AMENDED AND RESTATED DECLARATION

                                    OF TRUST

                              FSBS Capital Trust I

                          Dated as of January 30, 2004







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                                TABLE OF CONTENTS

                                                                            Page


                                    ARTICLE I
                         INTERPRETATION AND DEFINITIONS

SECTION 1.1.    Definitions...................................................1

                                   ARTICLE II
                                  ORGANIZATION

SECTION 2.1.    Name..........................................................9

SECTION 2.2.    Office........................................................9

SECTION 2.3.    Purpose.......................................................9

SECTION 2.4.    Authority.....................................................9

SECTION 2.5.    Title to Property of the Trust................................9

SECTION 2.6.    Powers and Duties of the Trustees and the Administrators......9

SECTION 2.7.    Prohibition of Actions by the Trust and the Trustees.........14

SECTION 2.8.    Powers and Duties of the Institutional Trustee...............15

SECTION 2.9.    Certain Duties and Responsibilities of the Trustees
                  and the Administrators.....................................16

SECTION 2.10.   Certain Rights of Institutional Trustee......................18

SECTION 2.11.   Delaware Trustee.............................................21

SECTION 2.12.   Execution of Documents.......................................21

SECTION 2.13.   Not Responsible for Recitals or Issuance of Securities.......21

SECTION 2.14.   Duration of Trust............................................21

SECTION 2.15.   Mergers......................................................21

                                   ARTICLE III
                                     SPONSOR

SECTION 3.1.    Sponsor's Purchase of Common Securities......................23

SECTION 3.2.    Responsibilities of the Sponsor..............................23

                                   ARTICLE IV
                           TRUSTEES AND ADMINISTRATORS

SECTION 4.1.    Number of Trustees...........................................24

SECTION 4.2.    Delaware Trustee.............................................24

SECTION 4.3.    Institutional Trustee; Eligibility...........................24

SECTION 4.4.    Certain Qualifications of the Delaware Trustee Generally.....25

SECTION 4.5.    Administrators...............................................25

SECTION 4.6.    Initial Delaware Trustee.....................................25



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                                Table of Contents
                                   (continued)
                                                                            Page

SECTION 4.7.    Appointment, Removal and Resignation of the Trustees
                  and the Administrators.....................................25

SECTION 4.8.    Vacancies Among Trustees.....................................27

SECTION 4.9.    Effect of Vacancies..........................................27

SECTION 4.10.   Meetings of the Trustees and the Administrators..............27

SECTION 4.11.   Delegation of Power..........................................28

SECTION 4.12.   Merger, Conversion, Consolidation or Succession
                  to Business................................................28

                                    ARTICLE V
                                  DISTRIBUTIONS

SECTION 5.1.    Distributions................................................28

                                   ARTICLE VI
                             ISSUANCE OF SECURITIES

SECTION 6.1.    General Provisions Regarding Securities......................29

SECTION 6.2.    Paying Agent, Transfer Agent, Calculation Agent
                  and Registrar..............................................30

SECTION 6.3.    Form and Dating..............................................30

SECTION 6.4.    Book -Entry Capital Securities...............................31

SECTION 6.5.    Mutilated, Destroyed, Lost or Stolen Certificates............33

SECTION 6.6.    Temporary Securities.........................................33

SECTION 6.7.    Cancellation.................................................33

SECTION 6.8.    Rights of Holders; Waivers of Past Defaults..................33

                                   ARTICLE VII
                      DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1.    Dissolution and Termination of Trust.........................35

                                  ARTICLE VIII
                              TRANSFER OF INTERESTS

SECTION 8.1.    General......................................................36

SECTION 8.2.    Transfer Procedures and Restrictions.........................37

SECTION 8.3.    Deemed Security Holders......................................41

                                   ARTICLE IX
      LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 9.1.    Liability....................................................41

SECTION 9.2.    Exculpation..................................................41

SECTION 9.3.    Fiduciary Duty...............................................42



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                                Table of Contents
                                   (continued)
                                                                            Page
SECTION 9.4.    Indemnification..............................................42

SECTION 9.5.    Outside Businesses...........................................45

SECTION 9.6.    Compensation; Fee............................................45

                                    ARTICLE X
                                   ACCOUNTING

SECTION 10.1.   Fiscal Year..................................................46

SECTION 10.2.   Certain Accounting Matters...................................46

SECTION 10.3.   Banking......................................................47

SECTION 10.4.   Withholding..................................................47

                                   ARTICLE XI
                             AMENDMENTS AND MEETINGS

SECTION 11.1.   Amendments...................................................47

SECTION 11.2.   Meetings of the Holders of the Securities;
                  Action by Written Consent..................................49

                                   ARTICLE XII
          REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE

SECTION 12.1.   Representations and Warranties of Institutional Trustee......51

SECTION 12.2.   Representations and Warranties of Delaware Trustee...........51

                                  ARTICLE XIII
                                  MISCELLANEOUS

SECTION 13.1.   Notices......................................................52

SECTION 13.2.   Governing Law................................................53

SECTION 13.3.   Submission to Jurisdiction...................................53

SECTION 13.4.   Intention of the Parties.....................................54

SECTION 13.5.   Headings.....................................................54

SECTION 13.6.   Successors and Assigns.......................................54

SECTION 13.7.   Partial Enforceability.......................................54

SECTION 13.8.   Counterparts.................................................54


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                                Table of Contents
                                   (continued)
                                                                            Page

                              ANNEXES AND EXHIBITS

ANNEX I  Terms of TP Securities and Common Securities

EXHIBIT A-1.......Form of Capital Security Certificate
EXHIBIT A-2.......Form of Common Security Certificate





























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                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                              FSBS Capital Trust I

                                January 30, 2004

         AMENDED AND RESTATED DECLARATION OF TRUST (this  "Declaration"),  dated
and effective as of January 30, 2004, by the Trustees (as defined  herein),  the
Administrators  (as defined  herein),  the  Sponsor (as defined  herein) and 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,  certain of the Trustees,  the  Administrators and the Sponsor
established  FSBS Capital  Trust I (the  "Trust"),  a statutory  trust under the
Statutory  Trust Act (as defined  herein),  pursuant to a Declaration  of Trust,
dated as of January 28, 2004 (the "Original Declaration"),  and a Certificate of
Trust filed with the  Secretary of State of the State of Delaware on January 28,
2004,  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 the  Debentures  (as defined  herein) of the
Debenture  Issuer (as defined  herein) in  connection  with the  issuance of the
Capital Securities (as defined herein);

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

         WHEREAS,  all of the Trustees,  the Administrators and the Sponsor,  by
this  Declaration,  amend and restate  each and every term and  provision of the
Original Declaration.

         NOW,  THEREFORE,  it being  the  intention  of the  parties  hereto  to
continue the Trust as a statutory  trust under the Statutory  Trust Act and that
this Declaration  constitutes the governing  instrument of such statutory trust,
and 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,  and, in  consideration  of the
mutual covenants contained herein and other good and valuable consideration, the
receipt of which is hereby  acknowledged,  the parties,  intending to be legally
bound  hereby,  amend and restate in its entirety the Original  Declaration  and
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 or elsewhere herein have the respective meanings assigned to them
in this Section 1.1 or, if not defined in this Section 1.1 or elsewhere  herein,
in the Indenture;



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         (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;

         (e) a term defined in the Trust  Indenture Act (as defined  herein) has
the same meaning when used in this Declaration  unless otherwise defined in this
Declaration or unless the context otherwise requires; and

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

         "Additional  Interest" has the meaning set forth in Section 3.06 of the
Indenture.

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

         "Administrators"  means each of Barry L.  Slider  and V. Lewis  Shuler,
solely  in such  Person's  capacity  as  Administrator  of the  Trust  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.

         "Applicable  Depositary Procedures" means, with respect to any transfer
or transaction involving a Book-Entry Capital Security, the rules and procedures
of the  Depositary for such  Book-Entry  Capital  Security,  in each case to the
extent applicable to such transaction and as in effect from time to time.

         "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  enters 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  appoints a  receiver,  liquidator,  assignee,  custodian,  trustee,
sequestrator or similar  official of such Person or for any substantial  part of
its property,  or orders the winding-up or liquidation of its affairs,  and such
decree,  appointment or order remains  unstayed and in effect for a period of 90
consecutive days; or

         (b) such  Person  commences  a  voluntary  case  under  any  applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an  involuntary  case under any such law,
or  consents  to  the  appointment  of  or  taking  possession  by  a  receiver,


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<PAGE>

liquidator, assignee, trustee, custodian, sequestrator or other similar official
of such Person of any  substantial  part of its  property,  or makes any general
assignment for the benefit of creditors,  or fails generally to pay its debts as
they become due.

         "Book-Entry  Capital Security" means a Capital Security,  the ownership
and transfers of which shall be made through book entries by a Depositary.

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

         "Calculation  Agent" has the meaning  set forth in Section  1.01 of the
Indenture.

         "Capital Securities" has the meaning set forth in Section 6.1(a).

         "Capital   Security   Certificate"   means  a  definitive   Certificate
registered  in  the  name  of  the  Holder   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.

         "Certificate  of Trust" means the  certificate  of trust filed with the
Secretary  of State of the State of  Delaware  with  respect  to the  Trust,  as
amended and restated from time to time.

         "Closing Date" has the meaning set forth in the Purchase Agreement .

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

          "Commission"   means  the  United  States   Securities   and  Exchange
Commission.

         "Common Securities" has the meaning set forth in Section 6.1(a).

         "Common Security Certificate" means a definitive Certificate registered
in the name of the Holder  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 shall at all times be
located in the United States and at the date of execution of this Declaration is
located  at 919  Market  Street  Suite  700  Wilmington,  DE  19801,  Attention:
Corporate Trust Division.



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<PAGE>

         "Coupon  Rate"  includes  the  Initial  Rate and  Subsequent  Rate,  as
applicable, as defined 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) the Trust's Affiliates; and (b) any Holder of Securities.

         "Debenture  Issuer"  means First South  Bancorp,  Inc.,  a bank holding
company  incorporated  in South  Carolina,  in its  capacity  as  issuer  of the
Debentures under the Indenture.

         "Debenture  Trustee" means Wells Fargo Bank,  National  Association,  a
national  banking  association with its principal place of business in the State
of Delaware,  not in its  individual  capacity  but solely as trustee  under the
Indenture until a successor is appointed  thereunder,  and thereafter means such
successor trustee.

         "Debentures" means the Junior Subordinated Debt Securities due April 7,
2034 to be issued by the Debenture Issuer under the Indenture.

         "Deferred  Interest"  means any interest on the  Debentures  that would
have been overdue and unpaid for more than one Distribution Payment Date but for
the  imposition of an Extension  Period,  and the interest that shall accrue (to
the extent that the payment of such  interest  is legally  enforceable)  on such
interest at the Coupon Rate applicable during such Extension Period,  compounded
quarterly  from the date on which such Deferred  Interest  would  otherwise have
been due and payable until paid or made available for payment.

         "Definitive   Capital  Securities"  means  any  Capital  Securities  in
definitive form issued by the Trust.

         "Delaware Trustee" has the meaning set forth in Section 4.2.

         "Depositary"  means an  organization  registered  as a clearing  agency
under the Exchange Act that is  designated  as  Depositary by the Sponsor or any
successor thereto. DTC will be the initial Depositary.

         "Depositary  Participant" means a broker, dealer, bank, other financial
institution  or other Person for whom from time to time the  Depositary  effects
book-entry transfers and pledges of securities deposited with the Depositary.

         "Direct Action" has the meaning set forth in Section 2.8(e).

         "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(e)
of Annex I.

         "Distribution  Payment  Period"  means the period from and  including a
Distribution  Payment  Date,  or in the case of the first  Distribution  Payment
Period, the original date of issuance of the Securities,  to, but excluding, the
next  succeeding  Distribution  Payment  Date  or,  in  the  case  of  the  last


                                       4
<PAGE>

Distribution  Payment Period,  the Redemption Date,  Special  Redemption Date or
Maturity  Date (each as defined in the  Indenture),  as the case may be, for the
related Debentures.

         "DTC" means The Depository Trust Company or any successor thereto.

         "Event  of  Default"  means the  occurrence  of an  Indenture  Event of
Default.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time, or any successor legislation.

         "Extension Period" has the meaning set forth in paragraph 2(e) of Annex
I.

         "Fiduciary  Indemnified  Person"  shall mean each of the  Institutional
Trustee (including in its individual capacity),  the Delaware Trustee (including
in its individual  capacity),  any Affiliate of the Institutional Trustee or the
Delaware Trustee, and any officers, directors, shareholders,  members, partners,
employees, representatives,  custodians, nominees or agents of the Institutional
Trustee or the Delaware Trustee.

         "Fiscal Year" has the meaning set forth in Section 10.1.

         "Global  Capital  Security"  means  a  Capital  Securities  Certificate
evidencing ownership of Book-Entry Capital Securities.

         "Guarantee"  means the  Guarantee  Agreement,  dated as of January  30,
2004, of the Sponsor in respect of the Capital Securities.

         "Holder"  means a Person in whose  name a  Certificate  representing  a
Security  is  registered  on the  register  maintained  by or on  behalf  of the
Registrar,  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 January 30, 2004,  among
the Debenture Issuer and the Debenture Trustee,  and any indenture  supplemental
thereto pursuant to which the Debentures are to be issued.

         "Indenture  Event of Default" means an "Event of Default" as defined in
the Indenture.

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

         "Institutional  Trustee"  means the  Trustee  meeting  the  eligibility
requirements set forth in Section 4.3.

         "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.



                                       5
<PAGE>

         "Investment  Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.

         "Legal Action" has the meaning set forth in Section 2.8(e).

         "LIBOR"  means  the  London  Interbank  Offered  Rate for  U.S.  Dollar
deposits in Europe as determined by the Calculation Agent according to paragraph
2(b) of Annex I.

         "LIBOR  Banking Day" has the meaning set forth in paragraph  2(b)(1) of
Annex I.

