and ending at the close of business on the earliest date on
         which the relevant notice of redemption is deemed to have been given to
         all Holders of the Capital Securities to be so redeemed or (ii)
         register the transfer of or exchange any Capital Securities so selected
         for redemption, in whole or in part, except for the unredeemed portion
         of any Capital Securities being redeemed in part.



                                      I-8
<PAGE>

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

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

         5. VOTING RIGHTS - CAPITAL SECURITIES.

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

                  (b) Subject to the requirements of obtaining a tax opinion by
the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required;
PROVIDED, HOWEVER, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
aggregate principal amount of Debentures (a "SUPER MAJORITY") affected thereby,
the Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. If
the Institutional Trustee fails to enforce its rights under the Debentures after
the Holders of a Majority in liquidation amount of such Capital Securities have
so directed the Institutional Trustee, to the fullest extent permitted by law, a
Holder of the Capital Securities may institute a legal proceeding directly
against the Debenture Issuer to enforce the Institutional Trustee's rights under
the Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption, the Redemption Date or the Special Redemption Date,
as applicable), then a Holder of record of the Capital Securities may directly
institute a proceeding for enforcement of payment, on or after the respective
due dates specified in the Debentures, to such Holder directly of the principal
of or interest on the Debentures having an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or
interest on any of the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee



                                      I-9
<PAGE>

shall not take any of the actions described in clauses (i), (ii) or (iii) above
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.

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

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

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

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

         6. VOTING RIGHTS - COMMON SECURITIES.

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

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



                                      I-10
<PAGE>

                  (c) Subject to Section 6.7 of the Declaration and only after
each Event of Default (if any) with respect to the Capital Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waiving any past
default and its consequences that is waivable under the Indenture, or (iii)
exercising any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; PROVIDED, HOWEVER, that, where a
consent or action under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding
this paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration to the
fullest extent permitted by law, any Holder of the Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.

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

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

         7. AMENDMENTS TO DECLARATION AND INDENTURE.

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




                                      I-11
<PAGE>

only the Capital Securities or only the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.

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

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

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

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

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




                                      I-12
<PAGE>

Distributions on, or the Redemption Price (or Special Redemption Price) of, the
Capital Securities then due and payable.

         10. ACCEPTANCE OF GUARANTEE AND INDENTURE. Each Holder of the Capital
Securities and the Common Securities, by the acceptance of such Securities,
agrees to the provisions of the Guarantee, including the subordination
provisions therein and to the provisions of the Indenture.

         11. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have no
preemptive or similar rights to subscribe for any additional securities.

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




                                      I-13
<PAGE>


                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.

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




                                     A-1-1
<PAGE>

HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE
MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

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

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

              Certificate Number P-1            13,000 Capital Securities

                               September 17, 2003

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                            Carver Statutory Trust I

               (liquidation amount $1,000.00 per Capital Security)

         Carver Statutory Trust I, a statutory trust created under the laws of
the State of Connecticut (the "Trust"), hereby certifies that Hare & Co. (the
"Holder"), as the nominee of The Bank of New York, indenture trustee under the
Indenture dated as of September 17, 2003 among Preferred Term Securities XI,
Ltd., Preferred Term Securities XI, Inc. and The Bank of New York, is the
registered owner of capital securities of the Trust representing undivided
beneficial interests in the assets of the Trust, (liquidation amount $1,000.00
per capital security) (the "Capital Securities"). Subject to the Declaration (as
defined below), the Capital Securities are transferable on the books and records
of the Trust in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of September
17, 2003, among Linda Dunn, William Gray and Deborah Wright, as Administrators,
U.S. Bank National Association, as Institutional Trustee, Carver Bancorp, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust, including the designation of the terms of the
Capital Securities as set forth in Annex I to such amended and restated
declaration as the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee to
the extent provided therein. The Sponsor will provide a copy of the




                                     A-1-2
<PAGE>

Declaration, the Guarantee, and the Indenture to the Holder without charge upon
written request to the Sponsor at its principal place of business.

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

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

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

                       SIGNATURES APPEAR ON FOLLOWING PAGE




                                     A-1-3
<PAGE>



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

                                         CARVER STATUTORY TRUST I



                                         By:________________________________
                                              Name:
                                              Title:  Administrator


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as the Institutional Trustee


                                         By:________________________________
                                                  Authorized Officer




                                     A-1-4
<PAGE>



                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions payable on each Capital Security will be payable at an
annual rate equal to 4.19% beginning on (and including) the date of original
issuance and ending on (but excluding) December 17, 2003 and at an annual rate
for each successive period beginning on (and including) December 17, 2003, and
each succeeding Distribution Payment Date (each a "Distribution Period"), and
ending on (but excluding) the next succeeding Distribution Payment Date, equal
to 3-Month LIBOR, determined as described below, plus 3.05% (the "Coupon Rate"),
applied to the stated liquidation amount of $1,000.00 per Capital Security, such
rate being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears will bear interest thereon
compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes cash
distributions and any such compounded distributions unless otherwise noted. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. As used herein,
"Determination Date" means the date that is two London Banking Days (i.e., a
business day in which dealings in deposits in U.S. dollars are transacted in the
London interbank market) preceding the commencement of the relevant Distribution
Period. The amount of the Distribution payable for any Distribution Period will
be calculated by applying the Distribution Rate to the stated liquidation amount
outstanding at the commencement of the Distribution Period on the basis of the
actual number of days in the Distribution Period concerned divided by 360.

         "3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

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

         All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or




                                     A-1-5
<PAGE>

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

         Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 17, June 17, September 17 and
December 17 of each year (or if such day is not a Business Day, then the next
succeeding Business Day), commencing on December 17, 2003. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as "Additional
Interest"). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); PROVIDED, HOWEVER, that no Extension Period may
extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. During any Extension Period, Distributions on the Capital
Securities shall be deferred for a period equal to the Extension Period. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, to Holders of the Securities as they
appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

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




                                     A-1-6
<PAGE>



                                   ASSIGNMENT

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

_______________________________________________________________________________

(Insert assignee's social security or tax identification number)_______________

_______________________________________________________________________________

_______________________________________________________________________________



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

_______________________________________________________________________________



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

         Date:_______________________________________

         Signature:__________________________________

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

         Signature Guarantee:1



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




                                     A-1-7
<PAGE>



                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

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

         Certificate Number C-1                    403 Common Securities

                               September 17, 2003

             Certificate Evidencing Floating Rate Common Securities

                                       of

                            Carver Statutory Trust I

         Carver Statutory Trust I, a statutory trust created under the laws of
the State of Connecticut (the "Trust"), hereby certifies that Carver Bancorp,
Inc. (the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities"). The Common Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of September 17, 2003, among Linda Dunn, William Gray and
Deborah Wright, as Administrators, U.S. Bank National Association, as
Institutional Trustee, Carver Bancorp, Inc., as Sponsor, and the holders from
time to time of undivided beneficial interest in the assets of the Trust
including the designation of the terms of the Common Securities as set forth in
Annex I to such amended and restated declaration, as the same may be amended
from time to time (the "Declaration"). Capitalized terms used herein but not
defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.

         As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holders of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.

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

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

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




                                     A-2-1
<PAGE>


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

                                           CARVER STATUTORY TRUST I


                                           By:_______________________________
                                                Name:
                                                Title: Administrator



                                     A-2-2
<PAGE>


                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions payable on each Common Security will be payable at an
annual rate equal to 4.19% beginning on (and including) the date of original
issuance and ending on (but excluding) December 17, 2003 and at an annual rate
for each successive period beginning on (and including) December 17, 2003, and
each succeeding Distribution Payment Date, and ending on (but excluding) the
next succeeding Distribution Payment Date (each a "Distribution Period"), equal
to 3-Month LIBOR, determined as described below, plus 3.05% (the "Coupon Rate"),
applied to the stated liquidation amount of $1,000.00 per Common Security, such
rate being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears will bear interest thereon
compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes cash
distributions and any such compounded distributions unless otherwise noted. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. As used herein,
"Determination Date" means the date that is two London Banking Days (i.e., a
business day in which dealings in deposits in U.S. dollars are transacted in the
London interbank market) preceding the commencement of the relevant Distribution
Period. The amount of the Distribution payable for any Distribution Period will
be calculated by applying the Distribution Rate to the stated liquidation amount
outstanding at the commencement of the Distribution Period on the basis of the
actual number of days in the Distribution Period concerned divided by 360.

         "3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

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

         All percentages resulting from any calculations on the Common
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or



                                     A-2-3
<PAGE>

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

         Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 17, June 17, September 17 and
December 17 of each year (or if such day is not a Business Day, then the next
succeeding Business Day), commencing on December 17, 2003. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as "Additional
Interest"). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); PROVIDED, HOWEVER, that no Extension Period may
extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. During any Extension Period, Distributions on the Common
Securities shall be deferred for a period equal to the Extension Period. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, to Holders of the Securities as they
appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Securities will be limited to payments received from the
Debenture Issuer.

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




                                     A-2-4
<PAGE>



                                   ASSIGNMENT

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

_______________________________________________________________________________

(Insert assignee's social security or tax identification number)_______________

_______________________________________________________________________________

_______________________________________________________________________________

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

_______________________________________________________________________________



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

Date:________________________________

Signature:___________________________

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

Signature:___________________________

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

Signature Guarantee2




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


                                     A-2-5
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

     FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

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

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

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



                                      B-1
<PAGE>

EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE
OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3)
OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY
OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

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

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

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                              Carver Bancorp, Inc.

                               September 17, 2003

         Carver Bancorp, Inc., a Delaware corporation (the "Company" which term
includes any successor Person under the Indenture hereinafter referred to), for
value received promises to pay to U.S. Bank National Association, not in its
individual capacity but solely as Institutional Trustee for Carver Statutory
Trust I (the "Holder") or registered assigns, the principal sum of thirteen
million four hundred three thousand dollars ($13,403,000.00) on September 17,
2033, and to pay interest on said principal sum from September 17, 2003, 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 17, June 17, September 17
and December 17 of each year (or if such day is not a Business Day, then the
next succeeding Business Day) commencing on December 17, 2003, at an annual rate
equal to 4.19% beginning on (and including) the date of original issuance and
ending on (but excluding) December 17, 2003 and at an annual rate for each
successive period beginning on (and including) December 17, 2003, and each
succeeding Interest Payment Date, and ending on (but excluding) the next
succeeding Interest Payment Date (each a "Distribution Period"), equal to
3-Month LIBOR, determined as described below, plus 3.05% (the "Coupon Rate"),
applied to the principal amount hereof, until the principal hereof is paid or
duly provided for or made available for payment, and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest
(including Additional Interest) at the Interest



                                      B-2
<PAGE>

Rate in effect for each applicable period, compounded quarterly, from the dates
such amounts are due until they are paid or made available for payment. The
amount of interest payable for any period will be computed on the basis of the
actual number of days in the Distribution Period concerned divided by 360. In
the event that any date on which interest is payable on this Debenture is not a
Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date the payment was originally payable. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on the regular record date for such interest
installment, which shall be fifteen days prior to the day on which the relevant
Interest Payment Date occurs. Any such interest installment not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder on
such regular record date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a special record date.

         "3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Trustee in
the following order of priority: (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date ("Telerate Page 3750" means the display designated as "Page 3750" on the
Dow Jones Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the principal London offices of four leading banks in the London interbank
market to provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar deposits
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two quotations are provided, 3-Month LIBOR will
be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If at least
two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of
such quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date. As used
herein, "Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period.

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

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



                                      B-3
<PAGE>

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

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

         So long as no Event of Default has occurred and is continuing, the
Company shall have the right, from time to time, and without causing an Event of
Default, to defer payments of interest on the Debentures by extending the
interest payment period on the Debentures at any time and from time to time
during the term of the Debentures, for up to 20 consecutive quarterly periods
(each such extended interest payment period, an "Extension Period"), during
which Extension Period no interest (including Additional Interest) shall be due
and payable (except any Additional Sums that may be due and payable). No
Extension Period may end on a date other than an Interest Payment Date. During
an Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the
Interest Rate in effect for such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension Period,
to the extent permitted by law (such interest referred to herein as "Additional
Interest"). At the end of any such Extension Period the Company shall pay all
interest then accrued and unpaid on the Debentures (together with Additional
Interest thereon); PROVIDED, HOWEVER, that no Extension Period may extend beyond
the Maturity Date; PROVIDED FURTHER, HOWEVER, that during any such Extension
Period, the Company shall not and shall not permit any Affiliate to engage in
any of the activities or transactions described on the reverse side hereof and
in the Indenture. Prior to the termination of any Extension Period, the Company
may further extend such period, provided that such period together with all such
previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Company may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. The Company must give the Trustee notice of its election to begin or
extend an Extension Period at least 5 Business Days prior to the regular record
date (as such term is used in Section 2.8 of the Indenture) immediately
preceding the Interest Payment Date with respect to which interest on the
Debentures would have been payable except for the election to begin or extend
such Extension Period.

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



                                      B-4
<PAGE>

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

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




                                      B-5
<PAGE>


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

                                      CARVER BANCORP, INC.


                                      By________________________________________
                                        Name:
                                        Title:


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

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

                                      U.S. Bank National Association, as Trustee


                                      By:_______________________________________
                                         Authorized Officer




                                      B-6
<PAGE>


                         [FORM OF REVERSE OF DEBENTURE]

         This Debenture is one of the Floating rate junior subordinated
deferrable interest debentures of the Company, all issued or to be issued under
and pursuant to the Indenture dated as of September 17, 2003 (the "Indenture"),
duly executed and delivered between the Company and the Trustee, to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures. The Debentures are limited in
aggregate principal amount as specified in the Indenture.

         Upon the occurrence and continuation of a Special Event prior to
September 17, 2008, the Company shall have the right to redeem the Debentures in
whole, but not in part, at any Interest Payment Date, within 120 days following
the occurrence of such Special Event, at the Special Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in part, but in all cases in a principal amount with integral
multiples of $1,000.00, on any Interest Payment Date on or after September 17,
2008, at the Redemption Price.

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

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

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

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

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

         The Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the holders of all of the Debentures to



                                      B-7
<PAGE>

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

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

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


                                      B-8
<PAGE>

cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee).

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

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

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

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

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






                                      B-9
<PAGE>

                                   EXHIBIT C

                               PLACEMENT AGREEMENT

                              CARVER BANCORP, INC.

                            13,000 CAPITAL SECURITIES


                        FLOATING RATE CAPITAL SECURITIES
               (LIQUIDATION AMOUNT $1,000.00 PER CAPITAL SECURITY)


                               PLACEMENT AGREEMENT

                              ____________________

                                                               September 9, 2003



FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee  38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York  10019

Ladies and Gentlemen:

         Carver Bancorp, Inc., a Delaware corporation (the "Company"), and its
financing subsidiary, Carver Statutory Trust I, a Connecticut statutory trust
(the "Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement (this "Agreement") with you as placement agents (the
"Placement Agents"), as follows:

                                    ARTICLE I
                        ISSUANCE AND SALE OF SECURITIES.

         SECTION 1.1. INTRODUCTION. The Offerors propose to issue and sell at
the Closing (as defined in Section Section 2.3(a) hereof) 13,000 of the Trust's
Floating Rate Capital Securities, with a liquidation amount of $1,000.00 per
capital security (the "Capital Securities"), to Preferred Term Securities XI,
Ltd., a company with limited liability established under the laws of the Cayman
Islands (the "Purchaser") pursuant to the terms of a Subscription Agreement
entered into, or to be entered into on or prior to the Closing Date (as defined
in Section Section 2.3(a) hereof), between the Offerors and the Purchaser (the
"Subscription Agreement"), the form of which is attached hereto as EXHIBIT A and
incorporated herein by this reference.

         SECTION 1.2. OPERATIVE AGREEMENTS. The Capital Securities shall be
fully and unconditionally guaranteed on a subordinated basis by the Company with
respect to distributions and amounts payable upon liquidation, redemption or
repayment (the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date and executed and
delivered


<PAGE>

by the Company and U.S. Bank National Association ("U.S. Bank"), as trustee (the
"Guarantee Trustee"), for the benefit from time to time of the holders of the
Capital Securities. The entire proceeds from the sale by the Trust to the
holders of the Capital Securities shall be combined with the entire proceeds
from the sale by the Trust to the Company of its common securities (the "Common
Securities"), and shall be used by the Trust to purchase $13,403,000.00 in
principal amount of the Floating Rate Junior Subordinated Deferrable Interest
Debentures (the "Debentures") of the Company. The Capital Securities and the
Common Securities for the Trust shall be issued pursuant to an Amended and
Restated Declaration of Trust among U.S. Bank, as institutional trustee (the
"Institutional Trustee"), the Administrators named therein, and the Company, to
be dated as of the Closing Date and in substantially the form heretofore
delivered to the Placement Agents (the "Trust Agreement"). The Debentures shall
be issued pursuant to an Indenture (the "Indenture"), to be dated as of the
Closing Date, between the Company and U.S. Bank, as indenture trustee (the
"Indenture Trustee"). The documents identified in this Section 1.2 and in
Section 1.1 are referred to herein as the "Operative Documents."

         SECTION 1.3. RIGHTS OF PURCHASER. The Capital Securities shall be
offered and sold by the Trust directly to the Purchaser without registration of
any of the Capital Securities, the Debentures or the Guarantee under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities laws in reliance upon exemptions from the registration
requirements of the Securities Act and other applicable securities laws. The
Offerors agree that this Agreement shall be incorporated by reference into the
Subscription Agreement and the Purchaser shall be entitled to each of the
benefits of the Placement Agents and the Purchaser under this Agreement and
shall be entitled to enforce obligations of the Offerors under this Agreement as
fully as if the Purchaser were a party to this Agreement. The Offerors and the
Placement Agents have entered into this Agreement to set forth their
understanding as to their relationship and their respective rights, duties and
obligations.

         SECTION 1.4. LEGENDS. Upon original issuance thereof, and until such
time as the same is no longer required under the applicable requirements of the
Securities Act, the Capital Securities and Debentures certificates shall each
contain a legend as required pursuant to any of the Operative Documents.

                                   ARTICLE II
                        PURCHASE OF CAPITAL SECURITIES.

         SECTION 2.1. EXCLUSIVE RIGHTS; PURCHASE PRICE. From the date hereof
until the Closing Date (which date may be extended by mutual agreement of the
Offerors and the Placement Agents), the Offerors hereby grant to the Placement
Agents the exclusive right to arrange for the sale of the Capital Securities to
the Purchaser at a purchase price of $1,000.00 per Capital Security.

         SECTION 2.2. SUBSCRIPTION AGREEMENT. The Offerors hereby agree to
evidence their acceptance of the subscription by countersigning a copy of the
Subscription Agreement and returning the same to the Placement Agents.

         SECTION 2.3. CLOSING AND DELIVERY OF PAYMENT.

                  (a) CLOSING; CLOSING DATE. The sale and purchase of the
Capital Securities by the Offerors to the Purchaser shall take place at a
closing (the "Closing") at the offices of Lewis, Rice & Fingersh, L.C., at 10:00
a.m. (St. Louis time) on September 17, 2003, or such other business day as may
be agreed upon by the Offerors and the Placement Agents (the "Closing Date");
PROVIDED, HOWEVER, that in no event shall the Closing Date occur later than
September 30, 2003 unless consented to by the Purchaser. Payment by the
Purchaser shall be payable in the manner set forth in the Subscription Agreement
and shall be made prior to or on the Closing Date.



                                       2
<PAGE>

                  (b) DELIVERY. The certificate for the Capital Securities shall
be in definitive form, registered in the name of the Purchaser and in the
aggregate amount of the Capital Securities purchased by the Purchaser.

                  (c) TRANSFER AGENT. The Offerors shall deposit the certificate
representing the Capital Securities with the Institutional Trustee or other
appropriate party prior to the Closing Date.

         SECTION 2.4. PLACEMENT AGENTS' FEES AND EXPENSES.

                  (a) PLACEMENT AGENTS' COMPENSATION. Because the proceeds from
the sale of the Capital Securities shall be used to purchase the Debentures from
the Company, the Company shall pay an aggregate of $30.00 for each $1,000.00 of
principal amount of Debentures sold to the Trust (excluding the Debentures
related to the Common Securities purchased by the Company). Of this amount,
$15.00 for each $1,000.00 of principal amount of Debentures shall be payable to
FTN Financial Capital Markets and $15.00 for each $1,000.00 of principal amount
of Debentures shall be payable to Keefe, Bruyette & Woods, Inc. Such amount
shall be delivered to the Trustee or such other person designated by the
Placement Agents on the Closing Date and shall be allocated between and paid to
the respective Placement Agents as directed by the Placement Agents.

                  (b) COSTS AND EXPENSES. Whether or not this Agreement is
terminated or the sale of the Capital Securities is consummated, the Company
hereby covenants and agrees that it shall pay or cause to be paid (directly or
by reimbursement) all reasonable costs and expenses incident to the performance
of the obligations of the Offerors under this Agreement, including all fees,
expenses and disbursements of counsel and accountants for the Offerors; all
reasonable expenses incurred by the Offerors incident to the preparation,
execution and delivery of the Trust Agreement, the Indenture, and the Guarantee;
and all other reasonable costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement.

         SECTION 2.5. FAILURE TO CLOSE. If any of the conditions to the Closing
specified in this Agreement shall not have been fulfilled to the satisfaction of
the Placement Agents or if the Closing shall not have occurred on or before
10:00 a.m. (St. Louis time) on September 30, 2003, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; PROVIDED, HOWEVER, that
the obligations of the parties under Sections Section 2.4(b), 7.5 and 9 shall
not be so relieved and shall continue in full force and effect.

                                  ARTICLE III
                              CLOSING CONDITIONS.

         The obligations of the Purchaser and the Placement Agents on the
Closing Date shall be subject to the accuracy, at and as of the Closing Date, of
the representations and warranties of the Offerors contained in this Agreement,
to the accuracy, at and as of the Closing Date, of the statements of the
Offerors made in any certificates pursuant to this Agreement, to the performance
by the Offerors of their respective obligations under this Agreement, to
compliance, at and as of the Closing Date, by the Offerors with their respective
agreements herein contained, and to the following further conditions:

         SECTION 3.1. OPINIONS OF COUNSEL. On the Closing Date, the Placement
Agents shall have received the following favorable opinions, each dated as of
the Closing Date: (a) from Thacher Proffitt & Wood LLP, counsel for the Offerors
and addressed to the Purchaser and the Placement Agents in substantially the
form set forth on EXHIBIT B-1 attached hereto and incorporated herein by this
reference, (b) from Shipman & Goodwin LLP, special Connecticut counsel to the
Offerors and addressed to the Purchaser, the Placement Agents and the Offerors,
in substantially the form set forth on EXHIBIT B-2 attached hereto and
incorporated herein by this reference and (c) from Lewis, Rice & Fingersh, L.C.,
special tax counsel to the Offerors, and addressed to the Placement Agents and
the Offerors, in



                                       3
<PAGE>

substantially the form set forth on EXHIBIT B-3 attached hereto and incorporated
herein by this reference, subject to the receipt by Lewis, Rice & Fingersh, L.C.
of a representation letter from the Company in the form set forth in EXHIBIT B-3
completed in a manner reasonably satisfactory to Lewis, Rice & Fingersh, L.C.
(collectively, the "Offerors' Counsel Opinions"). In rendering the Offerors'
Counsel Opinions, counsel to the Offerors may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees of
the Offerors (copies of which shall be delivered to the Placement Agents and the
Purchaser) and by government officials, and upon such other documents as counsel
to the Offerors may, in their reasonable opinion, deem appropriate as a basis
for the Offerors' Counsel Opinions. Counsel to the Offerors may specify the
jurisdictions in which they are admitted to practice and that they are not
admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction. If the Offerors' counsel is not admitted to practice in
the State of New York, the opinion of Offerors' counsel may assume, for purposes
of the opinion, that the laws of the State of New York are substantively
identical, in all respects material to the opinion, to the internal laws of the
state in which such counsel is admitted to practice. Such Offerors' Counsel
Opinions shall not state that they are to be governed or qualified by, or that
they are otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).

         SECTION 3.2. OFFICER'S CERTIFICATE. At the Closing Date, the Purchaser
and the Placement Agents shall have received certificates from the Chief
Executive Officer of the Company, dated as of the Closing Date, stating that (i)
the representations and warranties of the Offerors set forth in Section 5 hereof
are true and correct as of the Closing Date and that the Offerors have complied
with all agreements and satisfied all conditions on their part to be performed
or satisfied at or prior to the Closing Date, (ii) since the date of this
Agreement the Offerors have not incurred any liability or obligation, direct or
contingent, or entered into any material transactions, other than in the
ordinary course of business, which is material to the Offerors, and (iii)
covering such other matters as the Placement Agents may reasonably request.

         SECTION 3.3. ADMINISTRATOR'S CERTIFICATE. At the Closing Date, the
Purchaser and the Placement Agents shall have received a certificate of one or
more Administrators of the Trust, dated as of the Closing Date, stating that the
representations and warranties of the Trust set forth in Section 5 are true and
correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.