         "LIBOR Business Day" has the meaning set forth in paragraph  2(b)(1) of
Annex I.

         "LIBOR  Determination  Date" has the  meaning  set  forth in  paragraph
2(b)(1) of Annex I.

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

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

         "Majority in  liquidation  amount of the  Securities"  means Holders 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.

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

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

         "Officers'   Certificate"   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
provided for in this Declaration shall include:

         (a) a statement that each officer signing the Officers' 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 Officers' 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.



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<PAGE>

         "Owner"  means each Person who is the  beneficial  owner of  Book-Entry
Capital  Securities  as  reflected  in the  records of the  Depositary  or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner as
reflected in the records of the Depositary Participant.

         "Paying Agent" has the meaning set forth in Section 6.2.

         "Payment Amount" has the meaning set forth in Section 5.1.

         "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.

         "Purchase  Agreement  " means the  Purchase  Agreement  relating to the
offering and sale of Capital Securities.

         "PORTAL" has the meaning set forth in Section 2.6(a)(i).

         "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.

         "QIB" means a  "qualified  institutional  buyer" as defined  under Rule
144A.

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

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

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

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

         "Relevant Trustee" has the meaning set forth in Section 4.7(a).

         "Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional  Trustee with
direct responsibility for the administration of this Declaration,  including any
vice-president,  any  assistant  vice-president,  any  secretary,  any assistant
secretary,  the treasurer,  any assistant treasurer,  any trust officer or other
officer of the Corporate Trust Office of the 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(c).

         "Rule 144A" means Rule 144A under the Securities Act.



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<PAGE>

         "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, as
applicable.

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

         "Sponsor" means First South Bancorp,  Inc., a bank holding company that
is a U.S. Person  incorporated in South Carolina,  or any successor  entity in a
merger,  consolidation or amalgamation that is a U.S. Person, in its capacity as
sponsor of the Trust.

         "Statutory  Trust  Act" means  Chapter  38 of Title 12 of the  Delaware
Code,  12 Del.  Codess.3801  et seq., as it may be amended from time to time, or
any successor legislation.

         "Successor  Delaware  Trustee"  has the  meaning  set forth in  Section
4.7(e).

         "Successor Entity" has the meaning set forth in Section 2.15(b).

         "Successor  Institutional Trustee" has the meaning set forth in Section
4.7(b).

         "Successor Securities" has the meaning set forth in Section 2.15(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  Holders  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.

         "Transfer Agent" has the meaning set forth in Section 6.2.

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

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

         "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


                                       8
<PAGE>

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 "FSBS Capital Trust I," as such
name may be modified from time to time by the  Administrators  following written
notice to the  Institutional  Trustee  and 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,
which shall be in a state of the United  States or the District of Columbia,  is
1450 John B. White,  Sr. Blvd.,  Spartanburg,  S.C. 29306. On ten Business Days'
written notice to the  Institutional  Trustee and the Holders of the Securities,
the Administrators  may designate another principal office,  which shall be in a
state of the United States or 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  incidental  thereto that are deemed necessary or advisable by
the  Institutional  Trustee,  including,  without  limitation,  those activities
specified in this Declaration.  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 a Trustee
on behalf  of the Trust and in  accordance  with  such  Trustee's  powers  shall
constitute the act of and serve to bind the Trust.  In dealing with the Trustees
acting on behalf of the Trust,  no Person  shall be required to inquire into the
authority of the Trustees to bind the Trust.  Persons dealing with the Trust are
entitled to rely  conclusively on the power and authority of the Trustees as set
forth in this Declaration.  The Administrators shall have only those ministerial
duties set forth herein with respect to accomplishing  the purposes of the Trust
and are not intended to be trustees or fiduciaries  with respect to the Trust or
the Holders.  The  Institutional  Trustee shall have the right, but shall not be
obligated except as provided in 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  2.6(g) and 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


                                       9
<PAGE>

title to any part of the  assets  of the  Trust,  but  shall  have an  undivided
beneficial interest in the assets of the Trust.

         SECTION 2.6. Powers and Duties of the Trustees and the Administrators.

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

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

                           (A) the issuance and sale of the Securities;

                           (B) to acquire the  Debentures  with the  proceeds of
                  the  sale  of the  Securities;  provided,  however,  that  the
                  Administrators shall cause legal title to the Debentures to be
                  held of record in the name of the  Institutional  Trustee  for
                  the benefit of the Holders;

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

                           (D) if and at  such  time  determined  solely  by the
                  Sponsor  at the  request  of  the  Holders,  assisting  in the
                  designation  of the  Capital  Securities  for  trading  in the
                  Private  Offering,  Resales and Trading  through the Automatic
                  Linkages ("PORTAL") system if available;

                           (E) 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,  including notice of any notice received from the
                  Debenture Issuer of its election to defer payments of interest
                  on the  Debentures  by extending the interest  payment  period
                  under the Indenture;

                           (F) the appointment of a Paying Agent, Transfer Agent
                  and Registrar in accordance with this Declaration;

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



                                       10
<PAGE>

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

                           (I) 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;

                           (J)  the  taking  of  any  action  incidental  to the
                  foregoing as the Sponsor or an Administrator  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);

                           (K) 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;

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

                           (M) to negotiate  the terms of, and the execution and
                  delivery of, the Purchase Agreement  providing for the sale of
                  the Capital Securities;

                           (N) to employ or otherwise engage  employees,  agents
                  (who may be designated  as officers  with  titles),  managers,
                  contractors,  advisors,  attorneys  and  consultants  and  pay
                  reasonable compensation for such services;

                           (O)  to  incur   expenses   that  are   necessary  or
                  incidental to carry out any of the purposes of the Trust;

                           (P) to give the certificate required by ss. 314(a)(4)
                  of the Trust Indenture Act to the Institutional Trustee, which
                  certificate may be executed by an Administrator; and

                           (Q) to take  all  action  that  may be  necessary  or
                  appropriate for the  preservation  and the continuation of the
                  Trust's valid existence,  rights, franchises and privileges as
                  a statutory trust under the laws of each  jurisdiction  (other
                  than  the  State  of  Delaware)  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.



                                       11
<PAGE>

                  (ii)  As  among  the  Trustees  and  the  Administrators,  the
         Institutional Trustee shall have the power, duty and authority,  and is
         hereby  authorized,  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
                  Delaware;

                           (I)  after  any  Event  of  Default   (of  which  the
                  Institutional  Trustee has  knowledge  (as provided in Section
                  2.10(m) hereof)) (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);

                           (J) to take  all  action  that  may be  necessary  or
                  appropriate for the  preservation  and the continuation of the
                  Trust's valid existence,  rights, franchises and privileges as
                  a  statutory  trust under the laws of the State of Delaware 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; and

                           (K) to undertake  any actions set forth in ss. 317(a)
                  of the Trust Indenture Act.



                                       12
<PAGE>

                  (iii)  The  Institutional  Trustee  shall  have the  power and
         authority, and is hereby authorized, 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)(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.

         (b) So long as this  Declaration  remains in effect,  the Trust (or the
Trustees or  Administrators  acting on behalf of the Trust) shall not  undertake
any business,  activities or transaction  except as expressly provided herein or
contemplated hereby. In particular,  neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any  investments  or engage in any activities
not  authorized by this  Declaration,  (ii) sell,  assign,  transfer,  exchange,
mortgage,  pledge,  set-off or otherwise dispose of any of the Trust Property or
interests  therein,  including to Holders,  except as expressly provided herein,
(iii) take any  action  that  would  cause (or in the case of the  Institutional
Trustee, to the actual knowledge of a Responsible Officer would cause) the Trust
to fail or cease to  qualify as a "grantor  trust"  for  United  States  federal
income tax purposes, (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  advisement  of and  direction  to the Trustees 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; and

                  (iii) 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,  the  Institutional  Trustee  and the  Holders of a Majority  in


                                       13
<PAGE>

liquidation  amount of the Common  Securities  are  authorized  and  directed to
conduct  the affairs of the Trust and to operate the Trust so that (i) the Trust
will not be deemed to be an "investment company" required to be registered under
the Investment  Company Act (in the case of the  Institutional  Trustee,  to the
actual knowledge of a Responsible Officer),  and (ii) the Trust will not fail to
be classified as a grantor trust for United States  federal  income tax purposes
(in  the  case  of the  Institutional  Trustee,  to the  actual  knowledge  of a
Responsible  Officer) and (iii) the Trust will 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 the case of the  Institutional
Trustee, to the actual knowledge of a Responsible  Officer). In this connection,
the Institutional  Trustee,  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 or this Declaration,  as amended from time
to time, that each of the Institutional  Trustee,  the  Administrators  and such
Holders  determine in their  discretion  to be  necessary or desirable  for such
purposes,  even if such action adversely affects the interests of the Holders of
the Capital Securities.

         (e)  All  expenses  incurred  by the  Administrators  or  the  Trustees
pursuant  to this  Section  2.6  shall be  reimbursed  by the  Sponsor,  and the
Trustees 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  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 Trustees.  The
Trust shall not, and the Institutional Trustee and the Administrators shall not,
and the  Administrators  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 and the Administrators shall not
cause the Trust to:

         (a)  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;

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

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



                                       14
<PAGE>

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

         (e)  possess  any power or  otherwise  act in such a way as to vary the
Trust Property or the terms of the Securities;

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

         (g) other than as provided in this Declaration (including Annex I), (i)
direct the time,  method and place of  exercising  any trust or power  conferred
upon the Debenture  Trustee with respect to the Debentures,  (ii) waive any past
default  that is  waivable  under the  Indenture,  (iii)  exercise  any right to
rescind or annul any declaration  that the principal of all the Debentures shall
be  due  and  payable,  or  (iv)  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
experienced in such matters to the effect that such  amendment,  modification or
termination  will not  cause the  Trust to cease to be  classified  as a grantor
trust for United States federal income tax purposes.

         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.  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 4.7. 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 or to the Delaware Trustee.

         (c) The Institutional Trustee shall:

                  (i) establish and maintain a segregated  non-interest  bearing
         trust account (the "Property Account") in the United States (as defined
         in Treasury  Regulationsss.  301.7701-7),  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 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



                                       15
<PAGE>

                  (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 shall take all actions and perform such
duties as may be specifically  required of the Institutional Trustee pursuant to
the terms of the Securities.

         (e) 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 (a "Legal Action") which arise
out of or in connection with an Event of Default of which a Responsible  Officer
of the Institutional Trustee has actual knowledge or the Institutional Trustee's
duties  and  obligations  under this  Declaration  or the Trust  Indenture  Act;
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 a Holder of the Common  Securities may
exercise such right of  subrogation  only if no Event of Default with respect to
the Capital Securities has occurred and is continuing.

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

                  (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 (including
         Annex I)n and the  certificate  of  cancellation  referenced in Section
         7.1(b) has been filed; or

                  (ii) a Successor  Institutional Trustee has been appointed and
         has accepted that appointment in accordance with Section 4.7.

         (g) 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.

         (h) 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


                                       16
<PAGE>

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 Trustees and
the Administrators.

         (a) The  Institutional  Trustee,  before the occurrence of any Event of
Default  (of which the  Institutional  Trustee  has  knowledge  (as  provided in
Section 2.10(m)  hereof)) and after the curing of all 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 (of
which the  Institutional  Trustee has knowledge (as provided in Section  2.10(m)
hereof)),  has occurred  (that has not been cured or waived  pursuant to Section
6.8),  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   Trustees  and  the
Administrators  shall be as provided by this Declaration and, in the case of the
Institutional   Trustee,  by  the  Trust  Indenture  Act.   Notwithstanding  the
foregoing,  no  provision  of this  Declaration  shall  require  any  Trustee or
Administrator  to expend or risk its own funds or otherwise  incur any financial
liability in the performance of any of its duties hereunder,  or in the exercise
of any of its  rights  or  powers,  if it  shall  have  reasonable  grounds  for
believing that repayment of such funds or adequate indemnity  satisfactory to it
against such risk or liability is not  reasonably  assured to it. Whether or not
therein expressly so provided,  every provision of this Declaration  relating to
the  conduct or  affecting  the  liability  of or  affording  protection  to the
Trustees  or the  Administrators  shall be  subject  to the  provisions  of this
Article.  Nothing in this  Declaration  shall be  construed to release a Trustee
from liability for its own negligent  action,  its own negligent failure to act,
or its own willful misconduct. Nothing in this Declaration shall be construed to
release an Administrator  from liability for its own gross negligent action, its
own gross negligent failure to act, or its own willful misconduct. To the extent
that,  at law or in  equity,  a  Trustee  or an  Administrator  has  duties  and
liabilities  relating  to  the  Trust  or  to  the  Holders,   such  Trustee  or
Administrator  shall  not be  liable  to the  Trust  or to any  Holder  for such
Trustee's  or  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  Trustees
otherwise  existing  at law or in  equity,  are  agreed by the  Sponsor  and the
Holders to replace such other duties and  liabilities of the  Administrators  or
the Trustees.

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


                                       17
<PAGE>

forth  elsewhere  in this  Declaration  or,  in the  case  of the  Institutional
Trustee, in the Trust Indenture Act.