         SECTION 3.4. PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT.
The purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.

         SECTION 3.5. CONSENTS AND PERMITS. The Company and the Trust shall have
received all consents, permits and other authorizations, and made all such
filings and declarations, as may be required from any person or entity pursuant
to any law, statute, regulation or rule (federal, state, local and foreign), or
pursuant to any agreement, order or decree to which the Company or the Trust is
a party or to which either is subject, in connection with the transactions
contemplated by this Agreement.

         SECTION 3.6. SALE OF PURCHASER SECURITIES. The Purchaser shall have
sold securities issued by the Purchaser in an amount such that the net proceeds
of such sale shall be (i) available on the Closing Date and (ii) in an amount
sufficient to purchase the Capital Securities and all other capital or similar
securities contemplated in agreements similar to this Agreement and the
Subscription Agreement.


                                       4
<PAGE>


         SECTION 3.7. INFORMATION. Prior to or on the Closing Date, the Offerors
shall have furnished to the Placement Agents such further information,
certificates, opinions and documents addressed to the Purchaser and the
Placement Agents, which the Placement Agents may reasonably request, including,
without limitation, a complete set of the Operative Documents or any other
documents or certificates required by this Section 3; and all proceedings taken
by the Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.

         If any condition specified in this Section 3 shall not have been
fulfilled when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date. Notice of such termination shall be
given to the Offerors in writing or by telephone or facsimile confirmed in
writing.

                                   ARTICLE IV
                    CONDITIONS TO THE OFFERORS' OBLIGATIONS.

         The obligations of the Offerors to sell the Capital Securities to the
Purchaser and consummate the transactions contemplated by this Agreement shall
be subject to the accuracy, at and as of the Closing Date, of the
representations and warranties of the Placement Agents contained in this
Agreement and to the following further conditions:

         SECTION 4.1. EXECUTED AGREEMENT. The Offerors shall have received from
the Placement Agents an executed copy of this Agreement.

         SECTION 4.2. FULFILLMENT OF OTHER OBLIGATIONS. The Placement Agents
shall have fulfilled all of their other obligations and duties required to be
fulfilled under this Agreement prior to or at the Closing.

                                   ARTICLE V
                REPRESENTATIONS AND WARRANTIES OF THE OFFERORS.

         Except as set forth on the Disclosure Schedule (as defined in Section
11.1) attached hereto, if any, the Offerors jointly and severally represent and
warrant to the Placement Agents and the Purchaser as of the date hereof and as
of the Closing Date as follows:

         SECTION 5.1. SECURITIES LAW MATTERS.

                  (i) Neither the Company nor the Trust, nor any of their
"Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on any of their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration under the
Securities Act of any of the Capital Securities, the Guarantee or the Debentures
(collectively, the "Securities") or any other securities to be issued, or which
may be issued, by the Purchaser.

                  (ii) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf has (i) other than the
Placement Agents, offered for sale or solicited offers to purchase the
Securities, (ii) engaged or will engage, in any "directed selling efforts"
within the meaning of Regulation S under the Securities Act ("Regulation S")
with respect to the Securities, or (iii) engaged in any form of offering,
general solicitation or general advertising (within the meaning of Regulation D)
in connection with any offer or sale of any of the Securities.

                  (iii) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.

                  (iv) Neither the Company nor the Trust is or, after giving
effect to the offering and sale of the Capital Securities and the consummation
of the transactions described in this Agreement, will be an



                                       5
<PAGE>

"investment company" or an entity "controlled" by an "investment company," in
each case within the meaning of Section 3(a) of the Investment Company Act of
1940, as amended (the "Investment Company Act") without regard to Section 3(c)
of the Investment Company Act.

                  (v) Neither the Company nor the Trust has paid or agreed to
pay to any person or entity (other than the Placement Agents) any compensation
for soliciting another to purchase any of the Securities.

         SECTION 5.2. ORGANIZATION, STANDING AND QUALIFICATION OF THE TRUST. The
Trust has been duly created and is validly existing in good standing as a
statutory trust under the Connecticut Statutory Trust Act (the "Statutory Trust
Act") with the power and authority to own property and to conduct the business
it transacts and proposes to transact and to enter into and perform its
obligations under the Operative Documents. The Trust is duly qualified to
transact business as a foreign entity and is in good standing in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the Trust. The Trust is not a party to or otherwise bound by any agreement other
than the Operative Documents and the documents contemplated thereby. The Trust
is and will, under current law, be classified for federal income tax purposes as
a grantor trust and not as an association taxable as a corporation.

         SECTION 5.3. TRUST AGREEMENT. The Trust Agreement has been duly
authorized by the Company and, on the Closing Date, will have been duly executed
and delivered by the Company and the Administrators of the Trust, and, assuming
due authorization, execution and delivery by the Institutional Trustee, will be
a valid and binding obligation of the Company and such Administrators,
enforceable against them in accordance with its terms, subject to (a) applicable
bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation
and other laws relating to or affecting creditors' rights generally, and (b)
general principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law) ("Bankruptcy and Equity"). Each of the
Administrators of the Trust is an employee or a director of the Company or of a
financial institution subsidiary of the Company and has been duly authorized by
the Company to execute and deliver the Trust Agreement.

         SECTION 5.4. GUARANTEE AGREEMENT AND THE INDENTURE. Each of the
Guarantee and the Indenture has been duly authorized by the Company and, on the
Closing Date will have been duly executed and delivered by the Company, and,
assuming due authorization, execution and delivery by the Guarantee Trustee, in
the case of the Guarantee, and by the Indenture Trustee, in the case of the
Indenture, will be a valid and binding obligation of the Company enforceable
against it in accordance with its terms, subject to Bankruptcy and Equity.

         SECTION 5.5. CAPITAL SECURITIES AND COMMON SECURITIES. The Capital
Securities and the Common Securities have been duly authorized by the Trust
Agreement and, when issued and delivered against payment therefor on the Closing
Date to the Purchaser, in the case of the Capital Securities, and to the
Company, in the case of the Common Securities, will be validly issued and
represent undivided beneficial interests in the assets of the Trust. None of the
Capital Securities or the Common Securities is subject to preemptive or other
similar rights. On the Closing Date, all of the issued and outstanding Common
Securities will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance.

         SECTION 5.6. DEBENTURES. The Debentures have been duly authorized by
the Company and, at the Closing Date, will have been duly executed and delivered
to the Indenture Trustee for authentication in accordance with the Indenture,
and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor by the Trust, will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture
enforceable against the Company in accordance with their terms, subject to
Bankruptcy and Equity.



                                       6
<PAGE>

         SECTION 5.7. POWER AND AUTHORITY. This Agreement has been duly
authorized, executed and delivered by the Company and the Trust and constitutes
the valid and binding obligation of the Company and the Trust, enforceable
against the Company and the Trust in accordance with its terms, subject to
Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.

         SECTION 5.8. NO DEFAULTS. The Trust is not in violation of the Trust
Agreement or, to the knowledge of the Administrators, any provision of the
Statutory Trust Act. The execution, delivery and performance by the Company or
the Trust of this Agreement or the Operative Documents to which it is a party,
and the consummation of the transactions contemplated herein or therein and the
use of the proceeds therefrom, will not conflict with or constitute a breach of,
or a default under, or result in the creation or imposition of any lien, charge
or other encumbrance upon any property or assets of the Trust, the Company or
any of the Company's Subsidiaries (as defined in Section 5.11 hereof) pursuant
to any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of any of them is subject, except for a conflict, breach, default, lien,
charge or encumbrance which could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect nor will such action result in any
violation of the Trust Agreement or the Statutory Trust Act or require the
consent, approval, authorization or order of any court or governmental agency or
body. As used herein, the term "Material Adverse Effect" means any one or more
effects that individually or in the aggregate are material and adverse to the
Offeror's ability to consummate the transactions contemplated herein or in the
Operative Documents or any one or more effects that individually or in the
aggregate are material and adverse to the condition (financial or otherwise),
earnings, affairs, business or results of operations of the Company and its
Subsidiaries taken as whole, whether or not occurring in the ordinary course of
business.

         SECTION 5.9. ORGANIZATION, STANDING AND QUALIFICATION OF THE COMPANY.
The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of Delaware, with all requisite corporate power
and authority to own its properties and conduct its business, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.

         SECTION 5.10. SUBSIDIARIES OF THE COMPANY. Each of the Company's
significant subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the
Securities Act (the "Significant Subsidiaries")) is listed in EXHIBIT C attached
hereto and incorporated herein by this reference. Each Significant Subsidiary
has been duly organized and is validly existing and in good standing under the
laws of the jurisdiction in which it is chartered or organized, with all
requisite power and authority to own its properties and conduct its business,
and is duly qualified to transact business and is in good standing as a foreign
entity in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of any such Significant Subsidiary to be
so qualified would not, singly or in the aggregate, have a Material Adverse
Effect. All of the issued and outstanding shares of capital stock of the
Significant Subsidiaries (a) have been duly authorized and are validly issued,
(b) are fully paid and nonassessable, and (c) are wholly owned, directly or
indirectly, by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction upon voting or transfer, preemptive
rights, claim, equity or other defect.

         SECTION 5.11. PERMITS. The Company and each of its subsidiaries (as
defined in Section 1-02(x) of Regulation S-X to the Securities Act) (the
"Subsidiaries") have all requisite power and authority, and all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from regulatory or governmental officials, bodies and tribunals, to own or lease
their respective properties and



                                       7
<PAGE>

to conduct their respective businesses as now being conducted, except such
authorizations, approvals, orders, licenses, certificates and permits which, if
not obtained and maintained, would not, singly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such authorizations, approvals, orders, licenses, certificates or permits
which, singly or in the aggregate, if the failure to be so licensed or approved
is the subject of an unfavorable decision, ruling or finding, would, singly or
in the aggregate, have a Material Adverse Effect; and the Company and its
Subsidiaries are in compliance with all applicable laws, rules, regulations and
orders and consents, the violation of which would, singly or in the aggregate,
have a Material Adverse Effect.

         SECTION 5.12. CONFLICTS, AUTHORIZATIONS AND APPROVALS. Neither the
Company nor any of its Subsidiaries is in violation of its respective articles
or certificate of incorporation, charter or by-laws or similar organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which either the
Company or any of its Subsidiaries is a party, or by which it or any of them may
be bound or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, the effect of which violation or default in performance
or observance would have, singly or in the aggregate, a Material Adverse Effect.

         SECTION 5.13. HOLDING COMPANY REGISTRATION AND DEPOSIT INSURANCE. The
Company is duly registered as a savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended, and the regulations of the Office of
Thrift Supervision (the "OTS"), and the deposit accounts of the Company's
Subsidiary depository institutions are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law and the rules and
regulations of the FDIC, and no proceedings for the termination of such
insurance are pending or threatened.

         SECTION 5.14. FINANCIAL STATEMENTS.

                  (i) The consolidated balance sheets of the Company and all of
its Subsidiaries as of March 31, 2003 and March 31, 2002 and related
consolidated income statements and statements of changes in shareholders' equity
for the 3 years ended March 31, 2003 together with the notes thereto, and the
consolidated balance sheets of the Company and all of its Subsidiaries as of
June 30, 2003 and the related consolidated income statements and statements of
changes in shareholders' equity for the 3 months then ended, copies of each of
which have been provided to the Placement Agents (together, the "Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein) and fairly present in all material respects the financial position and
the results of operations and changes in shareholders' equity of the Company and
all of its Subsidiaries as of the dates and for the periods indicated (subject,
in the case of interim financial statements, to normal recurring year-end
adjustments, none of which shall be material). The books and records of the
Company and all of its Subsidiaries have been, and are being, maintained in all
material respects in accordance with generally accepted accounting principles
and any other applicable legal and accounting requirements and reflect only
actual transactions.

                  (ii) The information in the Company's most recently filed
H-(b)11 filed with the OTS if the Company is a savings and loan holding company
(the "Regulatory Report"), previously provided to the Placement Agents fairly
presents in all material respects the financial position of the Company and,
where applicable, all of its Subsidiaries as of the end of the period
represented by such Regulatory Report.

                  (iii) Since the respective dates of the Financial Statements
and the Regulatory Report, there has been no material adverse change or
development with respect to the financial condition or earnings of the Company
and all of its Subsidiaries, taken as a whole.



                                       8
<PAGE>

                  (D) The accountants of the Company who certified the Financial
Statements are independent public accountants of the Company and its
Subsidiaries within the meaning of the Securities Act and the rules and
regulations thereunder.