         (d) No provision of this Declaration  shall be construed to relieve the
Institutional  Trustee from  liability  for its own  negligent  action,  its own
negligent failure to act, or its own willful  misconduct with respect to matters
that  are  within  the  authority  of  the  Institutional   Trustee  under  this
Declaration, except that:

                  (i) the  Institutional  Trustee  shall not be  liable  for any
         error or 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,  safe keeping 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 own account,  subject to the  protections  and  limitations  on
         liability afforded to the Institutional  Trustee under this Declaration
         and the Trust Indenture Act;

                  (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,
written 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


                                       18
<PAGE>

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 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 opinion 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 in its sole  discretion  shall deem
advisable  and in the  best  interests  of  the  Holders,  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, in the absence of bad faith on its part, request and conclusively rely upon
an Officers' Certificate 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, upon the occurrence of an Event of Default (of which the
Institutional  Trustee has  knowledge (as provided in Section  2.10(m)  hereof))
that has not been cured or waived,  of its obligation to exercise the rights and
powers vested in it by this Declaration;



                                       19
<PAGE>

         (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  hereunder,
the Institutional  Trustee (i) may request  instructions from the Holders of the
Common Securities and the Capital  Securities,  which  instructions may be given
only by the Holders of the same  proportion in liquidation  amount of the Common
Securities  and the  Capital  Securities  as would be  entitled  to  direct  the
Institutional  Trustee under the terms of the Common  Securities and 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 has
actual  knowledge of such event or the  Institutional  Trustee  receives written
notice of such event from any Holder, except with respect to an Event of Default
pursuant to Sections 5.01 (a) or 5.01 (b) of the Indenture  (other than an Event
of Default  resulting from the default in the payment of Additional  Interest or
premium, if any, if the Institutional  Trustee does not have actual knowledge or
written notice that such payment is due and payable), of which the Institutional
Trustee shall be deemed to have knowledge;

         (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



                                       20
<PAGE>

         (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. Delaware Trustee.  Notwithstanding any other provision of
this  Declaration  other than Section 4.2,  the  Delaware  Trustee  shall not be
entitled to exercise any powers,  nor shall the Delaware Trustee have any of the
duties  and  responsibilities  of  any  of the  Trustees  or the  Administrators
described in this  Declaration  (except as may be required  under the  Statutory
Trust Act).  Except as set forth in Section 4.2, the Delaware Trustee shall be a
Trustee for the sole and limited  purpose of fulfilling the  requirements of ss.
3807 of the Statutory Trust Act.

         SECTION 2.12.  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  and  deliver on
behalf of the Trust any documents, agreements,  instruments or certificates that
the  Trustees  or the  Administrators,  as the case may be,  have the  power and
authority to execute pursuant to Section 2.6.

         SECTION 2.13. Not  Responsible  for Recitals or Issuance of Securities.
The recitals  contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their  correctness.  The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations  as to the  validity or  sufficiency  of this  Declaration,  the
Debentures or the Securities.

         SECTION 2.14.  Duration of Trust. The Trust,  unless dissolved pursuant
to the provisions of Article VII hereof,  shall have  existence for  thirty-five
(35) years from the Closing Date.

         SECTION 2.15. 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  Person,  except as
described in this Section  2.15 and except with respect to the  distribution  of
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  Administrators  (which
consent  will not be  unreasonably  withheld)  and  without  the  consent of the
Institutional  Trustee,  the  Delaware  Trustee or the  Holders  of the  Capital
Securities,  consolidate,  amalgamate, merge with or into, or be replaced by, or
convey,  transfer  or  lease  its  properties  and  assets  as  an  entirety  or
substantially  as an entirety to a trust organized as such under the laws of any
state; provided, that:



                                       21
<PAGE>

                  (i) if the Trust is not the survivor,  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,  as the  holder of the
         Common Securities, a trustee of the Successor Entity that possesses the
         same powers and duties as the Institutional Trustee;

                  (iii)  the  Capital  Securities  or any  Successor  Securities
         (excluding any securities  substituted  for the Common  Securities) are
         listed or quoted, or any Successor  Securities will be listed or quoted
         upon notification of issuance,  on any national  securities exchange or
         with  another  organization  on which the Capital  Securities  are then
         listed or quoted, if any;

                  (iv) such merger,  consolidation,  amalgamation,  replacement,
         conveyance,  transfer  or lease does not cause the  Capital  Securities
         (including any Successor Securities) to be downgraded by any nationally
         recognized  statistical rating organization,  if the Capital Securities
         are then rated;

                  (v) such  merger,  consolidation,  amalgamation,  replacement,
         conveyance,  transfer  or lease does not  adversely  affect the rights,
         preferences and privileges of the Holders of the Securities  (including
         any  Successor  Securities)  in any material  respect  (other than with
         respect to any dilution of such  Holders'  interests  in the  Successor
         Entity  as a result  of such  merger,  consolidation,  amalgamation  or
         replacement);

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

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

                           (A)   such   merger,   consolidation,   amalgamation,
                  replacement,  conveyance, transfer or lease does not adversely
                  affect the rights,  preferences  and privileges of the Holders
                  of the Securities  (including any Successor Securities) in any
                  material  respect  (other than with respect to any dilution of
                  the Holders' interests in the Successor Entity);



                                       22
<PAGE>

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

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

                  (viii)  the  Sponsor   guarantees  the   obligations  of  such
         Successor  Entity  under the  Successor  Securities  to the same extent
         provided by the Guarantee, the Debentures and this Declaration; and

                  (ix)  prior  to  such  merger,  consolidation,   amalgamation,
         replacement,  conveyance,  transfer or lease, 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
         of this paragraph (b) to such transaction have been satisfied.

         (c) Notwithstanding  Section 2.15(b),  the Trust shall not, except with
the  consent  of  Holders  of  100% in  liquidation  amount  of the  Securities,
consolidate,  amalgamate,  merge  with or into,  or be  replaced  by, or convey,
transfer or lease its properties and assets as an entirety or  substantially  as
an  entirety  to, any other  Person or permit any other  Person to  consolidate,
amalgamate,   merge  with  or  into,  or  replace  it  if  such   consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease 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  and sole  decision  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 of 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;

         (b) to prepare for filing and request the  Administrators  to cause the
filing by the Trust,  as may be  appropriate,  of an  application  to the PORTAL
system,  for  listing  or  quotation  upon  notice of  issuance  of any  Capital


                                       23
<PAGE>

Securities,  as  requested  by the  Holders  of not  less  than  a  Majority  in
liquidation amount of the Capital Securities; and

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

                                   ARTICLE IV
                           TRUSTEES AND ADMINISTRATORS

         SECTION 4.1. Number of Trustees. The number of Trustees initially shall
be two, and:

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

         (b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holder of a Majority in liquidation amount
of the  Common  Securities  voting as a class at a meeting  of the Holder of the
Common Securities;  provided, however, that there shall be a Delaware Trustee if
required by Section  4.2; and there shall always be one Trustee who shall be the
Institutional Trustee, and such Trustee may also serve as Delaware Trustee if it
meets the  applicable  requirements,  in which case  Section  2.11 shall have no
application to such entity in its capacity as Institutional Trustee.

         SECTION 4.2. Delaware Trustee.  If required by the Statutory Trust Act,
one Trustee (the "Delaware Trustee") shall be:

         (a) a natural person who is a resident of the State of Delaware; or

         (b) if not a natural  person,  an entity which is  organized  under the
laws of the United States or any state thereof or the District of Columbia,  has
its principal  place of business in the State of Delaware,  and otherwise  meets
the  requirements  of applicable law,  including  ss.3807 of the Statutory Trust
Act.

         SECTION 4.3. Institutional Trustee; Eligibility.

         (a)  There  shall  at all  times  be one  Trustee  which  shall  act as
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  national   association
         organized  and doing  business  under the laws of the United  States of
         America  or any  state  thereof  or of the  District  of  Columbia  and
         authorized under such laws to exercise corporate trust powers, having a
         combined  capital and surplus of at least fifty  million  U.S.  dollars
         ($50,000,000),  and subject to  supervision  or examination by federal,
         state  or  District  of  Columbia  authority.  If such  corporation  or
         national association  publishes reports of condition at least annually,


                                       24
<PAGE>

         pursuant to law or to the  requirements of the supervising or examining
         authority  referred to above,  then for the  purposes  of this  Section
         4.3(a)(iii),  the combined  capital and surplus of such  corporation or
         national  association  shall be deemed to be its  combined  capital and
         surplus  as set  forth  in its  most  recent  report  of  condition  so
         published.

         (b) If at any time the Institutional Trustee shall cease to be eligible
to so act under Section  4.3(a),  the  Institutional  Trustee shall  immediately
resign in the manner and with the effect set forth in Section 4.7.

         (c) If the Institutional  Trustee has or shall acquire any "conflicting
interest"  within the  meaning of ss.  310(b) of the Trust  Indenture  Act,  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 Wells  Fargo  Bank,
National Association.

         SECTION 4.4. Certain  Qualifications of the Delaware Trustee Generally.
The Delaware  Trustee shall be a U.S.  Person and either a natural person who is
at least 21 years of age or a legal  entity  that shall act  through one or more
Authorized Officers.

SECTION 4.5.      Administrators.  Each Administrator shall be a U.S. Person.

         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 acting alone.

         SECTION 4.6.  Initial  Delaware  Trustee.  The initial Delaware Trustee
shall be Wells Fargo Delaware Trust Company.

         SECTION 4.7.  Appointment,  Removal and Resignation of the Trustees and
the Administrators.

         (a) No resignation  or removal of any Trustee (the "Relevant  Trustee")
and no appointment of a successor  Trustee pursuant to this Article shall become
effective  until the  acceptance  of  appointment  by the  successor  Trustee in
accordance with the applicable requirements of this Section 4.7.

         (b)  Subject to Section  4.7(a),  a Relevant  Trustee may resign at any
time by giving  written  notice  thereof to the Holders of the Securities and by
appointing  a successor  Relevant  Trustee,  except in the case of the  Delaware
Trustee's  successor  which  shall be  appointed  by Holders  of a  Majority  in
liquidation  amount  of the  Common  Securities.  Upon  the  resignation  of the
Institutional  Trustee,  the Institutional  Trustee shall appoint a successor by
requesting  from at least three  Persons  meeting the  eligibility  requirements
their expenses and charges to serve as the successor  Institutional Trustee on a


                                       25
<PAGE>

form provided by the Administrators,  and selecting the Person who agrees to the
lowest  expense and charges  (the  "Successor  Institutional  Trustee").  If the
instrument  of acceptance by the  successor  Relevant  Trustee  required by this
Section 4.7 shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of  resignation or delivery of the instrument of
removal,  the Relevant  Trustee may petition,  at the expense of the Trust,  any
federal,  state or District of Columbia court of competent  jurisdiction for the
appointment of a successor  Relevant  Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any,  as it may deem  proper,  appoint a Relevant
Trustee. The Institutional  Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.7.

         (c) Unless an Event of Default shall have  occurred and be  continuing,
any Trustee may be removed at any time by an act of the Holders of a Majority in
liquidation amount of the Common Securities. If any Trustee shall be so removed,
the  Holders of the Common  Securities,  by act of the  Holders of a Majority in
liquidation  amount of the Common Securities  delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee,  and such successor Trustee
shall comply with the applicable  requirements  of this Section 4.7. If an Event
of Default shall have occurred and be continuing,  the Institutional  Trustee or
the Delaware Trustee,  or both of them, may be removed by the act of the Holders
of a Majority in liquidation amount of the Capital Securities,  delivered to the
Relevant Trustee (in its individual capacity and on behalf of the Trust). If any
Trustee shall be so removed,  the Holders of Capital  Securities,  by act of the
Holders of a Majority  in  liquidation  amount of the  Capital  Securities  then
outstanding  delivered  to  the  Relevant  Trustee,  shall  promptly  appoint  a
successor Relevant Trustee or Trustees,  and such successor Trustee shall comply
with the applicable  requirements of this Section 4.7. If no successor  Relevant
Trustee shall have been so appointed by the Holders of a Majority in liquidation
amount of the Capital Securities and accepted appointment in the manner required
by this Section 4.7 within 30 days after  delivery of an  instrument of removal,
the Relevant  Trustee or any Holder who has been a Holder of the  Securities for
at least six months may, on behalf of himself and all others similarly situated,
petition  any  federal,  state  or  District  of  Columbia  court  of  competent
jurisdiction for the appointment of a successor Relevant Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a successor Relevant Trustee or Trustees.

         (d) The Institutional Trustee shall give notice of each resignation and
each  removal of a Trustee and each  appointment  of a successor  Trustee to all
Holders and to the Sponsor.  Each notice shall include the name of the successor
Relevant  Trustee and the  address of its  Corporate  Trust  Office if it is the
Institutional Trustee.

         (e)  Notwithstanding  the  foregoing  or any  other  provision  of this
Declaration,  in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become  incompetent  or  incapacitated,  the vacancy
created  by  such  death,  incompetence  or  incapacity  may  be  filled  by the
Institutional   Trustee  (provided  the  Institutional   Trustee  satisfies  the
requirements  of a Delaware  Trustee as set forth in Section 4.2)  following the
procedures in this Section 4.7 (with the successor  being a Person who satisfies
the  eligibility   requirement  for  a  Delaware   Trustee  set  forth  in  this
Declaration) (the "Successor Delaware Trustee").



                                       26
<PAGE>

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

         (g) No  Institutional  Trustee or Delaware  Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.

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

                  (i) Any successor  Delaware Trustee shall file an amendment to
         the  Certificate  of Trust with the  Secretary of State of the State of
         Delaware  identifying  the name and principal place of business of such
         Delaware Trustee in the State of Delaware.

         SECTION 4.8.  Vacancies  Among  Trustees.  If a Trustee  ceases to hold
office for any reason and the number of  Trustees  is not  reduced  pursuant  to
Section 4.1, or if the number of Trustees is increased  pursuant to Section 4.1,
a vacancy shall occur. A resolution  certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive  evidence of the  existence  of such  vacancy.  The vacancy  shall be
filled with a Trustee appointed in accordance with Section 4.7.

         SECTION 4.9. Effect of Vacancies. The death,  resignation,  retirement,
removal,  bankruptcy,  dissolution,  liquidation,  incompetence or incapacity to
perform the duties of a Trustee  shall not  operate to  dissolve,  terminate  or
annul the Trust or terminate this Declaration.  Whenever a vacancy in the number
of Trustees  shall occur,  until such vacancy is filled by the  appointment of a
Trustee in accordance with Section 4.7, the Institutional Trustee shall have all
the powers  granted to the Trustees and shall  discharge all the duties  imposed
upon the Trustees by this Declaration.