         SECTION 5.15. REGULATORY ENFORCEMENT MATTERS. Neither the Company nor
any of its Subsidiaries is subject or is party to, or has received any notice or
advice that any of them may become subject or party to, any investigation with
respect to, any cease-and-desist order, agreement, consent agreement, memorandum
of understanding or other regulatory enforcement action, proceeding or order
with or by, or is a party to any commitment letter or similar undertaking to, or
is subject to any directive by, or has been since January 1, 2000, a recipient
of any supervisory letter from, or since January 1, 2000, has adopted any board
resolutions at the request of, any Regulatory Agency (as defined below) that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies, their ability or authority to pay dividends or make distributions to
their shareholders or make payments of principal or interest on their debt
obligations, their management or their business (each, a "Regulatory
Agreement"), nor has the Company or any of its Subsidiaries been advised since
January 1, 2000, by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. There is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any of its
Subsidiaries. As used herein, the term "Regulatory Agency" means any federal or
state agency charged with the supervision or regulation of depository
institutions, bank, financial or savings and loan holding companies, or engaged
in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is currently unable to pay dividends or make distributions to its
shareholders with respect to any class of its equity securities, or prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment of the Company's management, neither the Company nor any of the
Subsidiaries will be unable in the foreseeable future to pay dividends or make
distributions with respect to any class of equity securities, or be prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise. Notwithstanding the
preceding sentence, the Company and its Subsidiaries are subject to certain
restrictions on the amount of dividends and distributions they can pay during
certain periods of time under applicable Delaware statutes and OTS regulations.

         SECTION 5.16. NO MATERIAL CHANGE. Since March 31, 2003, there has been
no material adverse change or development with respect to the condition
(financial or otherwise), earnings, affairs, business, prospects or results of
operations of the Company or its Subsidiaries on a consolidated basis, whether
or not arising in the ordinary course of business.

         SECTION 5.17. NO UNDISCLOSED LIABILITIES. Neither the Company nor any
of its Subsidiaries has any material liability, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
Subsidiaries since the date of the most recent balance sheet included in the
Financial Statements.

         SECTION 5.18. LITIGATION. No charge, investigation, action, suit or
proceeding is pending or, to the knowledge of the Offerors, threatened, against
or affecting the Company or its Subsidiaries or any of



                                       9
<PAGE>

their respective properties before or by any courts or any regulatory,
administrative or governmental official, commission, board, agency or other
authority or body, or any arbitrator, wherein an unfavorable decision, ruling or
finding could have, singly or in the aggregate, a Material Adverse Effect.

         SECTION 5.19. DEFERRAL OF INTEREST PAYMENTS ON DEBENTURES. The Company
has no present intention to exercise its option to defer payments of interest on
the Debentures as provided in the Indenture. The Company believes that the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the Debentures
are outstanding is remote because of the restrictions that would be imposed on
the Company's ability to declare or pay dividends or distributions on, or to
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal, interest or premium on, or repay, repurchase or redeem, any of its
debt securities that rank PARI PASSU in all respects with, or junior in interest
to, the Debentures, in each case, subject to limited exceptions stated in
Section 2.11 of the Indenture to be entered into in connection with the issuance
of the Debentures.

                                   ARTICLE VI
            REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENTS.

         Each Placement Agent represents and warrants to the Offerors as to
itself (but not as to the other Placement Agent) as follows:

         SECTION 6.1. ORGANIZATION, STANDING AND QUALIFICATION.

                  (i) FTN Financial Capital Markets is a division of First
Tennessee Bank National Association, a national banking association duly
organized, validly existing and in good standing under the laws of the United
States, with full power and authority to own, lease and operate its properties
and conduct its business as currently being conducted. FTN Financial Capital
Markets is duly qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or leases property
or conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of FTN Financial Capital Markets.

                  (ii) Keefe, Bruyette & Woods, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, with full power and authority to own, lease and operate its properties
and conduct its business as currently being conducted. Keefe, Bruyette & Woods,
Inc. is duly qualified to transact business as a foreign corporation and is in
good standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.

         SECTION 6.2. POWER AND AUTHORITY. The Placement Agent has all requisite
power and authority to enter into this Agreement, and this Agreement has been
duly and validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.

         SECTION 6.3. GENERAL SOLICITATION. In the case of the offer and sale of
the Capital Securities, no form of general solicitation or general advertising
was used by the Placement Agent or its representatives including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Neither the



                                       10
<PAGE>

Placement Agent nor its representatives have engaged or will engage in any
"directed selling efforts" within the meaning of Regulation S with respect to
the Capital Securities.

         SECTION 6.4. PURCHASER. The Placement Agent has made such reasonable
inquiry as is necessary to determine that the Purchaser is acquiring the Capital
Securities for its own account, that the Purchaser does not intend to distribute
the Capital Securities in contravention of the Securities Act or any other
applicable securities laws, and that the Purchaser is not a "U.S. person" as
that term is defined under Rule 902 of the Securities Act.

         SECTION 6.5. QUALIFIED PURCHASERS. The Placement Agent has not offered
or sold and will not arrange for the offer or sale of the Capital Securities
except (i) in an offshore transaction complying with Rule 903 of Regulation S,
or (ii) to those the Placement Agent reasonably believes are "accredited
investors" (as defined in Rule 501 of Regulation D), or (iii) in any other
manner that does not require registration of the Capital Securities under the
Securities Act. In connection with each such sale, the Placement Agent has taken
or will take reasonable steps to ensure that the Purchaser is aware that (a)
such sale is being made in reliance on an exemption under the Securities Act and
(b) future transfers of the Capital Securities will not be made except in
compliance with applicable securities laws.

         6.6. OFFERING CIRCULARS. Neither the Placement Agent nor its
representatives will include any non-public information about the Company, the
Trust or any of their affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Capital Securities without the prior written consent of the Trust
and the Company.

                                  ARTICLE VII
                           COVENANTS OF THE OFFERORS.

         The Offerors covenant and agree with the Placement Agents and the
Purchaser as follows:

         SECTION 7.1. COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. During the
period from the date of this Agreement to the Closing Date, the Offerors shall
use all reasonable efforts and take all action necessary or appropriate to cause
their representations and warranties contained in Section 5 hereof to be true as
of the Closing Date, after giving effect to the transactions contemplated by
this Agreement, as if made on and as of the Closing Date.

         SECTION 7.2. SALE AND REGISTRATION OF SECURITIES. The Offerors and
their Affiliates shall not nor shall any of them permit any person acting on
their behalf (other than the Placement Agents), to directly or indirectly (i)
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in the Securities Act) that would or could be
integrated with the sale of the Capital Securities in a manner that would
require the registration under the Securities Act of the Securities or (ii) make
offers or sales of any such Security, or solicit offers to buy any such
Security, under circumstances that would require the registration of any of such
Securities under the Securities Act.

         SECTION 7.3. USE OF PROCEEDS. The Trust shall use the proceeds from the
sale of the Capital Securities to purchase the Debentures from the Company.

         SECTION 7.4. INVESTMENT COMPANY. The Offerors shall not engage, or
permit any Subsidiary to engage, in any activity which would cause it or any
Subsidiary to be an "investment company" under the provisions of the Investment
Company Act.

         SECTION 7.5. REIMBURSEMENT OF EXPENSES. If the sale of the Capital
Securities provided for herein is not consummated (i) because any condition set
forth in Section 3 hereof is not satisfied, or (ii) because of any refusal,
inability or failure on the part of the Company or the Trust to perform any
agreement herein or comply with any provision hereof other than by reason of a
breach by the Placement Agents, the Company shall reimburse the Placement Agents
upon demand for all of their pro rata share of



                                       11
<PAGE>

out-of-pocket expenses (including reasonable fees and disbursements of counsel)
in an amount not to exceed $50,000.00 that shall have been incurred by them in
connection with the proposed purchase and sale of the Capital Securities.
Notwithstanding the foregoing, the Company shall have no obligation to reimburse
the Placement Agents for their out-of-pocket expenses if the sale of the Capital
Securities fails to occur because the condition set forth in Section Section
3.1(b), Section 3.1(c) or Section 3.6 is not satisfied or because either of the
Placement Agents fails to fulfill a condition set forth in ARTICLE IV.

         SECTION 7.6. DIRECTED SELLING EFFORTS, SOLICITATION AND ADVERTISING. In
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to, (i) engage in any
"directed selling efforts" within the meaning of Regulation S, or (ii) engage in
any form of general solicitation or general advertising (as defined in
Regulation D).

         SECTION 7.7. COMPLIANCE WITH RULE 144A(D)(4) UNDER THE SECURITIES ACT.
So long as any of the Securities are outstanding and are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which it is not subject to and in compliance with Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the Company is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser in connection with any proposed transfer,
any information required to be provided by Rule 144A(d)(4) under the Securities
Act, if applicable. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders, from time to
time of such restricted securities. The information provided by the Company
pursuant to this Section 7.7 will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

         SECTION 7.8. QUARTERLY REPORTS. Within 50 days of the end of each
calendar year quarter and within 100 days of the end of each calendar year
during which the Debentures are issued and outstanding, the Offerors shall
submit to The Bank of New York a completed quarterly report in the form attached
hereto as EXHIBIT D. The Offerors acknowledge and agree that The Bank of New
York and its successors and assigns is a third party beneficiary of this Section
Section 7.8

                                  ARTICLE VIII
                       COVENANTS OF THE PLACEMENT AGENTS.

         The Placement Agents covenant and agree with the Offerors that, during
the period from the date of this Agreement to the Closing Date, the Placement
Agents shall use their best efforts and take all action necessary or appropriate
to cause their representations and warranties contained in Section 6 to be true
as of Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date. The Placement Agents
further covenant and agree not to engage in hedging transactions with respect to
the Capital Securities unless such transactions are conducted in compliance with
the Securities Act.

                                   ARTICLE IX
                                INDEMNIFICATION.

         SECTION 9.1. INDEMNIFICATION OBLIGATION. The Offerors shall jointly and
severally indemnify and hold harmless the Placement Agents and the Purchaser and
each of their respective agents, employees, officers and directors and each
person that controls either of the Placement Agents or the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and agents, employees, officers and directors or any such controlling person of
either of the Placement Agents or the Purchaser (each such person or entity, an
"Indemnified Party") from and against any and all losses, claims, damages,
judgments, liabilities or expenses, joint or several, to which such Indemnified
Party may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or



                                       12
<PAGE>

regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Offerors), insofar as such losses, claims, damages, judgments, liabilities or
expenses (or actions in respect thereof) arise out of, or are based upon, or
relate to, in whole or in part, (a) any untrue statement or alleged untrue
statement of a material fact contained in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors, or (b) any omission or
alleged omission to state in any information (whether written or oral) or
documents executed in favor of, furnished or made available to the Placement
Agents or the Purchaser by the Offerors a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgments, liability, expense or action described in this Section 9.1.
In addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of, or based upon, or
related to the matters described above in this Section 9.1, they shall reimburse
each Indemnified Party on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by First
Tennessee Bank National Association (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Indemnified Party within 30 days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.

         SECTION 9.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by an Indemnified Party under this Section 9 of notice of the
commencement of any action, such Indemnified Party shall, if a claim in respect
thereof is to be made against the Offerors under this Section 9, notify the
Offerors in writing of the commencement thereof; but, subject to Section 9.4,
the omission to so notify the Offerors shall not relieve them from any liability
pursuant to Section 9.1 which the Offerors may have to any Indemnified Party
unless and to the extent such failure by the Indemnified Party results in the
forfeiture by the Offerors of substantial rights and defenses. In case any such
action is brought against any Indemnified Party and such Indemnified Party seeks
or intends to seek indemnity from the Offerors, the Offerors shall be entitled
to participate in, and, to the extent that they may wish, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party;
PROVIDED, HOWEVER, if the defendants in any such action include both the
Indemnified Party and the Offerors and the Indemnified Party shall have
reasonably concluded that there may be a conflict between the positions of the
Offerors and the Indemnified Party in conducting the defense of any such action
or that there may be legal defenses available to it and/or other Indemnified
Parties which are different from or additional to those available to the
Offerors, the Indemnified Party shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such Indemnified Party. Upon receipt of notice from the
Offerors to such Indemnified Party of their election to so assume the defense of
such action and approval by the Indemnified Party of counsel, the Offerors shall
not be liable to such Indemnified Party under this Section 9 for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof unless (i) the Indemnified Party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso in the preceding sentence (it being understood, however, that
the Offerors shall not be liable for the expenses of more than one separate
counsel representing the Indemnified Parties who are parties to such action), or
(ii) the Offerors shall not have employed counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after



                                       13
<PAGE>

notice of commencement of the action, in each of which cases the reasonable fees
and expenses of counsel of such Indemnified Party shall be at the expense of the
Offerors.

         SECTION 9.3. CONTRIBUTION. If the indemnification provided for in this
Section 9 is required by its terms, but is for any reason held to be unavailable
to or otherwise insufficient to hold harmless an Indemnified Party under Section
9.1 in respect of any losses, claims, damages, liabilities or expenses referred
to herein or therein, then the Offerors shall contribute to the amount paid or
payable by such Indemnified Party as a result of any losses, claims, damages,
judgments, liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the Indemnified Party, on the other hand, from the offering of
such Capital Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Offerors, on the one hand, and the Placement Agents,
on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein or other breaches
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Offerors, on the one hand, and the Placement
Agents, on the other hand, shall be deemed to be in the same proportion, in the
case of the Offerors, as the total price paid to the Offerors for the Capital
Securities sold by the Offerors to the Purchaser (net of the compensation paid
to the Placement Agents hereunder, but before deducting expenses), and in the
case of the Placement Agents, as the compensation received by them, bears to the
total of such amounts paid to the Offerors and received by the Placement Agents
as compensation. The relative fault of the Offerors and the Placement Agents
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Offerors
or the Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The provisions set forth in Section Section 9.2 with respect to notice of
commencement of any action shall apply if a claim for contribution is made under
this Section Section 9.3; PROVIDED, HOWEVER, that no additional notice shall be
required with respect to any action for which notice has been given under
Section Section 9.2 for purposes of indemnification. The Offerors and the
Placement Agents agree that it would not be just and equitable if contribution
pursuant to this Section Section 9.3 were determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to in this Section Section 9.3. The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages,
judgments, liabilities or expenses referred to in this Section Section 9.3 shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. In no event shall the
liability of the Placement Agents hereunder be greater in amount than the dollar
amount of the compensation (net of payment of all expenses) received by the
Placement Agents upon the sale of the Capital Securities giving rise to such
obligation. No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.

         SECTION 9.4. ADDITIONAL REMEDIES. The indemnity and contribution
agreements contained in this Section 9 are in addition to any liability that the
Offerors may otherwise have to any Indemnified Party.

         SECTION 9.5. ADDITIONAL INDEMNIFICATION. The Company shall indemnify
and hold harmless the Trust against all loss, liability, claim, damage and
expense whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.



                                       14
<PAGE>

                                   ARTICLE X
                RIGHTS AND RESPONSIBILITIES OF PLACEMENT AGENTS.

         SECTION 10.1. RELIANCE. In performing their duties under this
Agreement, the Placement Agents shall be entitled to rely upon any notice,
signature or writing which they shall in good faith believe to be genuine and to
be signed or presented by a proper party or parties. The Placement Agents may
rely upon any opinions or certificates or other documents delivered by the
Offerors or their counsel or designees to either the Placement Agents or the
Purchaser.

         SECTION 10.2. RIGHTS OF PLACEMENT AGENTS. In connection with the
performance of their duties under this Agreement, the Placement Agents shall not
be liable for any error of judgment or any action taken or omitted to be taken
unless the Placement Agents were grossly negligent or engaged in willful
misconduct in connection with such performance or non-performance. No provision
of this Agreement shall require the Placement Agents to expend or risk their own
funds or otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of their duties hereunder. The Placement
Agents shall be under no obligation to exercise any of the rights or powers
vested in them by this Agreement.

                                   ARTICLE XI
                                 MISCELLANEOUS.

         SECTION 11.1. DISCLOSURE SCHEDULE. The term "Disclosure Schedule," as
used herein, means the schedule, if any, attached to this Agreement that sets
forth items the disclosure of which is necessary or appropriate as an exception
to one or more representations or warranties contained in Section 5 hereof;
PROVIDED, that any item set forth in the Disclosure Schedule as an exception to
a representation or warranty shall be deemed an admission by the Offerors that
such item represents an exception, fact, event or circumstance that is
reasonably likely to result in a Material Adverse Effect. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 5. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.

         SECTION 11.2. LEGAL EXPENSES. At Closing, the Placement Agents shall
provide a credit for the Offerors' transaction-related legal expenses in the
amount of $10,000.00.

         SECTION 11.3. NOTICES. Prior to the Closing, and thereafter with
respect to matters pertaining to this Agreement only, all notices and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telex, telecopier or overnight air courier
guaranteeing next day delivery:



                                       15
<PAGE>

         if to the Placement Agents, to:

                                    FTN Financial Capital Markets
                                    845 Crossover Lane, Suite 150
                                    Memphis, Tennessee  38117
                                    Telecopier:  901-435-4706
                                    Telephone:  800-456-5460
                                    Attention:  James D. Wingett

                                            and

                                    Keefe, Bruyette & Woods, Inc.
                                    787 7th Avenue
                                    4th Floor
                                    New York, New York  10019
                                    Telecopier:  212-403-2000
                                    Telephone:  212-403-1004
                                    Attention:  Mitchell Kleinman,
                                                General Counsel

         with a copy to:

                                    Lewis, Rice & Fingersh, L.C.
                                    500 North Broadway, Suite 2000
                                    St. Louis, Missouri  63102
                                    Telecopier:  314-241-6056
                                    Telephone:  314-444-7600
                                    Attention:  Thomas C. Erb, Esq.

                                            and

                                    Sidley Austin Brown & Wood LLP
                                    787 7th Avenue
                                    New York, New York  10019
                                    Telecopier:  212-839-5599
                                    Telephone:  212-839-5300
                                    Attention:  Renwick Martin, Esq.

         if to the Offerors, to:

                                    Carver Bancorp, Inc.
                                    75 West 125th Street
                                    New York, New York 10027
                                    Telecopier:  212-426-6159
                                    Telephone:  212-876-4747 Ext. 174
                                    Attention:  Chief Financial Officer



                                       16
<PAGE>

         with a copy to:

                                    Thacher Proffitt & Wood LLP
                                    Two World Financial Center
                                    New York, New York 10281
                                    Telecopier:  212-912-7751
                                    Telephone:  212-912-7418
                                    Attention:  Kofi Appenteng, Esq.

         All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
business days after being deposited in the mail, postage prepaid, if mailed,
(iii) when answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Company, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.

         SECTION 11.4. PARTIES IN INTEREST, SUCCESSORS AND ASSIGNS. Except as
expressly set forth herein, this Agreement is made solely for the benefit of the
Placement Agents, the Purchaser and the Offerors and any person controlling the
Placement Agents, the Purchaser or the Offerors and their respective successors
and assigns; and no other person shall acquire or have any right under or by
virtue of this Agreement. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.

         SECTION 11.5. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

         SECTION 11.6. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

         SECTION 11.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO
CONFLICTS OF LAWS) OF THE STATE OF NEW YORK.

         SECTION 11.8. ENTIRE AGREEMENT. This Agreement, together with the
Operative Documents and the other documents delivered in connection with the
transactions contemplated by this Agreement, is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, together with the Operative Documents and
the other documents delivered in connection with the transaction contemplated by
this Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.

         SECTION 11.9. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected, it being intended that all of the Placement Agents' and the
Purchaser's rights and privileges shall be enforceable to the fullest extent
permitted by law.



                                       17
<PAGE>

         SECTION 11.10. SURVIVAL. The Placement Agents and the Offerors,
respectively, agree that the representations, warranties and agreements made by
each of them in this Agreement and in any certificate or other instrument
delivered pursuant hereto shall remain in full force and effect and shall
survive the delivery of, and payment for, the Capital Securities.

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE



<PAGE>


         If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.

                                                     Very truly yours,

                                                     CARVER BANCORP, INC.


                                                     By:________________________
                                                     Name:______________________
                                                     Title:_____________________


                                                     CARVER STATUTORY TRUST I


                                                     By:________________________
                                                     Name:______________________
                                                     Title:  Administrator



CONFIRMED AND ACCEPTED,
as of the date first set forth above


FTN FINANCIAL CAPITAL MARKETS,
A DIVISION OF FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
AS A PLACEMENT AGENT


By:_______________________________________
Name:_____________________________________
Title:____________________________________


KEEFE, BRUYETTE & WOODS, INC.,
A NEW YORK CORPORATION, AS A PLACEMENT AGENT


By:_______________________________________
Name:_____________________________________
Title:____________________________________



<PAGE>



                                    EXHIBIT A
                         FORM OF SUBSCRIPTION AGREEMENT
                            CARVER STATUTORY TRUST I
                              CARVER BANCORP, INC.

                             SUBSCRIPTION AGREEMENT

                               SEPTEMBER 17, 2003

         THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among Carver
Statutory Trust I (the "Trust"), a statutory trust created under the Connecticut
Statutory Trust Act (Chapter 615 of Title 34 of the Connecticut General
Statutes, Section 500, ET SEQ.), Carver Bancorp, Inc., a Delaware corporation,
with its principal offices located at 75 West 125th Street, New York, New York
10027 (the "Company" and, collectively with the Trust, the "Offerors"), and
Preferred Term Securities XI, Ltd. (the "Purchaser").

                                    RECITALS:

         A. The Trust desires to issue 13,000 of its Floating Rate Capital
Securities (the "Capital Securities"), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the "Offering"), to be issued pursuant to an Amended and Restated
Declaration of Trust (the "Declaration") by and among the Company, U.S. Bank
National Association ("U.S. Bank"), the administrators named therein, and the
holders (as defined therein), which Capital Securities are to be guaranteed by
the Company with respect to distributions and payments upon liquidation,
redemption and otherwise pursuant to the terms of a Guarantee Agreement between
the Company and U.S. Bank, as trustee (the "Guarantee"); and

         B. The proceeds from the sale of the Capital Securities will be
combined with the proceeds from the sale by the Trust to the Company of its
common securities, and will be used by the Trust to purchase an equivalent
amount of Floating Rate Junior Subordinated Deferrable Interest Debentures of
the Company (the "Debentures") to be issued by the Company pursuant to an
indenture to be executed by the Company and U.S. Bank, as trustee (the
"Indenture"); and

         C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:

                                   ARTICLE I

                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1. Upon the execution of this Agreement, the Purchaser hereby agrees
to purchase from the Trust 13,000 Capital Securities at a price equal to
$1,000.00 per Capital Security (the "Purchase Price") and the Trust agrees to
sell such Capital Securities to the Purchaser for said Purchase Price. The
rights and preferences of the Capital Securities are set forth in the
Declaration. The Purchase Price is payable in immediately available funds on
September 17, 2003, or such other business day as may be designated by the
Purchaser, but in no event later than September 30, 2003 (the "Closing Date").
The Offerors shall provide the Purchaser wire transfer instructions no later
than 1 day following the date hereof.

         1.2. The certificate for the Capital Securities shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.



                                      A-1
<PAGE>

         1.3. The Placement Agreement, dated September 9, 2003 (the "Placement
Agreement"), among the Offerors and the Placement Agents identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the Offering. The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors under such Placement Agreement as fully as if the
Purchaser were a party to such Placement Agreement.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1. The Purchaser understands and acknowledges that neither the
Capital Securities, the Debentures nor the Guarantee have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.

         2.2. The Purchaser represents, warrants and certifies that (i) it is
not a "U.S. person" as such term is defined in Rule 902 under the Securities
Act, (ii) it is not acquiring the Capital Securities for the account or benefit
of any such U.S. person, (iii) the offer and sale of Capital Securities to the
Purchaser constitutes an "offshore transaction" under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard
to the Capital Securities unless such transactions are conducted in compliance
with the Securities Act and the Purchaser agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.

         2.3. The Purchaser represents and warrants that it is purchasing the
Capital Securities for its own account, for investment, and not with a view to,
or for offer or sale in connection with, any distribution thereof in violation
of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within
its control and subject to its ability to resell such Capital Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable Securities law.

         2.4. The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.

         2.5. The Purchaser, a Cayman Islands Company whose business includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of purchasing the Capital Securities, has had the opportunity to ask
questions of, and receive answers and request additional information from, the
Offerors and is aware that it may be required to bear the economic risk of an
investment in the Capital Securities.

         2.6. The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or


                                      A-2
<PAGE>

required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.

         2.7. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.

2.8. The Purchaser represents and warrants that (i) the Purchaser is not in
violation or default of any term of its Memorandum of Association or Articles of
Association, of any provision of any mortgage, indenture, contract, agreement,
instrument or contract to which it is a party or by which it is bound or of any
judgment, decree, order, writ or, to its knowledge, any statute, rule or
regulation applicable to the Purchaser which would prevent the Purchaser from
performing any material obligation set forth in this Agreement; and (ii) the
execution, delivery and performance of and compliance with this Agreement, and
the consummation of the transactions contemplated herein, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Purchaser, its
business or operations or any of its assets or properties which would prevent
the Purchaser from performing any material obligations set forth in this
Agreement.