                                       27
<PAGE>

         SECTION 4.10. Meetings of the Trustees and the Administrators. Meetings
of the Trustees or the  Administrators  shall be held from time to time upon the
call of any Trustee or  Administrator,  as applicable.  Regular  meetings of the
Trustees and the  Administrators,  respectively,  may be in person in the United
States or by telephone,  at a place (if applicable) and time fixed by resolution
of the Trustees or the  Administrators,  as applicable.  Notice of any in-person
meetings  of the  Trustees  or the  Administrators  shall be hand  delivered  or
otherwise  delivered in writing  (including  by  facsimile,  with a hard copy by
overnight  courier)  not less than 48 hours before such  meeting.  Notice of any
telephonic  meetings of the  Trustees  or the  Administrators  or any  committee
thereof shall be hand delivered or otherwise  delivered in writing (including by
facsimile,  with a hard copy by overnight courier) not less than 24 hours before
a  meeting.  Notices  shall  contain a brief  statement  of the time,  place and
anticipated  purposes  of the  meeting.  The  presence  (whether in person or by
telephone)  of a Trustee or an  Administrator,  as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or an
Administrator,  as the case may be, attends a meeting for the express purpose of
objecting to the  transaction of any activity on the ground that the meeting has
not  been  lawfully  called  or  convened.  Unless  provided  otherwise  in this
Declaration,  any action of the Trustees or the Administrators,  as the case may
be,  may be taken at a meeting  by vote of a  majority  of the  Trustees  or the
Administrators  present (whether in person or by telephone) and eligible to vote
with respect to such matter;  provided, that, in the case of the Administrators,
a Quorum is present,  or without a meeting by the unanimous  written  consent of
the Trustees or the Administrators, as the case may be. Meetings of the Trustees
and the Administrators together shall be held from time to time upon the call of
any Trustee or Administrator.

         SECTION 4.11. Delegation of Power.

         (a) Any Trustee or any Administrator, as the case may be, 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,  instruments or other writings  contemplated in Section
2.6.

         (b) The Trustees shall have power to delegate from time to time to such
of their number or to any officer of the Trust that is a U.S. Person,  the doing
of such things and the execution of such instruments or other writings either in
the name of the Trust or the names of the  Trustees or otherwise as the Trustees
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  4.12.  Merger,  Conversion,  Consolidation  or  Succession  to
Business.  Any Person  into  which the  Institutional  Trustee  or the  Delaware
Trustee,  as the case maybe, may be merged or converted or with which either may
be  consolidated,  or any  Person  resulting  from  any  merger,  conversion  or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person  succeeding to all or substantially
all the corporate  trust business of the  Institutional  Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided  such Person  shall be  otherwise  qualified  and  eligible  under this


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<PAGE>

Article and, provided,  further, that such Person shall file an amendment to the
Certificate  of Trust with the  Secretary  of State of the State of  Delaware as
contemplated in Section 4.7(i).

                                   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  (including
any Additional Interest or Deferred Interest) and/or principal on the Debentures
held by the  Institutional  Trustee  (the  amount  of any such  payment  being a
"Payment  Amount"),  the  Institutional  Trustee  shall and is directed,  to the
extent funds are available in the Property  Account for that purpose,  to make a
distribution  (a  "Distribution")  of the  Payment  Amount to  Holders.  For the
avoidance of doubt,  funds in the Property  Account shall not be  distributed to
Holders  to the  extent  of any  taxes  payable  by the  Trust,  in the  case of
withholding  taxes,  as  determined by the  Institutional  Trustee or any Paying
Agent and, in the case of taxes other than  withholding tax taxes, as determined
by the Administrators in a written notice to the Institutional Trustee.

                                   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,  evidenced by a  certificate  substantially  in the form of
Exhibit A-1,  representing  undivided  beneficial interests in the assets of the
Trust  and  having  such  terms  as are  set  forth  in  Annex  I (the  "Capital
Securities"),  and one series of common  securities,  evidenced by a certificate
substantially  in the form of Exhibit  A-2,  representing  undivided  beneficial
interests  in the assets of the Trust and having  such terms as are set forth in
Annex I (the "Common Securities").  The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital  Securities  and the
Common  Securities.  The Capital  Securities rank pari passu 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.

         (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. Any Certificate may be signed on behalf
of the  Trust by such  person  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


                                       29
<PAGE>

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 and shall be valid upon execution by one or more Administrators.

         (c) The  Capital  Securities  issued  pursuant  to  Regulations  of the
Securities  Act or to  QIBs  shall  be,  except  as  provided  in  Section  6.4,
Book-Entry  Capital  Securities issued in the form of one or more Global Capital
Securities  registered  in the  name  of the  Depositary,  or  its  nominee  and
deposited  with the  Depositary or a custodian for the  Depositary for credit by
the Depositary to the respective accounts of the Depositary Participants thereof
(or such other accounts as they may direct).

         (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
non-assessable,  and each  Holder  thereof  shall be  entitled  to the  benefits
provided by this Declaration.

         (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,  Calculation  Agent and
Registrar.

         (a) The Trust shall  maintain  in  Wilmington,  Delaware,  an office or
agency where the Securities  may be presented for payment (the "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 and 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, 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 or co-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 at its Corporate Trust Office.
The Institutional  Trustee or any of its Affiliates in the United States may act
as Paying Agent, Transfer Agent or Registrar.

         (b) The Trust  shall also  appoint a  Calculation  Agent,  which  shall
determine the Coupon Rate in accordance  with the terms of the  Securities.  The
Trust initially appoints the Institutional Trustee as Calculation Agent.



                                       30
<PAGE>

         SECTION 6.3. Form and Dating.

         (a) The Capital Securities and the Institutional  Trustee's certificate
of authentication thereon shall be substantially in the form of Exhibit A-1, and
the Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby  incorporated in and expressly made a part of this  Declaration.
Certificates may be typed, printed,  lithographed or engraved or may be produced
in any other  manner  as is  reasonably  acceptable  to the  Administrators,  as
conclusively  evidenced by their execution  thereof.  The  Certificates 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 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


                                       31
<PAGE>

A-2 are part of the terms of this Declaration and to the extent applicable,  the
Institutional Trustee, the Delaware Trustee, the Administrators and the Sponsor,
by their  execution and delivery of this  Declaration,  expressly  agree to such
terms and provisions and to be bound thereby.  Capital Securities will be issued
only in blocks having a stated liquidation amount of not less than $100,000.

         (b) The Capital  Securities sold by the Trust to the Initial Purchasers
pursuant  to the  Purchase  Agreement  shall be  issued  in the form of a Global
Capital Security, registered in the name of the Depositary,  without coupons and
with the Restricted Securities Legend.

         SECTION 6.4. Book -Entry Capital Securities.

         (a) A Global  Capital  Security may be exchanged,  in whole or in part,
for Definitive Capital Securities Certificates registered in the names of Owners
only if such exchange complies with Article VIII and (i) the Depositary  advises
the Administrators and the Institutional  Trustee in writing that the Depositary
is no longer  willing or able  properly to discharge its  responsibilities  with
respect to the Global Capital Security,  and no qualified successor is appointed
by the  Administrators  within ninety (90) days of receipt of such notice,  (ii)
the Depositary  ceases to be a clearing agency registered under the Exchange Act
and the Administrators  fail to appoint a qualified successor within ninety (90)
days of obtaining  knowledge of such event,  (iii) the  Administrators  at their
option  advise the  Institutional  Trustee in writing  that the Trust  elects to
terminate  the  book-entry  system  through the  Depositary or (iv) an Indenture
Event of Default has  occurred and is  continuing.  Upon the  occurrence  of any
event  specified in clause (i), (ii),  (iii) or (iv) above,  the  Administrators
shall notify the  Depositary and instruct the Depositary to notify all Owners of
Book-Entry Capital Securities and the Institutional Trustee of the occurrence of
such event and of the availability of Definitive Capital Securities Certificates
to Owners of the Capital  Securities  requesting the same.  Upon the issuance of
Definitive   Capital  Securities   Certificates,   the  Administrators  and  the
Institutional  Trustee  shall  recognize the Holders of the  Definitive  Capital
Securities  Certificates as Holders.  Notwithstanding the foregoing, if an Owner
of a  beneficial  interest in a Global  Capital  Security  wishes at any time to
transfer an interest in such Global  Capital  Security to a Person  other than a
QIB,  such  transfer  shall be effected,  subject to the  Applicable  Depository
Procedures,  in accordance  with the  provisions of this Section 6.4 and Article
VIII,  and  the  transferee  shall  receive  a  Definitive   Capital  Securities
Certificate in connection with such transfer.  A holder of a Definitive  Capital
Securities  Certificate  that is a QIB may upon request,  and in accordance with
the  provisions of this Section 6.4 and Article VIII,  exchange such  Definitive
Capital  Securities  Certificate  for a beneficial  interest in a Global Capital
Security.

         (b) If any Global  Capital  Security is to be exchanged for  Definitive
Capital  Securities  Certificates  or  canceled  in part,  or if any  Definitive
Capital  Securities  Certificate  is to be exchanged in whole or in part for any
Global Capital  Security,  then either (i) such Global Capital Security shall be
so surrendered  for exchange or cancellation as provided in this Section 6.4 and
Article VIII or (ii) the aggregate liquidation amount represented by such Global
Capital  Security  shall be reduced,  subject to Section 6.3, or increased by an
amount equal to the liquidation amount represented by that portion of the Global
Capital  Security to be so exchanged or  canceled,  or equal to the  liquidation
amount represented by such Definitive  Capital Securities  Certificates to be so
exchanged for any Global  Capital  Security,  as the case may be, by means of an
appropriate  adjustment  made  on  the  records  of  the  Securities  Registrar,
whereupon  the  Institutional   Trustee,   in  accordance  with  the  Applicable
Depositary   Procedures,   shall  instruct  the  Depositary  or  its  authorized
representative to make a corresponding  adjustment to its records. Upon any such
surrender to the  Administrators or the Registrar of any Global Capital Security
or Securities by the Depositary,  accompanied by registration instructions,  the
Administrators,  or any  one of  them,  shall  execute  the  Definitive  Capital
Securities  Certificates in accordance with the  instructions of the Depositary.
None of the Registrar,  Administrators,  or the  Institutional  Trustee shall be
liable for any delay in delivery of such  instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.

         (c)  Every  Definitive  Capital  Securities  Certificate  executed  and
delivered upon  registration or transfer of, or in exchange for or in lieu of, a
Global Capital  Security or any portion  thereof shall be executed and delivered
in the form of, and shall be, a Global Capital Security,  unless such Definitive
Capital Securities  Certificate is registered in the name of a Person other than
the Depositary for such Global Capital Security or a nominee thereof.

         (d) The  Depositary  or its nominee,  as  registered  owner of a Global
Capital  Security,  shall be the Holder of such Global Capital  Security for all
purposes under this Declaration and the Global Capital Security, and Owners with
respect to a Global Capital  Security shall hold such interests  pursuant to the
Applicable  Depositary  Procedures.  The Registrar,  the  Administrators and the
Institutional  Trustee  shall be  entitled to deal with the  Depositary  for all
purposes  of  this  Declaration   relating  to  the  Global  Capital  Securities
(including the payment of the  liquidation  amount of and  Distributions  on the
Book-Entry Capital Securities represented thereby and the giving of instructions
or directions by Owners of Book-Entry Capital Securities represented thereby and
the giving of notices) as the sole Holder of the Book-Entry  Capital  Securities
represented thereby and shall have no obligations to the Owners thereof. None of
the Administrators,  the Institutional  Trustee nor the Registrar shall have any
liability in respect of any transfers effected by the Depositary.

         (e) The rights of the Owners of the Book-Entry Capital Securities shall
be  exercised  only  through  the  Depositary  and  shall  be  limited  to those
established by law, the Applicable  Depositary Procedures and agreements between
such Owners and the  Depositary  and/or the Depositary  Participants;  provided,


                                       32
<PAGE>

solely for the  purpose of  determining  whether  the  Holders of the  requisite
amount of  Capital  Securities  have voted on any  matter  provided  for in this
Declaration,  to the extent that Capital  Securities are represented by a Global
Capital  Security,   the  Administrators  and  the  Institutional   Trustee  may
conclusively  rely on, and shall be fully  protected  in relying on, any written
instrument  (including a proxy)  delivered to the  Institutional  Trustee by the
Depositary setting forth the Owners' votes or assigning the right to vote on any
matter  to any other  Persons  either in whole or in part.  To the  extent  that
Capital  Securities are  represented by a Global Capital  Security,  the initial
Depositary will make book-entry transfers among the Depositary  Participants and
receive and transmit payments on the Capital  Securities that are represented by
a Global  Capital  Security  to such  Depositary  Participants,  and none of the
Sponsor,  the  Administrators  or  the  Institutional  Trustee  shall  have  any
responsibility or obligation with respect thereto.

         (f) To the extent that a notice or other  communication  to the Holders
is  required  under  this  Declaration,  for so long as Capital  Securities  are
represented  by  a  Global  Capital   Security,   the   Administrator   and  the
Institutional  Trustee  shall give all such  notices and  communications  to the
Depositary, and shall have no obligations to the Owners.

         SECTION 6.5. 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 bona fide 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  6.5, 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 6.6.  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 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 6.7.  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


                                       33
<PAGE>

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

         SECTION 6.8. 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
2.6(g)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, and the
issuance of the Securities shall not be subject to,  preemptive or other similar
rights and when issued and delivered to Holders  against payment of the purchase
price  therefor,  the  Securities  will be fully paid and  nonassessable  by the
Trust.

         (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 not less  than 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.

         (c) 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 not less
than 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  Sponsor  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  Deferred  Interest  on  all of the
                  Debentures;

                           (C) all payments on any  Debentures  that have become
                  due otherwise  than by such  declaration of  acceleration  and
                  interest  and Deferred  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,
                  documented   expenses,   disbursements  and  advances  of  the
                  Debenture Trustee and the Institutional  Trustee, their agents
                  and counsel; and



                                       34
<PAGE>

                  (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 5.07 of the Indenture.

         (d) The  Holders of not less than 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,  except a default or
Event of Default in the payment of principal or interest (unless such default or
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 or Event of Default in
respect of a covenant or provision  that under the Indenture  cannot be modified
or amended without the consent of the holder of each outstanding  Debenture.  No
such  rescission  shall  affect  any  subsequent  default  or  impair  any right
consequent thereon.

         (e)  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 6.8.

         (f) Except as  otherwise  provided in this  Section 6.8, the Holders of
not less than 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



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<PAGE>

                  (i)  unless  earlier  dissolved,  on  January  30,  2039,  the
         expiration of the term of the Trust;

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

                  (iii) (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) the  filing  of a
         certificate  of  dissolution  or its  equivalent  with  respect  to the
         Sponsor 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) the  distribution of the Debentures to the Holders of the
         Securities,  upon  exercise  of the right of the  Holders of all of the
         outstanding  Common  Securities  to  dissolve  the Trust as provided in
         Annex I hereto;

                  (v) the  entry  of a decree  of  judicial  dissolution  of any
         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 all of the Trustees 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  Section 3808 of the Statutory
Trust  Act,  and  subject  to the terms set forth in Annex I, the  Institutional
Trustee shall terminate the Trust by filing a certificate of  cancellation  with
the Secretary of State of the State of Delaware.

         (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.  Subject to Section 6.4 and Section 8.1(c), where
Capital  Securities  are presented to the 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 transfers and exchanges,  the Trust shall issue and the
Institutional  Trustee shall authenticate  Capital Securities at the Registrar's
request.

         (a) 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


                                       36
<PAGE>

successor of the Sponsor under the Indenture  that is a U.S.  Person may succeed
to the Sponsor's ownership of the Common Securities.

         (b) 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  Capital  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.

         (c) 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  to be  issued  in the name of the  designated
transferee or transferees. Any Security 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 Security  surrendered upon such registration of transfer or exchange.  Every
Security  surrendered  for  registration  of transfer  shall be accompanied by a
written  instrument  of  transfer in form  satisfactory  to the  Registrar  duly
executed by the Holder or such  Holder's  attorney  duly  authorized in writing.
Each Security  surrendered for registration of transfer shall be canceled by the
Institutional  Trustee pursuant to Section 6.7. 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.

         (d) Neither the Trust nor the Registrar shall 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
(as defined below),  which shall not be removed unless there is delivered to the
Trust  such  satisfactory  evidence,  which may  include  an  opinion of counsel
reasonably  acceptable  to the  Institutional  Trustee,  as  may  be  reasonably
required by the Trust,  that neither the legend nor the restrictions on transfer
set forth therein are required to ensure that transfers  thereof comply with the
provisions of the  Securities Act or that such  Securities are not  "restricted"
within the meaning of Rule 144 under 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 Restricted Securities Legend.



                                       37
<PAGE>

         (b) When  Capital  Securities  are  presented to the  Registrar  (x) to
register  the  transfer of such  Capital  Securities,  or (y) to  exchange  such
Capital  Securities  for an equal number of Capital  Securities  represented  by
different  Certificates,  the Registrar  shall register the transfer or make the
exchange as requested if its reasonable  requirements  for such  transaction are
met; provided, however, that the Capital Securities surrendered for registration
of transfer  or exchange  shall be duly  endorsed  or  accompanied  by a written
instrument  of transfer  in form  reasonably  satisfactory  to the Trust and the
Registrar,  duly executed by the Holder thereof or his attorney duly  authorized
in writing.

         (c) Except as permitted by Section 8.2(a),  each Capital Security shall
bear  a  legend  (the  "Restricted  Securities  Legend")  in  substantially  the
following form:

         [If the  Capital  Security  is to be  Global  Capital  Security  - THIS
CAPITAL  SECURITY IS A GLOBAL  SECURITY  WITHIN THE  MEANING OF THE  DECLARATION
HEREINAFTER  REFERRED TO AND IS REGISTERED IN THE NAME OF THE  DEPOSITORY  TRUST
COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL  SECURITY IS EXCHANGEABLE  FOR
CAPITAL  SECURITIES  REGISTERED  IN THE NAME OF A PERSON  OTHER  THAN DTC OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES  DESCRIBED IN THE DECLARATION,  AND NO
TRANSFER  OF THIS  CAPITAL  SECURITY  (OTHER  THAN A  TRANSFER  OF THIS  CAPITAL
SECURITY  AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR
ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

         UNLESS  THIS   CAPITAL   SECURITY  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE  OF DTC TO FSBS Capital Trust I OR ITS AGENT FOR  REGISTRATION OF
TRANSFER,  EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC),
ANY  TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY
PERSON IS  WRONGFUL  INASMUCH  AS THE  REGISTERED  OWNER  HEREOF HAS AN INTEREST
HEREIN.]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY STATE  SECURITIES LAWS OR ANY OTHER
APPLICABLE   SECURITIES  LAWS.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT.  THE  HOLDER  OF  THIS  SECURITY  BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE  DEBENTURE  ISSUER OR THE TRUST,  (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"),  TO A PERSON THE HOLDER  REASONABLY  BELIEVES IS A
"QUALIFIED  INSTITUTIONAL  BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE


                                       38
<PAGE>

IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,  (C) PURSUANT
TO AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT TO AN
"ACCREDITED  INVESTOR"  WITHIN THE MEANING OF SUBPARAGRAPH  (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE  SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT,  OR FOR THE ACCOUNT OF AN  "ACCREDITED  INVESTOR,"  FOR  INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN  CONNECTION  WITH,  ANY
DISTRIBUTION  IN  VIOLATION  OF THE  SECURITIES  ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE  EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER  PURSUANT  TO CLAUSES (C) OR (D) TO REQUIRE THE  DELIVERY OF AN
OPINION OF COUNSEL,  CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE DEBENTURE  ISSUER OR THE TRUST.  THE HOLDER OF
THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.

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

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


                                       39
<PAGE>

406 OF  ERISA OR  SECTION  4975 OF THE CODE  FOR  WHICH  THERE IS NO  APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

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

         (d) Capital  Securities  may only be  transferred  in minimum blocks of
$100,000 aggregate  liquidation amount (100 Capital Securities) and multiples of
$1,000 in excess  thereof.  Any  attempted  transfer of Capital  Securities in a
block  having an aggregate  liquidation  amount of less than  $100,000  shall be
deemed  to be  void  and of no  legal  effect  whatsoever.  Any  such  purported
transferee shall be deemed not to be a Holder of such Capital Securities for any
purpose,  including,  but not limited to, the receipt of  Distributions  on such
Capital  Securities,  and such purported  transferee  shall be deemed to have no
interest whatsoever in such Capital Securities.

         (e) Each party hereto  understands  and hereby  agrees that the Initial
Purchaser is intended  solely to be an interim holder of the Capital  Securities
and is purchasing such securities to facilitate consummation of the transactions
contemplated herein and in the documents  ancillary hereto.  Notwithstanding any
provision in this Declaration to the contrary,  the Initial Purchaser shall have
the right upon notice (a "Transfer Notice") to the Institutional Trustee and the
Sponsor to transfer title in and to the Capital Securities, provided the Initial
Purchaser  shall take  reasonable  steps to ensure that such  transfer is exempt
from  registration  under the  Securities  Act of 1933,  as  amended,  and rules
promulgated  thereunder.  Any Transfer  Notice  delivered  to the  Institutional
Trustee and Sponsor  pursuant  to the  preceding  sentence  shall  indicate  the
aggregate  liquidation amount of Capital Securities being transferred,  the name
and address of the transferee  thereof (the  "Transferee")  and the date of such
transfer. Notwithstanding any provision in this Declaration to the contrary, the
transfer by the  Initial  Purchaser  of title in and to the  Capital  Securities
pursuant to a Transfer Notice shall not be subject to any  requirement  relating
to  Opinions  of  Counsel,  Certificates  of  Transfer  or any other  Opinion or
Certificate   applicable   to  transfers   hereunder  and  relating  to  Capital
Securities.

         SECTION 8.3. Deemed Security  Holders.  The Trust, the  Administrators,
the Trustees,  the Paying Agent,  the Transfer  Agent or the Registrar may treat


                                       40
<PAGE>

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

                                   ARTICLE IX
                       LIMITATION OF LIABILITY OF HOLDERS
                        OF SECURITIES, TRUSTEES 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; and

                  (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) Except to the extent  provided in Section  9.1(b),  and pursuant to
ss. 3803(a) of the Statutory  Trust Act, the Holders of the Securities  shall be
entitled to the same limitation of personal  liability  extended to stockholders
of private  corporations for profit organized under the General  Corporation Law
of the State of Delaware, except as otherwise specifically set forth herein.

         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 (other than an Administrator) shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's negligence
or willful  misconduct with respect to such acts or omissions and except that an
Administrator  shall be liable for any such loss,  damage or claim  incurred  by
reason of such  Administrator's  gross  negligence  or willful  misconduct  with
respect to such acts or omissions.



                                       41
<PAGE>

         (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 (other than the
duties imposed on the Institutional  Trustee under the Trust Indenture Act), 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) (i) The Sponsor shall indemnify, to
the fullest  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) by reason
of the fact that such Person is or was an Indemnified  Person  against  expenses
(including attorneys' fees and expenses),  judgments,  fines and amounts paid in
settlement  actually and reasonably  incurred by such Person in connection  with
such  action,  suit or  proceeding  if such Person  acted in good faith and in a
manner  such  Person  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 such 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 such Person reasonably believed to be in or not opposed to the best


                                       42
<PAGE>

interests of the Trust,  and, with respect to any criminal action or proceeding,
had reasonable cause to believe that such conduct was unlawful.

                  (ii)  The  Sponsor  shall  indemnify,  to the  fullest  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  by  reason  of  the  fact  that  such  Person  is or was an
         Indemnified  Person against  expenses  (including  attorneys'  fees and
         expenses) actually and reasonably incurred by such Person in connection
         with the  defense or  settlement  of such action or suit if such Person
         acted in good faith and in a manner such Person reasonably  believed to
         be in or not opposed to the best interests of the Trust and except 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 of
         Chancery  of  Delaware  or 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 of Chancery or such other court shall deem proper.

                  (iii)  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  (i) and (ii) of this Section  9.4(a),  or in defense of any
         claim,  issue or matter therein,  such Person shall be indemnified,  to
         the  fullest  extent  permitted  by law,  against  expenses  (including
         attorneys' fees and expenses) actually and reasonably  incurred by such
         Person in connection therewith.

                  (iv) Any  indemnification of an Administrator under paragraphs
         (i) and (ii) of this Section 9.4(a)  (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  such  Person  has  met  the  applicable
         standard  of  conduct  set  forth  in  paragraphs  (i) and  (ii).  Such
         determination  shall be made (A) by the  Administrators  by a  majority
         vote of a Quorum consisting of such Administrators who were not parties
         to  such  action,  suit or  proceeding,  (B) 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 (C) by the Common Security Holder of the Trust.

                  (v)  To  the  fullest  extent   permitted  by  law,   expenses
         (including  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  (i) and (ii) of
         this  Section  9.4(a)  shall be paid by the  Sponsor  in advance of the
         final disposition of such action, suit or proceeding upon receipt of an


                                       43
<PAGE>

         undertaking  by or on behalf of such  Indemnified  Person to repay such
         amount if it shall  ultimately  be  determined  that such Person is not
         entitled to be indemnified by the Sponsor as authorized in this Section
         9.4(a).  Notwithstanding the foregoing, no advance shall be made by the
         Sponsor if a  determination  is reasonably and promptly made (1) in the
         case of a Company  Indemnified  Person (A) by the  Administrators  by a
         majority vote of a Quorum of disinterested Administrators,  (B) 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 (C) 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 Person
         either  believed  to be opposed to or 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  such conduct was  unlawful,  or (2) in the case of a Fiduciary
         Indemnified  Person,  by independent legal counsel in a written opinion
         that,  based  upon the  facts  known to the  counsel  at the time  such
         determination is made, such Indemnified Person acted in bad faith or in
         a manner that such Indemnified  Person either believed to be opposed to
         or 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 such conduct was unlawful.
         In no event  shall any  advance  be made (i) to a  Company  Indemnified
         Person in instances where the Administrators, independent legal counsel
         or the Common  Security  Holder  reasonably  determine that such Person
         deliberately  breached such Person's duty to the Trust or its Common or
         Capital Security Holders or (ii) to a Fiduciary  Indemnified  Person in
         instances  where  independent  legal  counsel  promptly and  reasonably
         determines in a written opinion that such Person deliberately  breached
         such  Person's  duty to the  Trust or its  Common or  Capital  Security
         Holders.

         (b) The Sponsor shall  indemnify,  to the fullest  extent  permitted by
applicable  law,  each  Indemnified  Person  from and  against any and all loss,
damage, liability, tax (other than taxes based on the income of such Indemnified
Person),  penalty, expense or claim of any kind or nature whatsoever incurred by
such Indemnified Person arising out of or in connection with or by reason of the
creation,  administration or termination of the Trust, or any act or omission of
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 authority
conferred  on such  Indemnified  Person  by  this  Declaration,  except  that no
Indemnified  Person shall be entitled to be  indemnified in respect of any loss,
damage,  liability,  tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence or willful  misconduct  with respect to such acts
or omissions.

         (c) 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


                                       44
<PAGE>

stockholders  or  disinterested  directors  of the  Sponsor or Capital  Security
Holders of the Trust or otherwise,  both as to action in such Person's  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.

         (d) 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 such Person and incurred by such Person in any such  capacity,
or arising out of such Person's status as such, whether or not the Sponsor would
have the  power to  indemnify  such  Person  against  such  liability  under the
provisions of this Section 9.4.

         (e) 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 such Person would have
with respect to such constituent entity if its separate existence had continued.