         2.9. The Purchaser represents and warrants that the Purchaser is an
exempted company with limited liability duly incorporated, validly existing and
in good standing under the laws of the jurisdiction where it is organized, with
full power and authority to perform its obligations under this Agreement.

         2.10. The Purchaser understands and acknowledges that the Offerors will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Offerors.

         2.11. The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.

                                  ARTICLE III

                                  MISCELLANEOUS

         3.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:

                  To the Offerors:          Carver Bancorp, Inc.
                                            75 West 125th Street
                                            New York, New York 10027
                                            Attention:  Chief Financial Officer
                                            Fax:  212-426-6159

                  To the Purchaser:         Preferred Term Securities XI, Ltd.
                                            c/o Maples Finance Limited
                                            P.O. Box 1093 GT
                                            Queensgate House
                                            South Church Street
                                            George Town, Grand Cayman


                                      A-3
<PAGE>

                                            Cayman Islands
                                            Attention:  The Directors
                                            Fax:  345-945-7100

                  Unless otherwise expressly provided herein, notices shall be
deemed to have been given on the date of mailing, except notice of change of
address, which shall be deemed to have been given when received.

         3.2. This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.

         3.3. Upon the execution and delivery of this Agreement by the
Purchaser, this Agreement shall become a binding obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.

         3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

         3.5. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.

         3.6. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

         3.7. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE




                                      A-4
<PAGE>


                   IN WITNESS WHEREOF, I have set my hand the day and year first
written above.



PREFERRED TERM SECURITIES XI, LTD.


By:______________________________
Print Name:______________________
Title:___________________________

         IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.


                                                     CARVER BANCORP, INC.


                                                     By:________________________

                                                     Name:______________________

                                                     Title:_____________________



                                                     CARVER STATUTORY TRUST I


                                                     By:________________________

                                                     Name:______________________

                                                     Title:  Administrator





                                      A-5
<PAGE>



                                   EXHIBIT B-1
                                   -----------

                         FORM OF COMPANY COUNSEL OPINION
                         -------------------------------

                               September 17, 2003

Preferred Term Securities XI, Ltd.                 FTN Financial Capital Markets
c/o Maples Finance Limited                         845 Crossover Lane, Suite 150
P. O. Box 1093 GT                                  Memphis, Tennessee  38117
Queensgate House
South Church Street                                Keefe, Bruyette & Woods, Inc.
George Town, Grand Cayman                          787 7th Avenue
Cayman Islands                                     4th Floor
                                                   New York, New York  10019

Ladies and Gentlemen:

         We have acted as counsel to Carver Bancorp, Inc. (the "Company"), a
Delaware corporation in connection with a certain Placement Agreement, dated
September 9, 2003, (the "Placement Agreement"), between the Company and Carver
Statutory Trust I (the "Trust"), on one hand, and FTN Financial Capital Markets
and Keefe, Bruyette & Woods, Inc. (the "Placement Agents"), on the other hand.
Pursuant to the Placement Agreement, and subject to the terms and conditions
stated therein, the Trust will issue and sell to Preferred Term Securities XI,
Ltd. (the "Purchaser"), $13,000,000.00 aggregate principal amount of Floating
Rate Capital Securities (liquidation amount $1,000.00 per capital security) (the
"Capital Securities").

         Capitalized terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.

         The law covered by the opinions expressed herein is limited to the law
of the United States of America and of the States of Delaware and New York.

         We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company's Articles of Incorporation, as amended, and its By-Laws, as amended;
and (b) such corporate documents, records, information and certificates of the
Company and its Subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in connection
with the above-referenced transaction, of officers and other representatives of
the Company and its Subsidiaries and the Trust.

         As used herein, the phrase "to our knowledge" or "to the best of our
knowledge" or other similar phrase means the actual knowledge of the attorneys
who have had active involvement in the transactions described above or who have
prepared or signed this opinion letter, or who otherwise have devoted
substantial attention to legal matters for the Company.

         Based upon and subject to the foregoing and the further qualifications
set forth below, we are of the opinion as of the date hereof that:



                                     B-1-1
<PAGE>

         1. The Company is validly existing and in good standing under the laws
of the State of Delaware and is duly registered as a savings and loan holding
company under the Home Owners' Loan Act of 1933, as amended. Each of the
Significant Subsidiaries is validly existing and in good standing under the laws
of its jurisdiction of organization. Each of the Company and the Significant
Subsidiaries has full corporate power and authority to own or lease its
properties and to conduct its business as such business is currently conducted
in all material respects. To the best of our knowledge, all outstanding shares
of capital stock of the Significant Subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable except to the extent such
shares may be deemed assessable under 12 U.S.C. Section 1831o or 12 U.S.C.
Section 55, and are owned of record and beneficially, directly or indirectly, by
the Company.

         2. The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The issuance,
sale and delivery of the Debentures by the Company and the issuance, sale and
delivery of the Trust Securities by the Trust do not give rise to any preemptive
or other rights to subscribe for or to purchase any shares of capital stock or
equity securities of the Company or the Significant Subsidiaries pursuant to the
corporate Articles of Incorporation or Charter, By-Laws or other governing
documents of the Company or the Significant Subsidiaries, or, to the best of our
knowledge, any agreement or other instrument to which either Company or the
Subsidiaries is a party or by which the Company or the Significant Subsidiaries
may be bound.

         3. The Company has all requisite corporate power to enter into and
perform its obligations under the Placement Agreement and the Subscription
Agreement, and the Placement Agreement and the Subscription Agreement have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy or other laws affecting
creditors' rights generally, and except as the indemnification and contribution
provisions thereof may be limited under applicable laws and certain remedies may
not be available in the case of a non-material breach.

         4. Each of the Indenture, the Trust Agreement and the Guarantee
Agreement has been duly authorized, executed and delivered by the Company, and
is a valid and legally binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         5. The Debentures have been duly authorized, executed and delivered by
the Company, are entitled to the benefits of the Indenture and are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

         6. To the best of our knowledge, neither the Company, the Trust, nor
any other Subsidiaries of the Company is in breach or violation of, or default
under, with or without notice or lapse of time or both, its Articles of
Incorporation or Charter, By-Laws or other governing documents (including
without limitation, the Trust Agreement). The execution, delivery and
performance of the Placement Agreement and the Operative Documents and the
consummation of the transactions contemplated by the Placement Agreement and the
Operative Documents do not and will not (i) result in the creation or imposition
of any material lien, claim, charge, encumbrance or restriction upon any
property or assets of the Company or its Subsidiaries, or (ii) conflict with,
constitute a material breach or violation of, or constitute a material default
under, with or without notice or lapse of time or both, any of the terms,
provisions or conditions of



                                     B-1-2
<PAGE>

(A) the Articles of Incorporation or Charter, By-Laws or other governing
documents of the Company or its Subsidiaries, or (B) to the best of our
knowledge, any material contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, franchise, license or any other agreement or
instrument to which the Company or its Subsidiaries is a party or by which any
of them or any of their respective properties may be bound or (C) any order,
decree, judgment, franchise, license, permit, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality, domestic or
foreign, known to us having jurisdiction over the Company or its Subsidiaries or
any of their respective properties which, in the case of each of (i) or (ii)
above, is material to the Company and its Subsidiaries on a consolidated basis.

         7. Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required under
the laws of the State of New York in connection with the transactions
contemplated by the Placement Agreement and the Operative Documents in
connection with the offer and sale of the Capital Securities as contemplated by
the Placement Agreement and the Operative Documents.

         8. To the best of our knowledge (i) no action, suit or proceeding at
law or in equity is pending or threatened to which the Offerors or their
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Offerors or their Subsidiaries or
any of their properties, before or by any court or governmental official,
commission, board or other administrative agency, authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding could reasonably
be expected to have a material adverse effect on the consummation of the
transactions contemplated by the Placement Agreement and the Operative Documents
or the issuance and sale of the Capital Securities as contemplated therein or
the condition (financial or otherwise), earnings, affairs, business, or results
of operations of the Offerors and their Subsidiaries on a consolidated basis.

         9. Assuming the truth and accuracy of the representations and
warranties of the Placement Agents in the Placement Agreement and the Purchaser
in the Subscription Agreement, it is not necessary in connection with the
offering, sale and delivery of the Capital Securities, the Debentures and the
Guarantee Agreement (or the Guarantee) to register the same under the Securities
Act of 1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.

         10. Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in the Placement Agreement will be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of the Investment Company Act of 1940, as amended, without
regard to Section 3(c) of such Act.

         The opinion expressed in the first two sentences of numbered paragraph
1 of this Opinion Letter is based solely upon certain certificates and
confirmations issued by the applicable governmental officer or authority with
respect to each of the Company and the Significant Subsidiaries.

         With respect to the foregoing opinions, since no member of this firm is
actively engaged in the practice of law in the States of Connecticut or New
York, we do not express any opinions as to the laws of such states and have (i)
relied, with your approval, upon the opinion of Shipman & Goodwin LLP with
respect to matters of Connecticut law and (ii) assumed, with your approval and
without rendering any opinion to such effect, that the laws of the State of New
York, in all respects material to this opinion, are substantively identical to
the laws of the State of New York, without regard to conflict of law provisions.



                                     B-1-3
<PAGE>

         This opinion is rendered to you solely pursuant to Section 3.1(a) of
the Placement Agreement. As such, it may be relied upon by you only and may not
be used or relied upon by any other person for any purpose whatsoever without
our prior written consent.

                                                     Very truly yours,







                                     B-1-4
<PAGE>



                                   EXHIBIT B-2
                                   -----------

                       FORM OF CONNECTICUT COUNSEL OPINION
                       -----------------------------------

TO THE PARTIES LISTED
ON SCHEDULE I HERETO

Ladies and Gentlemen:

         We have acted as special counsel in the State of Connecticut (the
"State") for Carver Statutory Trust I (the "Trust"), a Connecticut statutory
trust formed pursuant to the Amended and Restated Declaration of Trust (the
"Trust Agreement") dated as of the date hereof, among Carver Bancorp, Inc., a
Delaware corporation (the "Sponsor"), U.S. Bank National Association, a national
banking association ("U.S. Bank"), in its capacity as Institutional Trustee (the
"Institutional Trustee"), and William Gray, Deborah Wright and Linda Dunn, each,
an individual, (each, an "Administrator") in connection with the issuance by the
Trust to the Holders (as defined in the Trust Agreement) of its capital
securities (the "Capital Securities") pursuant to the Placement Agreement dated
as of September 9, 2003 (the "Placement Agreement"), the issuance by the Trust
to the Sponsor of its Common Securities, pursuant to the Trust Agreement and the
acquisition by the Trust from the Sponsor of Debentures, issued pursuant to the
Indenture dated as of the date hereof (the "Indenture").

         The Institutional Trustee has requested that we deliver this opinion to
you in accordance with Section 3.1(b) of the Placement Agreement. Capitalized
terms not otherwise defined herein shall have the meanings specified in, or
defined by reference in or set forth in the Operative Documents (as defined
below).

         Our representation of the Trust has been as special counsel for the
limited purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied, with your permission, entirely upon (i)
the representations and warranties of the parties set forth in the Operative
Documents and (ii) certificates delivered to us by the management of U.S. Bank,
and have assumed, with your permission, without independent inquiry, the
accuracy of those representations, warranties and certificates.

         We have examined the following documents to which the Trust is a party,
each of which is dated the date hereof, unless otherwise noted:

                  (i)      the Trust Agreement;

                  (ii)     the Placement Agreement;

                  (iii)    the Subscription Agreement;

                  (iv)     the Certificate of Common Securities;

                  (v)      the Certificate of Capital Securities;

                  (vi)     the Guarantee Agreement;

                  (vii)    the Certificate of Trust filed with the Secretary of
                           State of the State of Connecticut dated September 8,
                           2003; and



                                     B-2-1
<PAGE>

                  (viii)   a Certificate of Legal Existence for the Trust
                           obtained from the Secretary of State of the State of
                           Connecticut dated September 9, 2003 (the "Certificate
                           of Legal Existence").

         The documents referenced in subparagraphs (i) through (vii) above are
hereinafter referred to collectively as the "Operative Documents."

         We have also examined originals, or copies, certified or otherwise
identified to our satisfaction, of such other corporate and public records and
agreements, instruments, certificates and other documents as we have deemed
necessary or appropriate for the purposes of rendering this opinion. For
purposes of our opinion rendered in paragraph 1 below, with respect to the legal
existence of the Trust, our opinion relies entirely upon and is limited by the
Certificate of Legal Existence, which is attached hereto as EXHIBIT A.