         (f) The  indemnification  and  advancement of expenses  provided by, or
granted  pursuant to, this Section 9.4 shall,  unless  otherwise  provided  when
authorized  or  ratified,  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.

         (g) The provisions of this Section 9.4 shall survive the termination of
this  Declaration  or the earlier  resignation  or removal of the  Institutional
Trustee. The obligations of the Sponsor under this Section 9.4 to compensate and
indemnify  the  Trustees and to pay or  reimburse  the  Trustees  for  expenses,
disbursements and advances shall constitute additional  indebtedness  hereunder.
Such  additional  indebtedness  shall be  secured by a lien prior to that of the
Securities  upon all  property  and funds held or  collected  by the Trustees as
such,  except  funds held in trust for the benefit of the holders of  particular
Capital  Securities,  provided,  that the  Sponsor  is the  holder of the Common
Securities.

         SECTION 9.5. Outside Businesses.  Any Covered Person, the Sponsor,  the
Delaware Trustee and the  Institutional  Trustee (subject to Section 4.3(c)) may
engage in or possess an  interest  in other  business  ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust,  and the Trust and the Holders of Securities  shall have no rights
by virtue of this Declaration in and to such independent  ventures or the income
or profits  derived  therefrom,  and the  pursuit of any such  venture,  even if
competitive  with the  business  of the Trust,  shall not be deemed  wrongful or
improper.  None of any Covered Person, the Sponsor,  the Delaware Trustee or the
Institutional Trustee shall be obligated to present any particular investment or
other  opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust,  could be taken by the Trust, and any Covered Person,
the Sponsor,  the Delaware Trustee and the Institutional  Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment or other opportunity.  Any
Covered Person, the Delaware Trustee and the Institutional Trustee may engage or
be  interested  in any  financial or other  transaction  with the Sponsor or any


                                       45
<PAGE>

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.

         (a) Subject to the  provisions  set forth in the Fee Agreement  between
the  Institutional  Trustee and the Sponsor of even date  herewith,  the Sponsor
agrees:

                  (i) to pay to the Trustees from time to time such compensation
         for all services  rendered by them hereunder as the parties shall agree
         in writing 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

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

         (b) 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 any Trustee.

                                   ARTICLE X
                                   ACCOUNTING

         SECTION 10.1.  Fiscal Year.  The fiscal year (the "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 ss.  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 on the accrual  method of  accounting,  in accordance  with generally
accepted accounting principles, consistently applied.

         (b) The  Administrators  shall either (i) cause each Form 10-K and Form
10-Q prepared by the Sponsor and filed with the  Commission  in accordance  with
the Exchange Act to be  delivered to each Holder of  Securities,  within 90 days
after the  filing of each Form 10-K and  within 30 days after the filing of each
Form 10-Q or (ii) cause to be prepared at the  principal  office of the Trust in
the  United  States,  as  defined  for  purposes  of  Treasury  Regulations  ss.
301.7701-7,  and delivered to each of the Holders of Securities,  within 90 days
after the end of each Fiscal Year of the Trust,  annual financial  statements of
the Trust,  including a balance  sheet of the Trust as of the end of such Fiscal
Year, and the related statements of income or loss.



                                       46
<PAGE>

         (c) 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.

         (d) The  Administrators  shall cause to be duly  prepared in the United
States,  as defined for purposes of Treasury  Regulations  ss.  301.7701-7,  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.

         (e) The Administrators  will cause the Sponsor's reports on Form FRY-9C
and FRY-9LP to be delivered to the Holder  promptly  following their filing with
the Federal Reserve.

         SECTION  10.3.  Banking.  The  Trust  shall  maintain  one or more bank
accounts in the United States,  as defined for purposes of Treasury  Regulations
ss.  301.7701-7,  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 to the Holder
in the amount of the withholding.  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.



                                       47
<PAGE>

         (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:

                  (i) the Institutional Trustee,

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

                  (iii) if the  amendment  affects the rights,  powers,  duties,
         obligations or immunities of the  Administrators,  the  Administrators,
         and

                  (iv) the  Holders of a Majority in  liquidation  amount of the
         Common Securities.

         (b)  Notwithstanding  any  other  provision  of  this  Article  XI,  no
amendment  shall be made,  and any such  purported  amendment  shall be void and
ineffective:

                  (i) unless 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 that all conditions  precedent to
                  the  execution  and  delivery  of  such  amendment  have  been
                  satisfied; or

                  (ii) if the result of such amendment would be to

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

                           (B) reduce or otherwise  adversely  affect the powers
                  of the  Institutional  Trustee in  contravention  of the Trust
                  Indenture Act;

                           (C) cause the Trust to be deemed to be an  Investment
                  Company required to be registered under the Investment Company
                  Act; or

                           (D) cause the Debenture  Issuer to be unable to treat
                  an  amount  equal to the  Liquidation  Amount  of the  Capital
                  Securities  as "Tier 1 Capital"  for  purposes  of the capital
                  adequacy  guidelines  or policies  of (x) the Federal  Reserve
                  (or, if the  Debenture  Issuer is not a bank holding  company,
                  such guidelines or policies applied to the Debenture Issuer as
                  if the  Debenture  Issuer were subject to such  guidelines  of


                                       48
<PAGE>

                  policies)  or of (y) any  other  regulatory  authority  having
                  jurisdiction over the Debenture Issuer.

         (c) Except as provided  in Section  11.1(d),  (e) or (g), 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 (ii) restrict
the right of a Holder to institute suit for the  enforcement of any such payment
on or after such date.

         (e)  Section  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) The rights of the  Holders  of the  Capital  Securities  and Common
Securities,  as applicable,  under Article IV to increase or decrease the number
of, and appoint and remove, Trustees shall not be amended without the consent of
the Holders of a Majority in  liquidation  amount of the Capital  Securities  or
Common Securities, as applicable.

         (g) Subject to Section 11.1(a)(ii),  this Declaration may be amended by
the Institutional  Trustee and the Holder 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 or desirable, including,
         without  limitation,  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
         under the  Investment  Company Act  (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 right,  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 the  powers,
preferences or rights of Holders of Capital Securities.



                                       49
<PAGE>

         SECTION  11.2.  Meetings  of the Holders of the  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  Holders of such class of  Securities
are  entitled  to act  under  the  terms of this  Declaration,  the terms of the
Securities  or the rules of any stock  exchange on which the Capital  Securities
are listed or admitted for  trading,  if any.  The  Administrators  shall call a
meeting of the  Holders of such class if directed to do so by the Holders of not
less than 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  or the rules of any
         stock  exchange on which the Capital  Securities are listed or admitted
         for trading,  if any, 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  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  Delaware   relating  to  proxies,   and  judicial   interpretations
         thereunder, as if the Trust were a Delaware corporation and the Holders


                                       50
<PAGE>

         of the Securities  were  stockholders of a Delaware  corporation;  each
         meeting of the  Holders of the  Securities  shall be  conducted  by the
         Administrators  or by such other  Person  that the  Administrators  may
         designate; and

                  (iii) unless the Statutory  Trust Act, this  Declaration,  the
         terms of the  Securities,  the Trust Indenture Act or the listing rules
         of any stock  exchange on which the Capital  Securities are then listed
         for trading, if any, 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 Regulationsss.301.7701-7).

                                  ARTICLE XII
                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
                              AND DELAWARE TRUSTEE

         SECTION 12.1.  Representations and Warranties of Institutional Trustee.
The Trustee that acts as 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 banking  corporation  or  national
association  with trust powers,  duly  organized,  validly  existing and in good
standing  under  the laws of the  State of  Delaware  or the  United  States  of
America,  respectively,  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 Institutional  Trustee has a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000);

         (c) the Institutional  Trustee is not an affiliate of the Sponsor,  nor
does the Institutional  Trustee offer or provide credit or credit enhancement to
the Trust;

         (d)  the  execution,  delivery  and  performance  by the  Institutional
Trustee of this  Declaration has been duly authorized by all necessary action on
the part of the Institutional  Trustee.  This Declaration has been duly executed
and delivered by the  Institutional  Trustee,  and under Delaware law (excluding
any securities laws)  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 and the  discretion  of the court  (regardless  of whether
considered in a proceeding in equity or at law);



                                       51
<PAGE>

         (e) 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

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

         SECTION 12.2.  Representations and Warranties of Delaware Trustee.  The
Trustee that acts as initial  Delaware  Trustee  represents  and warrants to the
Trust and to the  Sponsor at the date of this  Declaration,  and each  Successor
Delaware  Trustee  represents  and  warrants to the Trust and the Sponsor at the
time of the  Successor  Delaware  Trustee's  acceptance  of its  appointment  as
Delaware Trustee that:

         (a) if it is not a natural person, the Delaware has its principal place
of business in the State of Delaware;

         (b)  if it  is  not a  natural  person,  the  execution,  delivery  and
performance by the Delaware Trustee of this Declaration has been duly authorized
by all  necessary  corporate  action on the part of the Delaware  Trustee.  This
Declaration  has been duly executed and delivered by the Delaware  Trustee,  and
under Delaware law (excluding any securities  laws)  constitutes a legal,  valid
and  binding  obligation  of the  Delaware  Trustee,  enforceable  against it in
accordance  with its terms,  subject to applicable  bankruptcy,  reorganization,
moratorium,  insolvency  and other  similar  laws  affecting  creditors'  rights
generally and to general  principles  of equity and the  discretion of the court
(regardless of whether considered in a proceeding in equity or at law);

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

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

         (e) no consent,  approval or authorization  of, or registration with or
notice to, any state or federal banking authority  governing the trust powers of
the Delaware  Trustee is required for the execution,  delivery or performance by
the Delaware Trustee of this Declaration; and

         (f) if the Delaware Trustee is a natural perso, it is a resident of the
State of Delaware.

                                  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


                                       52
<PAGE>

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):

                           FSBS Capital Trust I
                           c/o First South Bancorp, Inc.
                           1450 John B. White, Sr. Blvd.
                           Spartanburg, S.C. 29306
                           Attention: V. Lewis Shuler
                           Telecopy: (864) 587-2781
                           Telephone: (864) 595-0455

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

                           Wells Fargo Delaware Trust Company
                           919 Market Street Suite 700
                           Wilmington, DE 19801
                           Attention: Corporate Trust Division
                           Telecopy: 302-575-2006
                           Telephone: 302-575-2005

         (c)  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):

                           Wells Fargo Bank, National Association
                           919 Market Street Suite 700
                           Wilmington, DE 19801
                           Attention: Corporate Trust Division
                           Telecopy: 302-575-2006
                           Telephone: 302-575-2005

         (d) 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):



                                       53
<PAGE>

                           First South Bancorp, Inc.
                           1450 John B. White, Sr. Blvd.
                           Spartanburg, S.C. 29306
                           Attention: V. Lewis Shuler
                           Telecopy: (864) 587-2781
                           Telephone: (864) 595-0455

         (e) 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 and  obligations of the parties  hereunder  shall be
governed by and  interpreted in accordance with the law of the State of Delaware
and all rights,  obligations and remedies shall be governed by such laws without
regard to the  principles  of  conflict  of laws of the State of Delaware or any
other  jurisdiction  that  would  call  for  the  application  of the law of any
jurisdiction other than the State of Delaware.

         SECTION 13.3. Submission to Jurisdiction.

         (a)  Each of the  parties  hereto  agrees  that  any  suit,  action  or
proceeding  arising out of or based upon this  Declaration,  or the transactions
contemplated  hereby, may be instituted in any of the courts of the State of New
York  located  in the  Borough  of  Manhattan,  City and State of New York,  and
further  agrees to submit to the  jurisdiction  of Delaware,  and to any actions
that are  instituted in state or Federal court in  Wilmington,  Delaware and any
competent  court in the place of its  corporate  domicile  in respect of actions
brought  against it as a  defendant.  In addition,  each such party  irrevocably
waives,  to the fullest extent  permitted by law, any objection which it may now
or hereafter have to the laying of the venue of such suit,  action or proceeding
brought in any such court and  irrevocably  waives any claim that any such suit,
action  or  proceeding  brought  in  any  such  court  has  been  brought  in an
inconvenient  forum and irrevocably waives any right to which it may be entitled
on  account  of  its  place  of  corporate  domicile.  Each  such  party  hereby
irrevocably  waives  any and all right to trial by jury in any legal  proceeding
arising out of or relating to this Declaration or the transactions  contemplated
hereby. Each such party agrees that final judgment in any proceedings brought in
such a court shall be conclusive  and binding upon it and may be enforced in any
court to the jurisdiction of which it is subject by a suit upon such judgment.

         (b) Each of the  Sponsor,  the  Trustees,  the  Administrators  and the
Holder of the Common Securities  irrevocably  consents to the service of process
on it in any  such  suit,  action  or  proceeding  by  the  mailing  thereof  by
registered or certified mail, postage prepaid,  to it at its address given in or
pursuant to Section 13.1 hereof.

         (c) To the extent  permitted by law,  nothing  herein  contained  shall
preclude  any party from  effecting  service of process in any lawful  manner or
from bringing any suit,  action or proceeding in respect of this  Declaration in
any other state, country or place.



                                       54
<PAGE>

         SECTION  13.4.  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.

         SECTION 13.5.  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 13.6. Successors and Assigns.  Whenever in this Declaration any
of the parties  hereto is named or referred  to, the  successors  and assigns of
such party shall be deemed to be included,  and all covenants and  agreements in
this  Declaration  by the Sponsor and the  Trustees  shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.

         SECTION  13.7.  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 13.8. Counterparts.  This Declaration may contain more than one
counterpart  of the signature page and this  Declaration  may be executed by the
affixing of the signature of each of the Trustees and  Administrators  to any of
such counterpart  signature pages. All of such counterpart signature pages shall
be read as though  one,  and they shall have the same force and effect as though
all of the signers had signed a single signature page.




                                       55
<PAGE>


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


                              [SIGNATURES OMITTED]





















                                       56
<PAGE>



                                     ANNEX I

                                    TERMS OF
                                TP SECURITIES AND
                                COMMON SECURITIES

         Pursuant  to Section 6.1 of the Amended  and  Restated  Declaration  of
Trust,  dated  as of  January  30,  2004 (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) Capital Securities.  5,000 Capital Securities of FSBS Capital Trust
I (the "Trust"), with an aggregate stated liquidation amount with respect to the
assets  of  the  Trust  of  Five  Million  Dollars  ($5,000,000)  and  a  stated
liquidation amount with respect to the assets of the Trust of $1,000 per Capital
Security,  are hereby designated for the purposes of identification  only as the
"TP Securities" (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 or to conform
to the rules of any stock  exchange on which the Capital  Securities are listed,
if any.

         (b) Common  Securities.155  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. In the absence of an Event of Default, the Common Securities will have
an aggregate stated  liquidation  amount with respect to the assets of the Trust
of One Hundred Fifty Five Thousand Dollars  ($155,000) and a stated  liquidation
amount with respect to the assets of the Trust of $1,000 per Common Security.

         2. Distributions.

         (a)  Distributions  payable  on  each  Security  will be  payable  at a
variable  per annum  rate of  interest,  reset  quarterly,  equal to  LIBOR,  as
determined on the LIBOR Determination Date for such Distribution Payment Period,
plus 2.80% (the  "Initial  Rate")  from  January  30, 2004 to April 7, 2009 (the
"Initial Rate Period") and thereafter at LIBOR plus 2.85% ("Subsequent Rate") of
the stated  liquidation  amount of $1,000  per  Security,  such rate  (provided,
however, that the Coupon Rate for any Distribution Payment Period may not exceed
the  highest  rate  permitted  by New York law,  as the same may be  modified by
United States law of general applicability),  such Coupon Rate being the rate of
interest  payable on the  Debentures  to be held by the  Institutional  Trustee;
provided,  that LIBOR may not fall below  __________%  during the  Initial  Rate
Period.   Except  as  set  forth  below  in  respect  of  an  Extension  Period,


                                     A-I-1
<PAGE>

Distributions  in arrears for more than one quarterly  period will bear interest
thereon  compounded  quarterly  at the  applicable  Coupon  Rate for  each  such
quarterly  period  (to  the  extent  permitted  by  applicable  law).  The  term
"Distributions" as used herein includes cash distributions,  any such compounded
distributions  and any  Additional  Interest  payable on the  Debentures  unless
otherwise stated. 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  legally  available in the Property
Account  therefor.  The amount of  Distributions  payable  for any  Distribution
Payment  Period will be computed  for any full  quarterly  Distribution  Payment
Period on the basis of a 360-day  year and the actual  number of days elapsed in
the relevant Distribution period; provided, however, that upon the occurrence of
a Special Event redemption  pursuant to paragraph 4(a) below the amounts payable
pursuant to this Declaration  shall be calculated as set forth in the definition
of Special Redemption Price.

         (b)  Subsequent to the Minimum  Rate,  LIBOR shall be determined by the
Calculation Agent in accordance with the following provisions:

                  (1) On the second LIBOR Business Day  (provided,  that on such
         day commercial banks are open for business -------- (including dealings
         in foreign  currency  deposits) in London (a "LIBOR Banking Day"),  and
         otherwise the next  preceding  LIBOR  Business Day that is also a LIBOR
         Banking  Day) prior to January  15,  April 15,  July 15 and  October 15
         immediately  succeeding the commencement of such  Distribution  Payment
         Period (or, with respect to the first  Distribution  Payment Period, on
         January 28,  2004),  (each such day, a "LIBOR  Determination  Date" for
         such Distribution  Payment Period),  the Calculation Agent shall obtain
         the rate for three-month U.S. Dollar deposits in Europe,  which appears
         on  Telerate  Page  3750 (as  defined  in the  International  Swaps and
         Derivatives Association,  Inc. 2000 Interest Rate and Currency Exchange
         Definitions)  or such other page as may replace such Telerate Page 3750
         on the  Moneyline  Telerate,  Inc.  service  (or such other  service or
         services as may be nominated by the British Banker's Association as the
         information  vendor for the  purpose  of  displaying  London  interbank
         offered rates for U.S. dollar deposits), as of 11:00 a.m. (London time)
         on such LIBOR  Determination  Date,  and the rate so obtained  shall be
         LIBOR for such Distribution Payment Period.  "LIBOR Business Day" means
         any day that is not a Saturday, Sunday or other day on which commercial
         banking  institutions  in The City of New York or Wilmington,  Delaware
         are authorized or obligated by law or executive order to be closed.  If
         such rate is  superseded  on  Telerate  Page 3750 by a  corrected  rate
         before 12:00 noon (London time) on the same LIBOR  Determination  Date,
         the corrected rate as so substituted  will be the applicable  LIBOR for
         that Distribution Payment Period.

                  (2) If, on any LIBOR  Determination  Date,  such rate does not
         appear on  Telerate  Page 3750 or such other page as may  replace  such
         Telerate Page 3750 on the  Moneyline  Telerate,  Inc.  service (or such
         other  service or services as may be nominated by the British  Banker's
         Association  as the  information  vendor for the purpose of  displaying
         London  interbank  offered  rates  for  U.S.  dollar   deposits),   the
         Calculation  Agent shall  determine the arithmetic  mean of the offered
         quotations of the Reference  Banks (as defined  below) to leading banks
         in the London  interbank market for three-month U.S. Dollar deposits in
         Europe (in an amount determined by the Calculation  Agent) by reference
         to requests for quotations as of approximately 11:00 a.m. (London time)
         on the LIBOR  Determination  Date made by the Calculation  Agent to the
         Reference Banks. If, on any LIBOR  Determination  Date, at least two of
         the  Reference  Banks  provide such  quotations,  LIBOR shall equal the
         arithmetic  mean of such  quotations.  If, on any  LIBOR  Determination


                                     A-I-2
<PAGE>

         Date, only one or none of the Reference Banks provide such a quotation,
         LIBOR  shall  be  deemed  to be the  arithmetic  mean  of  the  offered
         quotations  that at least two leading banks in the City of New York (as
         selected by the  Calculation  Agent) are quoting on the relevant  LIBOR
         Determination  Date for  three-month  U.S. Dollar deposits in Europe at
         approximately  11:00 a.m. (London time) (in an amount determined by the
         Calculation Agent). As used herein,  "Reference Banks" means four major
         banks in the London interbank market selected by the Calculation Agent.

                  (3) If the  Calculation  Agent is  required  but is  unable to
         determine  a rate in  accordance  with at least  one of the  procedures
         provided above,  LIBOR for the applicable  Distribution  Payment Period
         shall be LIBOR in effect  for the  immediately  preceding  Distribution
         Payment Period.

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

         (d) On each LIBOR  Determination  Date,  the  Calculation  Agent  shall
notify,  in writing,  the Sponsor and the Paying Agent of the applicable  Coupon
Rate in effect for the related  Distribution  Payment  Period.  The  Calculation
Agent  shall,  upon the  request of the Holder of any  Securities,  provide  the
Coupon Rate then in effect.  All calculations  made by the Calculation  Agent in
the absence of manifest  error shall be conclusive  for all purposes and binding
on the  Sponsor  and the Holders of the  Securities.  The Paying  Agent shall be
entitled  to rely on  information  received  from the  Calculation  Agent or the
Sponsor as to the Coupon Rate. The Sponsor shall, from time to time, provide any
necessary  information  to the  Paying  Agent  relating  to any  original  issue
discount  and  interest  on the  Securities  that is included in any payment and
reportable for taxable income calculation purposes.

         (e)  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
January 7, April 7, July 7 and October 7 of each year,  commencing April 7, 2004
(each, a "Distribution Payment Date"). Subject to prior submission of Notice (as
defined  in the  Indenture),  the  Debenture  Issuer  has the  right  under  the
Indenture  to defer  payments of interest on the  Debentures  by  extending  the
interest  distribution 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  (except any  Additional  Interest that may be
due and payable).  During any Extension Period, interest will continue to accrue
on the Debentures,  and interest on such accrued interest (such accrued interest
and interest thereon  referred to herein as "Deferred  Interest") will accrue at
an  annual  rate  equal to the  Coupon  Rate in effect  for each such  Extension


                                     A-I-3
<PAGE>

Period,  compounded  quarterly  from the date such Deferred  Interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law. No Extension  Period may end on a date other than an Interest Payment Date.
At the end of any such  Extension  Period,  the  Debenture  Issuer shall pay all
Deferred Interest then accrued and unpaid on the Debentures;  provided, however,
that no  Extension  Period may extend  beyond the  Maturity  Date and  provided,
further,  that, during any such Extension  Period,  the Debenture Issuer may not
(i)  declare or pay any  dividends  or  distributions  on, or redeem,  purchase,
acquire,  or make a  liquidation  payment with respect to, any of the  Debenture
Issuer's  capital stock or (ii) make any payment due on or repay,  repurchase or
redeem any debt  securities of the Debenture  Issuer that rank pari passu in all
respects  with  or  junior  in  interest  to  the  Debentures  (other  than  (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Debenture Issuer (A) in connection with any employment contract, benefit plan or
other  similar  arrangement  with or for the  benefit of one or more  employees,
officers,   directors  or  consultants,   (B)  in  connection  with  a  dividend
reinvestment  or stockholder  stock purchase plan or (C) in connection  with the
issuance of capital stock of the  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, reclassification, combination 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  stockholder's  rights plan, or the issuance of
rights,  stock or other  property  under any  stockholder's  rights plan, or the
redemption or repurchase of rights pursuant thereto,  or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock  issuable upon exercise of such  warrants,  options or other rights is the
same stock as that on which the  dividend is being paid or ranks pari passu with
or junior to such stock).  Prior to the termination of any Extension Period, the
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
Deferred  Interest,  the Debenture  Issuer may commence a new Extension  Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable  during an  Extension  Period,  except at the end  thereof,  but
Deferred  Interest  shall accrue upon each  installment  of interest  that would
otherwise  have been due and payable  during such  Extension  Period  until such
installment is paid. If Distributions are deferred,  the Distributions due shall
be paid on the date that the related  Extension Period  terminates,  or, if such
date  is  not  a  Distribution  Payment  Date,  on  the  immediately   following
Distribution  Payment Date,  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
legally 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.



                                     A-I-4
<PAGE>

         (f)  Distributions  on the  Securities  will be payable to the  Holders
thereof as they appear on the books and records of the Registrar on the relevant
record dates. The relevant record dates shall be selected by the Administrators,
which 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  Distribution  Payment Date
other than any date of  redemption,  falls on a day that is not a Business  Day,
then Distributions  payable will be paid on, and such Distribution  Payment Date
will be moved to, the next succeeding Business Day, and additional Distributions
will accrue for each day that such payment is delayed as a result thereof.

         (g) 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  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 Coupon 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 Section  3808(e) of 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 Tax Event,  an Investment  Company Event or a Capital  Treatment
Event),  subject to the receipt by the Debenture  Issuer of prior  approval from
any regulatory  authority having jurisdiction over the Sponsor that is primarily
responsible  for  regulating  the  activities of the Sponsor if such approval is
then required under applicable capital guidelines or policies of such regulatory
authority,  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.

         The Trust shall dissolve on the first to occur of (i) January 30, 2039,
the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect to


                                     A-I-5
<PAGE>

the Sponsor,  the Trust or the Debenture Issuer, (iii) (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) the filing of
a  certificate  of  dissolution  of the  Sponsor 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) the distribution to the Holders
of the Securities of the Debentures, upon exercise of the right of the Holder of
all of the  outstanding  Common  Securities  to dissolve  the Trust as described
above, (v) the entry of a decree of a judicial dissolution of the Sponsor or the
Trust, or (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.  As soon as practicable
after the  dissolution of the Trust and upon completion of the winding up of the
Trust,   the  Trust  shall  terminate  upon  the  filing  of  a  certificate  of
cancellation with the Secretary of State of the State of Delaware.

         If a Liquidation  of the Trust occurs as described in clause (i), (ii),
(iii)  or (v)  in the  immediately  preceding  paragraph,  the  Trust  shall  be
liquidated by the  Institutional  Trustee of the Trust as  expeditiously as such
Trustee  determines  to be  possible  by  distributing,  after  satisfaction  of
liabilities  to  creditors  of the Trust as provided by  applicable  law, 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 to 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 the
immediately  preceding  paragraph  shall  occur  if  the  Institutional  Trustee
determines that such Liquidation is possible by distributing, after satisfaction
of liabilities to creditors of 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 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.

         Upon any such  Liquidation of the Trust involving a distribution of the
Debentures,  if at the time of such  Liquidation,  the Capital  Securities  were
rated by at least one nationally-recognized statistical rating organization, the
Debenture  Issuer will use its  reasonable  best efforts to obtain from at least
one such or other rating organization a rating for the Debentures.

         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) any certificates  representing the Capital Securities 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 of, with an interest  rate  identical  to the  distribution  rate of, and
bearing  accrued and unpaid  interest equal to accrued and unpaid  distributions


                                     A-I-6
<PAGE>

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) and
(iii) all rights of Holders of  Securities  under the Capital  Securities or the
Common Securities, as applicable,  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 April 7, 2034. The Debentures may be
redeemed by the Debenture  Issuer,  in whole or in part, on any January 7, April
7, July 7 or October 7 on or after April 7, 2009 at the Redemption  Price,  upon
not less than 30 nor more than 60 days' notice to Holders of such Debentures. In
addition,  upon the occurrence and  continuation  of a Tax Event,  an Investment
Company Event or a Capital  Treatment  Event,  the Debentures may be redeemed by
the  Debenture  Issuer  in whole  but not in part,  at any time  within  90 days
following the occurrence of such Tax Event,  Investment Company Event or Capital
Treatment  Event,  as the case may be (the "Special  Redemption  Date"),  at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
Holders of the Debentures so long as such Tax Event, Investment Company Event or
Capital  Treatment  Event, as the case may be, 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 any regulatory  authority
having jurisdiction over the Debenture Issuer, if such approval is then required
under applicable capital guidelines or policies of such regulatory authority.