         We have assumed, with your permission, the genuineness of all
signatures (other than those on behalf of U.S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee and the Trust), the conformity of the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document.

         When an opinion set forth below is given to the best of our knowledge,
or to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly and substantively in the
specific transactions to which this opinion relates and without any special or
additional investigation undertaken for the purposes of this opinion except as
indicated herein.

         For the purposes of this opinion we have made such examination of law
as we have deemed necessary. The opinions expressed below are limited solely to
the internal substantive laws of the State (as applied by courts located in the
State without regard to choice of law) and we express no opinion as to the laws
of any other jurisdiction. To the extent to which this opinion deals with
matters governed by or relating to the laws of any other state or jurisdiction,
we have assumed, with your permission, that the Operative Documents are governed
by the internal substantive laws of the State.

         We express no opinion as to (i) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to the obligations of any
applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Trust Agreement with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein as
to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents. No opinion is expressed herein as to the application or effect of
federal securities laws or as to the securities or so-called "Blue Sky" laws of
Connecticut or of any other state or other jurisdiction.

         Our opinion, with your permission, is further subject to the following
exceptions, qualifications and assumptions:

                  (a) We have assumed without any independent investigation that
         (i) each party to the Operative Documents, other than U.S. Bank, the
         Guarantee Trustee, Indenture Trustee, Institutional Trustee and the
         Trust, as applicable, at all times relevant thereto, is validly
         existing and in good standing under the laws of the jurisdiction in
         which it is organized, and is qualified to do business and in good
         standing under the laws of each jurisdiction where such qualification
         is required generally or necessary in order for such party to enforce
         its rights under such Operative



                                     B-2-2
<PAGE>

         Documents, (ii) each party to the Operative Documents, at all times
         relevant thereto, had and has the full power, authority and legal right
         under its certificate of incorporation, partnership agreement, by-laws,
         and other governing organizational documents, and the applicable
         corporate, partnership, or other enterprise legislation and other
         applicable laws, as the case may be (other than U.S. Bank, the
         Guarantee Trustee, Indenture Trustee, Institutional Trustee or the
         Trust) to execute, deliver and to perform its obligations under, the
         Operative Documents, and (iii) each party to the Operative Documents
         other than U.S. Bank, the Guarantee Trustee, Indenture Trustee,
         Institutional Trustee or the Trust has duly executed and delivered each
         of such agreements and instruments to which it is a party and that the
         execution and delivery of such agreements and instruments and the
         transactions contemplated thereby have been duly authorized by proper
         corporate or other organizational proceedings as to each such party.

                  (b) We have assumed without any independent investigation (i)
         that the Institutional Trustee, the Sponsor and the Administrators have
         received the agreed to and stated consideration for the incurrence of
         the obligations applicable to it under the Trust Agreement and each of
         the other Operative Documents, (ii) that each of the Operative
         Documents (other than the Trust Agreement) is a valid, binding and
         enforceable obligation of each party thereto other than the Trust, U.S.
         Bank and the Institutional Trustee, as applicable; and, for the
         purposes of this opinion letter, we herein also assume that each of the
         Operative Documents (other than the Trust Agreement) constitutes a
         valid, binding and enforceable obligation of U.S. Bank, the Guarantee
         Trustee and the Indenture Trustee, as applicable under Connecticut and
         federal law (as to which such matters we are delivering to you a
         separate opinion letter on this date, which is subject to the
         assumptions, qualifications and limitations set forth therein).

                  (c) The enforcement of any obligations of U.S. Bank, the
         Sponsor and the Administrators, as applicable, under the Trust
         Agreement and the obligations of the Trust under the other Operative
         Documents may be limited by the receivership, conservatorship and
         supervisory powers of depository institution regulatory agencies
         generally, as well as by bankruptcy, insolvency, reorganization,
         moratorium, marshaling or other laws and rules of law affecting the
         enforcement generally of creditors' rights and remedies (including such
         as may deny giving effect to waivers of debtors' or guarantors'
         rights); and we express no opinion as to the status under any
         fraudulent conveyance laws or fraudulent transfer laws of any of the
         obligations of U.S. Bank, the Sponsor, the Administrators or the Trust
         under any of the Operative Documents.

                  (d) We express no opinion as to the enforceability of any
         particular provision of the Trust Agreement or the other Operative
         Documents relating to remedies after default.

                  (e) We express no opinion as the availability of any specific
         or equitable relief of any kind.

                  (f) The enforcement of any rights may in all cases be subject
         to an implied duty of good faith and fair dealing and to general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding at law or in equity).

                  (g) We express no opinion as to the enforceability of any
         particular provision of any of the Operative Documents relating to (i)
         waivers of rights to object to jurisdiction or venue, or consents to
         jurisdiction or venue, (ii) waivers of rights to (or methods of)
         service of process, or rights to trial by jury, or other rights or
         benefits bestowed by operation of law, (iii) waivers of any applicable
         defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
         variations of provisions which are not capable of waiver or variation
         under Sections 1-102, 9-602, 9-603 or other provisions of the Uniform
         Commercial Code ("UCC") of the State, (v) the grant of powers



                                     B-2-3
<PAGE>

         of attorney to any person or entity, or (vi) exculpation or exoneration
         clauses, indemnity clauses, and clauses relating to releases or waivers
         of unmatured claims or rights.

                  (h) We have made no examination of, and no opinion is given
         herein as to the Trustee's or the Trust's title to or other ownership
         rights in, or the existence of any liens, charges or encumbrances on,
         or adverse claims against, any asset or property held by the
         Institutional Trustee or the Trust. We express no opinion as to the
         creation, validity, attachment, perfection or priority of any mortgage,
         security interest or lien in any asset or property held by the
         Institutional Trustee or the Trust.

                  (i) We express no opinion as to the effect of events
         occurring, circumstances arising, or changes of law becoming effective
         or occurring, after the date hereof on the matters addressed in this
         opinion letter, and we assume no responsibility to inform you of
         additional or changed facts, or changes in law, of which we may become
         aware.

                  (j) We express no opinion as to any requirement that any party
         to the Operative Documents (or any other persons or entities
         purportedly entitled to the benefits thereof) qualify or register to do
         business in any jurisdiction in order to be able to enforce its rights
         thereunder or obtain the benefits thereof.

         Based upon the foregoing and subject to the limitations and
qualifications set forth herein, we are of the opinion that:

         1. The Trust has been duly formed and is validly existing as a
statutory trust under the Connecticut Statutory Trust Act, Chapter 615 of Title
34 of the Connecticut General Statutes, Section 500, ET SEQ. (the "Act").

         2. The Trust Agreement constitutes a valid and binding obligation of
U.S. Bank and the Institutional Trustee enforceable against U.S. Bank and the
Institutional Trustee in accordance with the terms thereof.

         3. The Trust Agreement constitutes a valid and binding obligation of
the Sponsor and the Administrators, enforceable against the Sponsor and the
Administrators in accordance with its terms.

         4. The Trust has the requisite trust power and authority to (a) execute
and deliver, and to perform its obligations under, the Operative Documents, and
(b) perform its obligations under such Operative Documents.

         5. Each of the Operative Documents to which the Trust is a party
constitutes a valid and binding obligation of the Trust, enforceable against the
Trust in accordance with the terms thereof.

         6. The Capital Securities have been duly authorized by the Trust under
the Trust Agreement, and the Capital Securities, when duly executed and
delivered to the Holders in accordance with the Trust Agreement, the Placement
Agreement and the Subscription Agreement, will be validly issued, fully paid and
nonassessable and will evidence undivided beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust Agreement.

         7. The Common Securities have been duly authorized by the Trust
Agreement, and the Common Securities, when duly executed and delivered to the
Company in accordance with the Trust Agreement, the Placement Agreement and the
Subscription Agreement and delivered and paid for in accordance therewith, will
be validly issued, fully paid and nonassessable (subject to Section 9.1(b) of
the Trust Agreement which provides that the Holders of Common Securities are
liable for debts and



                                     B-2-4
<PAGE>

obligations of the Trust to the extent such debts and obligations are not
satisfied out of the Trust's assets) and will evidence undivided beneficial
interests in the assets of the Trust and will be entitled to the benefits of the
Trust Agreement.

         8. Neither the execution, delivery or performance by the Trust of the
Operative Documents, the consummation by the Trust of the transactions
contemplated thereby, nor compliance by the Trust with any of the terms and
provisions thereof, (a) violates the Trust Agreement, or, to the best of our
knowledge, contravenes or will contravene any provision of, or constitutes a
default under, or results in any breach of, or results in the creation of any
lien (other than as permitted under the Operative Documents) upon property of
the Trust under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, license or other
agreement or instrument, in each case known to us, to which it is a party or by
which it is bound or (b) violates any applicable State law governing the Trust,
or, to the best of our knowledge, any judgment or order of any court or other
tribunal, in each case known to us, applicable to or binding on it.

         9. No consent, approval, order or authorization of, giving of notice
to, or registration with, or taking of any other action in respect of, any State
governmental authority regulating the Trust is required for the execution,
delivery, validity or performance of, or the carrying out by, the Trust of any
of the transactions contemplated by the Operative Documents, other than any such
consent, approval, order, authorization, registration, notice or action as has
been duly obtained, given or taken.

         10. The Holders, as the beneficial holders of the Capital Securities,
will be entitled to the same limitation of personal liability extended to
shareholders of domestic corporations organized under the laws of the State.

         11. Under the Trust Agreement, the issuance of the Capital Securities
is not subject to preemptive rights.

         12. Assuming that the Trust will not be taxable as a corporation for
federal income tax purposes, but rather will be classified for such purposes as
a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, the Trust will not be subject to any tax, fee or other
government charge under the laws of the State of Connecticut or any political
subdivision thereof.

         This opinion is rendered solely for the benefit of those institutions
listed on SCHEDULE I hereto and their successors and assigns in connection with
the transactions contemplated by the Operative Documents and may not be used or
relied upon by any other person or for any other purpose.

                                                     Very truly yours,



                                                     SHIPMAN & GOODWIN LLP





                                     B-2-5
<PAGE>

                                   SCHEDULE I
                                   ----------


         U.S. Bank National Association

         FTN Financial Capital Markets

         Keefe, Bruyette & Woods, Inc.

         Preferred Term Securities XI, Ltd.

         Preferred Term Securities XI, Inc.

         Lewis, Rice & Fingersh, L.C.

         Carver Bancorp, Inc.

         Thacher Proffitt & Wood LLP




                                     B-2-6
<PAGE>


                            EXHIBIT A TO EXHIBIT B-2
                            ------------------------

                         CERTIFICATE OF LEGAL EXISTENCE
                         ------------------------------






                                     B-2-7
<PAGE>

                                   EXHIBIT B-3
                                   -----------

                           FORM OF TAX COUNSEL OPINION
                           ---------------------------


Carver Bancorp, Inc.
75 West 125th Street
New York, New York 10027

Carver Statutory Trust I
c/o Carver Bancorp, Inc.
75 West 125th Street
New York, New York 10027

FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee 38117

Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York  10019

Ladies and Gentlemen:

         We have acted as special tax counsel to Carver Bancorp, Inc. and to
Carver Statutory Trust I in connection with the proposed issuance of (i)
Floating Rate Capital Securities, liquidation amount $1,000.00 per Capital
Security (the "Capital Securities") of Carver Statutory Trust I, a statutory
business trust created under the laws of Connecticut (the "Trust"), pursuant to
the terms of the Amended and Restated Declaration of Trust dated as of the date
hereof by Carver Bancorp, Inc., a Delaware corporation (the "Company"), U.S.
Bank National Association, as institutional trustee, and William Gray, Deborah
Wright and Linda Dunn, as Administrators (the "Trust Agreement"), (ii) Junior
Subordinated Deferrable Interest Debentures (the "Corresponding Debentures") of
the Company issued pursuant to the terms of an Indenture dated as of the date
hereof from the Company to U.S. Bank National Association, as trustee (the
"Indenture"), which Debentures are to be sold by the Company to the Trust, and
(iii) the Guarantee Agreement of the Company with respect to the Capital
Securities dated as of the date hereof (the "Guarantee") between the Company and
U.S. Bank National Association, as guarantee trustee. The Capital Securities and
the Corresponding Debentures are to be issued as contemplated by the Offering
Circular (the "Offering Circular") dated September 9, 2003 prepared by Preferred
Term Securities XI, Ltd., an entity formed under the Companies Law of the Cayman
Islands, and Preferred Term Securities XI, Inc., a Delaware corporation.

         We have examined originals or copies, certified or otherwise identified
to our satisfaction, of documents, corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion including (i)
the Offering Circular, (ii) the Indenture, (iii) the form of the Corresponding
Debentures attached as an exhibit to the Indenture, (iv) the Trust Agreement,
(v) the Guarantee, and (vi) the form of Capital Securities Certificate attached
as an exhibit to the Trust Agreement (collectively the "Documents").
Furthermore, we have relied upon certain representations made by the Company and
upon the opinion of Shipman & Goodwin LLP as to certain matters of Connecticut
law. In such examination, we have assumed the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or



                                     B-3-1
<PAGE>

photostatic copies, the authenticity of the originals of such latter documents,
the genuineness of all signatures and the correctness of all representations
made therein. We have further assumed that there are no agreements or
understandings contemplated therein other than those contained in the Documents.

         Based upon the foregoing, and assuming (i) that the final Documents
will be substantially identical to the forms examined, (ii) full compliance with
all the terms of the final Documents, and (iii) the accuracy of representations
made by the Company and delivered to us, we are of the opinion that:

         (a)      The Corresponding Debentures will be classified as
                  indebtedness of the Company for U.S. federal income tax
                  purposes.

         (b)      The Trust will be characterized as a grantor trust and not as
                  an association taxable as a corporation for U.S. federal
                  income tax purposes.

         The opinions expressed above are based on existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing Treasury
regulations, published interpretations by the Internal Revenue Service of the
Code and such Treasury regulations, and existing court decisions, any of which
could be changed at any time. Any such changes may or may not be retroactively
applied, and may result in federal income tax consequences that differ from
those reflected in the opinions set forth above. We note that there is no
authority directly on point dealing with securities such as the Capital
Securities or with transactions of the type described herein, and that the
authorities on which this opinion is based are subject to various
interpretations. Further, you should be aware that opinions of counsel have no
official status and are not binding on the Internal Revenue Service or the
courts. Accordingly, we can provide no assurance that the interpretation of the
federal income tax laws set forth in our opinions will prevail if challenged by
the IRS in an administrative or judicial proceeding.

         We have also assumed that each transaction contemplated herein will be
carried out strictly in accordance with the Documents. Any variance in the facts
may result in Federal income tax consequences that differ from those reflected
in the opinions set forth above.

         Additionally, we undertake no obligation to update this opinion in the
event there is either a change in the legal authorities, in the facts (including
the taking of any action by any party to any of the transactions described in
the Documents relating to such transactions) or in the Documents on which this
opinion is based, or an inaccuracy in any of the representations upon which we
have relied in rendering this opinion.

         We express no opinion with respect to any matter not specifically
addressed by the foregoing opinions, including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and discussed
above including, without limitation, the effect on the matters covered by this
opinion of the laws of any other jurisdiction.

         This letter is delivered for the benefit of the specified addressees
and may not be relied upon by any other person. No portion of this letter may be
quoted or otherwise referred to in any document or delivered to any other person
or entity without the express written consent of Lewis, Rice & Fingersh, L.C.
This opinion letter is rendered as of the date set forth above.

                                                Very truly yours,

                                                LEWIS, RICE & FINGERSH, L.C.




                                     B-3-2
<PAGE>


Lewis, Rice & Fingersh, L.C.
500 N. Broadway, Suite 2000
St. Louis, Missouri  63102
Attention:  Lawrence H. Weltman, Esq.


         RE:      REPRESENTATIONS CONCERNING THE ISSUANCE OF JUNIOR SUBORDINATED
                  DEFERRABLE INTEREST DEBENTURES (THE "DEBENTURES") TO CARVER
                  STATUTORY TRUST I (THE "TRUST") AND SALE OF TRUST SECURITIES
                  (THE "TRUST SECURITIES") OF THE TRUST

Ladies and Gentlemen:

         In accordance with your request, Carver Bancorp, Inc. (the "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax consequences of
the issuance by the Company of the Debentures to the Trust and the sale of the
Trust Securities.

         Company hereby represents that:

         1. The sole assets of the Trust will be the Debentures, any interest
paid on the Debentures to the extent not distributed, proceeds of the
Debentures, or any of the foregoing.

         2. The Company intends to use the net proceeds from the sale of the
Debentures for general corporate purposes.

         3. The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Debentures, and (iii)
engaging only in activities necessary or incidental thereto.

         4. The Trust was formed to facilitate direct investment in the assets
of the Trust, and the existence of multiple classes of ownership is incidental
to that purpose. There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.

         5. The Company intends to create a debtor-creditor relationship between
the Company, as debtor, and the Trust, as a creditor, upon the issuance and sale
of the Debentures to the Trust by the Company. The Company will (i) record and
at all times continue to reflect the Debentures as indebtedness on its separate
books and records for financial accounting purposes, and (ii) treat the
Debentures as indebtedness for all United States tax purposes.

         6. During each year, the Trust's income will consist solely of payments
made by the Company with respect to the Debentures. Such payments will not be
derived from the active conduct of a financial business by the Trust. Both the
Company's obligation to make such payments and the measurement of the amounts
payable by the Company are defined by the terms of the Debentures. Neither the
Company's obligation to make such payments nor the measurement of the amounts
payable by the Company is dependent on income or profits of Company or any
affiliate of the Company.

         7. The Company expects that it will be able to make, and will make,
timely payment of amounts identified by the Debentures as principal and interest
in accordance with the terms of the Debentures with available capital or
accumulated earnings.



                                     B-3-3
<PAGE>

         8. The Company presently has no intention to defer interest payments on
the Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company) or make any payment of principal of or interest or premium, if any,
on or repay, repurchase, or redeem any debt securities of the Company or any
affiliate of the Company that rank PARI PASSU in all respects with or junior in
interest to the Debentures, in each case subject to limited exceptions stated in
Section 2.11 of the Indenture to be entered into in connection with the issuance
of the Debentures.

         9. Immediately after the issuance of the Debentures, the debt-to-equity
ratio of the Company (as determined for financial accounting purposes, but
excluding deposit liabilities from the Company's debt) will be within standard
depository institution industry norms and, in any event, will be no higher than
four to one (4 : 1).

         10. To the best of our knowledge, the Company is currently in
compliance with all federal, state, and local capital requirements, except to
the extent that failure to comply with any such requirements would not have a
material adverse effect on the Company and its affiliates.

         11. The Company will not issue any class of common stock or preferred
stock senior to the Debentures during their term.

         12. The Internal Revenue Service has not challenged the interest
deduction on any class of the Company's subordinated debt in the last ten (10)
years on the basis that such debt constitutes equity for federal income tax
purposes.

         The above representations are accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise notified by us in writing. The undersigned understands that you
will rely on the foregoing in connection with rendering certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.

                                             Very truly yours,

                                             CARVER BANCORP, INC.


Date: September 12, 2003                     By:      __________________________

                                             Title:   __________________________




                                     B-3-4
<PAGE>



                                    EXHIBIT C
                                    ---------

                            SIGNIFICANT SUBSIDIARIES
                            ------------------------

Carver Federal Savings Bank

Carver Asset Corporation







                                       C-1

<PAGE>

                                    EXHIBIT D
                                    ---------

                            FORM OF QUARTERLY REPORT
                            ------------------------


Preferred Term Securities XI, Ltd.
c/o The Bank of New York
Collateralized Debt Obligation Group
101 Barclay Street, 8E
New York, New York  10286
Attention:  Franco B. Talavera
CDO Relationship Manager

BANK HOLDING COMPANY
As of [March 31, June 30, September 30 or December 31], 20__

Tier 1 to Risk Weighted Assets                                  _________%

Ratio of Double Leverage                                        _________%

Non-Performing Assets to Loans and OREO                         _________%

Ratio of Reserves to Non-Performing Loans                       _________%

Ratio of Net Charge-Offs to Loans                               _________%

Return on Average Assets (annualized)**                         _________%

Net Interest Margin (annualized)**                              _________%

Efficiency Ratio                                                _________%

Ratio of Loans to Assets                                        _________%

Ratio of Loans to Deposits                                      _________%

Total Assets                                                    $_________

Year to Date Income                                             $_________

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

** To annualize Return on Average Assets and Net Interest Margin do the
   following:
1st Quarter-multiply income statement item by 4, then divide by balance sheet
item(s)
2nd Quarter-multiply income statement item by 2,then divide by balance sheet
item(s)
3rd Quarter-divide income statement item by 3, then multiply by 4, then divide
by balance sheet item(s)
4th Quarter-should already be an annual number
NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS






                                      D-1

<PAGE>

<TABLE>
<CAPTION>
                              FINANCIAL DEFINITIONS

----------------------- -------------------------------------------------- ---------------------------------------------------
REPORT ITEM             CORRESPONDING FRY-9C OR LP LINE ITEMS WITH LINE
                        ITEM CORRESPONDING SCHEDULES                       DESCRIPTION OF CALCULATION
----------------------- -------------------------------------------------- ---------------------------------------------------
<S>                     <C>                                                <C>
"Tier 1 Capital" to     BHCK7206                                           Tier 1 Risk Ratio: Core Capital (Tier 1)/
Risk Weighted Assets    SCHEDULE HC-R                                      Risk-Adjusted Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Double         (BHCP0365)/(BHCP3210)                              Total equity investments in subsidiaries divided
Leverage                SCHEDULE PC  IN THE LP                             by the total equity capital. This field is
                                                                           calculated at the parent company level.
                                                                           "Subsidiaries" include bank, bank holding company,
                                                                           and nonbank subsidiaries.
----------------------- -------------------------------------------------- ---------------------------------------------------
Non-Performing  Assets  (BHCK5525-BHCK3506+BHCK5526-                       Total Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO       BHCK3507+BHCK2744)/(BHCK2122+BHCK2                 Estate+Other Nonaccrual & Repossessed Assets)/
                        744) SCHEDULES HC-C, HC-M & HC-N                   Total Loans + Foreclosed Real Estate
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Reserves to    (BHCK3123+BHCK3128)/(BHCK5525-                     Total) Loan Loss and Allocated Transfer Risk
Non-Performing Loans    BHCK3506+BHCK5526-BHCK3507)                        Reserves/ Total Nonperforming Loans (Nonaccrual +
                        SCHEDULES HC & HC-N                                Restructured)
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Net            (BHCK4635-BHCK4605)/(BHCK3516)                     Net charge offs for the period as a percentage of
Charge-Offs to Loans    SCHEDULES HI-B & HC-K                              average loans.
----------------------- -------------------------------------------------- ---------------------------------------------------
Return on Assets        (BHCK4340/BHCK3368)                                Net Income as a percentage of Assets.
                        SCHEDULES HI & HC-K
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Interest Margin     (BHCK4519)/(BHCK3515+BHCK3365+BHCK                 (Net Interest Income Fully Taxable Equivalent, if
                        3516+BHCK3401+BHCKB985)                            available / Average Earning Assets)
                        SCHEDULES HI MEMORANDUM AND HC-K
----------------------- -------------------------------------------------- ---------------------------------------------------
Efficiency Ratio        (BHCK4093)/(BHCK4519+BHCK4079)                     (Noninterest Expense)/ (Net Interest Income Fully
                        SCHEDULE HI                                        Taxable Equivalent, if available, plus Noninterest
                                                                           Income)
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Loans to       (BHCKB528+BHCK5369)/BHCK2170)                      Total Loans & Leases (Net of Unearned Income &
Assets                                     SCHEDULE HC                     Gross of Reserve)/ Total Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Loans to       (BHCKB528+BHCK5369)/(BHDM6631+BHD                  Total Loans & Leases (Net of Unearned Income &
Deposits                M6636+BHFN6631+BHFN6636)                           Gross of Reserve)/ Total Deposits (Includes
                                           SCHEDULE HC                     Domestic and Foreign Deposits)
----------------------- -------------------------------------------------- ---------------------------------------------------
Total Assets            (BHCK2170)                                         The sum of total assets. Includes cash and
                                           SCHEDULE HC                     balances due from depository institutions;
                                                                           securities; federal funds sold and securities
                                                                           purchased under agreements to resell; loans and
                                                                           lease financing receivables; trading assets;
                                                                           premises and fixed assets; other real estate
                                                                           owned; investments in unconsolidated subsidiaries
                                                                           and associated companies; customer's liability on
                                                                           acceptances outstanding; intangible assets; and
                                                                           other assets.
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Income              (BHCK4300)                                         The sum of income (loss) before extraordinary
                        SCHEDULE HI                                        items and other adjustments and extraordinary
                                                                           items; and other adjustments, net of income taxes.
----------------------- -------------------------------------------------- ---------------------------------------------------
</TABLE>