         "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,  regulatory procedure,  notice or announcement) (an
"Administrative Action") or judicial decision interpreting or applying such laws
or  regulations,  regardless of whether such  Administrative  Action or judicial
decision is issued to or in connection with a proceeding involving the 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  (including
withholding taxes), duties, assessments or other governmental charges.

         "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 a change  in law or  regulation  or  written  change  in
interpretation  or  application  of law or regulation by any  legislative  body,
court,  governmental  agency  or  regulatory  authority,  there is more  than an
insubstantial  risk  that the  Trust is or,  within  90 days of the date of such


                                     A-I-7
<PAGE>

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 original issuance of the Debentures.

         "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 any  amendment  to,  or 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 Debenture Issuer
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 the then  equivalent  thereof) for purposes of the capital
adequacy  guidelines  of  the  Federal  Reserve  (or  any  successor  regulatory
authority with jurisdiction over bank holding companies),  as then in effect and
applicable to the Debenture Issuer; provided,  however, that the distribution of
the Debentures in connection  with the liquidation of the Trust by the Debenture
Issuer 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.

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

         "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 or,  in the case of a  redemption  due to the  occurrence  of a
Special Event, to the Special Redemption Date if such Special Redemption Date is
on or after April 7, 2009.

         "Special  Redemption Price" means (1) if the Special Redemption Date is
before April 7, 2009, One Hundred Five Percent (105%) of the principal amount to
be redeemed  plus any accrued  and unpaid  interest  thereon to the date of such
redemption and (2) if the Special  Redemption Date is on or after April 7, 2009,
the Redemption Price for such Special Redemption Date.

         "Redemption  Date" means the date fixed for the  redemption  of Capital
Securities,  which  shall be any  January 7,  April 7, July 7or  October 7 on or
after April 7, 2009.

         (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,  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).



                                     A-I-8
<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 as described in Section  4(e)(ii)
below.

         (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  Section  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   Registrar.    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)  In  the  event  that  fewer  than  all  the  outstanding
         Securities  are to be redeemed,  the Securities to be redeemed shall be
         redeemed Pro Rata from each Holder of Capital Securities.

                  (iii) 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 Section 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, with respect to Book-Entry Capital Securities,  on the Redemption
         Date,  irrevocably  deposit  with the  Depositary  for such  Book-Entry
         Capital Securities,  to the extent available therefor, funds sufficient
         to pay the  relevant  Redemption  Price and will  give such  Depositary
         irrevocable  instructions  and authority to pay the Redemption Price to
         the  Owners  of  the  Capital  Securities.   With  respect  to  Capital
         Securities   that   are  not   Book-Entry   Capital   Securities,   the
         Institutional  Trustee will pay, to the extent available therefor,  the
         relevant  Redemption  Price 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


                                     A-I-9
<PAGE>

         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
         specified  in Section  4(a),  but without  interest on such  Redemption
         Price. If any date fixed for redemption of Securities is not a Business
         Day,  then payment of any such  Redemption  Price  payable on such date
         will be made on the next  succeeding  day that is a Business Day except
         that,  if such  Business  Day  falls in the next  calendar  year,  such
         payment will be made on the immediately preceding Business Day, in each
         case with the same  force and  effect as if made on such date fixed for
         redemption.  If  payment  of the  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 then  applicable  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.  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.

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

                  (v) 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 anytime 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  Sections  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 not less
than 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


                                     A-I-10
<PAGE>

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 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 not less
than 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), then a Holder of record of the Capital  Securities may directly institute
a proceeding for  enforcement  of payment,  on or after the respective due dates
specified  in the  Debentures,  to such Holder  directly of the  principal of or
interest on the  Debentures  having an aggregate  principal  amount equal to the
aggregate  liquidation  amount of the Capital  Securities  of such  Holder.  The
Institutional  Trustee shall notify all Holders of the Capital Securities of any
default  actually  known  to  the  Institutional  Trustee  with  respect  to the
Debentures  unless (x) such  default  has been cured prior to the giving of such
notice  or (y) the  Institutional  Trustee  determines  in good  faith  that the
withholding  of such notice is in the  interest  of the Holders of such  Capital
Securities,  except where the default  relates to the payment of principal of or
interest on any of the  Debentures.  Such notice shall state that such Indenture
Event of Default also  constitutes  an Event of Default  hereunder.  Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clause (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 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 the consent of a Super


                                     A-I-11
<PAGE>

Majority,  the  Institutional  Trustee may only give such consent at the written
direction of the Holders of not less than the proportion in  liquidation  amount
of such 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 written directions
of the Holders of the Securities unless the  Institutional  Trustee has obtained
an opinion of tax counsel to the effect that,  as a result of such  action,  the
Trust will not be  classified  as other than a grantor  trust for United  States
federal income tax purposes.

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

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

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

         6. Voting Rights - Common Securities.

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

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

         (c) Subject to Section 6.8 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


                                     A-I-12
<PAGE>

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 are 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 not less than 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 Section
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 clause  (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
Trustees 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


                                     A-I-13
<PAGE>

vote on such  amendment or proposal and such  amendment or proposal shall not be
effective except with the approval of the Holders of not less than a Majority in
liquidation amount of the Securities affected thereby; provided, however, if any
amendment  or proposal  referred to in clause (i) above would  adversely  affect
only  the  Capital  Securities  or only the  Common  Securities,  then  only the
affected  class will be entitled to vote on such  amendment or proposal and such
amendment  or proposal  shall not be  effective  except  with the  approval of a
Majority in liquidation amount of such class of Securities.

         (b) In the event the consent of the Institutional Trustee as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification   or   termination  of  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
written  direction of the Holders of not less than 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  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.



                                     A-I-14
<PAGE>

         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  the  Special  Redemption  Price  on all
outstanding Capital Securities then called for redemption,  shall have been made
or  provided  for,  and all funds  immediately  available  to the  Institutional
Trustee  shall  first  be  applied  to  the  payment  in  full  in  cash  of all
Distributions  on, or the Redemption  Price or the 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,
and the  issuance of the  Securities  is not subject to,  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.




                                     A-I-15
<PAGE>



                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         [If the Capital Security is to be Global Capital Security- THIS CAPITAL
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION  HEREINAFTER
REFERRED  TO AND IS  REGISTERED  IN THE  NAME OF THE  DEPOSITORY  TRUST  COMPANY
("DTC") OR A NOMINEE OF DTC. THIS CAPITAL  SECURITY IS EXCHANGEABLE  FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED  CIRCUMSTANCES  DESCRIBED IN THE DECLARATION,  AND NO TRANSFER OF
THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE
BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE  OF DTC TO DTC OR ANOTHER  NOMINEE OF
DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

         UNLESS  THIS   CAPITAL   SECURITY  IS   PRESENTED   BY  AN   AUTHORIZED
REPRESENTATIVE  OF DTC TO FSBS Capital Trust I OR ITS AGENT FOR  REGISTRATION OF
TRANSFER,  EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO  CEDE  & CO.  OR TO  SUCH  OTHER  ENTITY  AS IS  REQUESTED  BY AN  AUTHORIZED
REPRESENTATIVE  OF DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY PERSON IS  WRONGFUL  INASMUCH  AS THE  REGISTERED  OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY STATE  SECURITIES LAWS OR ANY OTHER
APPLICABLE   SECURITIES  LAWS.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT.  THE  HOLDER  OF  THIS  SECURITY  BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE  DEBENTURE  ISSUER OR THE TRUST,  (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"),  TO A PERSON THE HOLDER  REASONABLY  BELIEVES IS A
"QUALIFIED  INSTITUTIONAL  BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,  (C) PURSUANT
TO AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT TO AN


                                     A-1-1
<PAGE>

"ACCREDITED  INVESTOR"  WITHIN THE MEANING OF SUBPARAGRAPH  (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE  SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT,  OR FOR THE ACCOUNT OF AN  "ACCREDITED  INVESTOR,"  FOR  INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN  CONNECTION  WITH,  ANY
DISTRIBUTION  IN  VIOLATION  OF THE  SECURITIES  ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE  EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER  PURSUANT  TO CLAUSES (C) OR (D) TO REQUIRE THE  DELIVERY OF AN
OPINION OF COUNSEL,  CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE DEBENTURE  ISSUER OR THE TRUST.  THE HOLDER OF
THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.

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

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

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE


                                     A-1-2
<PAGE>

REQUIRED BY THE AMENDED AND  RESTATED  DECLARATION  OF TRUST TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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
































                                     A-1-3
<PAGE>

Certificate Number  [P-001]                   Number of Capital Securities 5,000

                    Certificate Evidencing Capital Securities

                                       of

                              FSBS Capital Trust I

                                  TP Securities

                (liquidation amount $1,000 per Capital Security)

         FSBS Capital  Trust I, a statutory  trust created under the laws of the
State  of  Delaware  (the  "Trust"),  hereby  certifies  that  Cede  & Co.  (the
"Holder"),  as nominee on behalf of The Depository  Trust Company (the "Holder")
is the registered  owner of 5,000 capital  securities of the Trust  representing
undivided  beneficial  interests in the assets of the Trust,  designated  the TP
Securities  (liquidation  amount  $1,000 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  January  30,  2004,  (the
"Declaration")  among Barry L. Slider and V. Lewis  Shuler,  as  Administrators,
Wells Fargo  Delaware  Trust  Company,  as Delaware  Trustee,  Wells Fargo Bank,
National Association,  as Institutional  Trustee,  First South 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 the  Declaration,  as the  same may be
amended from time to time.  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.

         By acceptance 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 shall be  construed  in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.




                                     A-1-4
<PAGE>


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


                            FSBS Capital Trust I


                             By:
                                    --------------------------------------------
                             Name:
                                    --------------------------------------------
                             Title: Administrator

                             Dated:______________, 2004


                          CERTIFICATE OF AUTHENTICATION

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

                           Wells Fargo Bank, National Association, not in its
                             individual capacity but solely as the Institutional
                             Trustee


                           By:
                              --------------------------------------------------
                                 Authorized Officer

                           Dated:______________, 2004












                                     A-1-5
<PAGE>


                          [FORM OF REVERSE OF SECURITY]

         Distributions  payable on each  Capital  Security  will be payable at a
variable per annum rate of interest, reset quarterly, equal to LIBOR (as defined
in the  Declaration)  plus 2.80% (the  "Initial  Rate") from January 30, 2004 to
April 7, 2009 ( the "Initial  Rate  Period") and  thereafter at LIBOR plus 2.85%
("Subsequent  Rate") of the  stated  liquidation  amount of $1,000  per  Capital
Security,   such  rate  (provided,   however,  that  the  Coupon  Rate  for  any
Distribution  Payment  Period may not exceed the highest  rate  permitted by New
York  law,  as  the  same  may be  modified  by  United  States  law of  general
applicability),  such  Coupon  Rate  being the rate of  interest  payable on the
Debentures to be held by the Institutional Trustee (provided, that LIBOR may not
fall below __________% during the Initial Rate Period). Distributions in arrears
for more  than one  quarterly  period  will  bear  interest  thereon  compounded
quarterly at the applicable Coupon Rate (defined to include the Initial Rate and
Subsequent  Rate, as applicable)  for each such quarterly  period (to the extent
permitted by applicable law). The term  "Distributions"  as used herein includes
cash  distributions,  any  such  compounded  distributions  and  any  Additional
Interest payable on the Debentures  unless  otherwise  stated. 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  legally  available in the Property  Account  therefor.  The amount of
Distributions  payable for any period will be  computed  for any full  quarterly
Distribution period on the basis of a 360-day year and the actual number of days
elapsed in the relevant Distribution Payment Period.

         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  January 7, April 7, July 7 and
October 7 of each  year,  commencing  on April 7, 2004  (each,  a  "Distribution
Payment Date").  Upon submission of Notice,  the Debenture  Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest  distribution  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 (except any Additional Interest that
may be due and payable).  During any Extension Period, interest will continue to
accrue on the  Debentures,  and interest on such accrued  interest (such accrued
interest and interest  thereon  referred to herein as "Deferred  Interest") will
accrue at an  annual  rate  equal to the  Coupon  Rate in  effect  for each such
Extension  Period,  compounded  quarterly  from the date such Deferred  Interest
would have been  payable  were it not for the  Extension  Period,  to the extent
permitted  by  law.  No  Extension  Period  may  end  on a  date  other  than  a
Distribution  Payment  Date.  At the  end  of any  such  Extension  Period,  the
Debenture Issuer shall pay all Deferred  Interest then accrued and unpaid on the
Debentures;  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  Deferred
Interest,  the Debenture Issuer may commence a new Extension Period,  subject to
the foregoing  requirements.  No interest or Deferred  Interest shall be due and
payable  during an Extension  Period,  except at the end  thereof,  but Deferred
Interest  shall accrue upon each  installment  of interest that would  otherwise
have been due and payable during such Extension Period until such installment is


                                     A-1-6
<PAGE>

paid. 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 legally 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-1-7
<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 as agent to transfer this Capital Security Certificate
on the books of the Trust.  The agent may substitute  another to act for it, 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-1-8
<PAGE>



                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

         EXCEPT AS SET FORTH IN SECTION 8.1 (b) OF THE  DECLARATION  (AS DEFINED
BELOW),   THIS  SECURITY  MAY  NOT  BE  OFFERED,   SOLD,  PLEDGED  OR  OTHERWISE
TRANSFERRED.

























                                     A-2-1
<PAGE>



Certificate Number [C-001]                      Number of Common Securities 155

                    Certificate Evidencing Common Securities
                                       of
                              FSBS Capital Trust I

         FSBS Capital  Trust I, a statutory  trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that First South Bancorp, Inc.
(the  "Holder") is the  registered  owner of 155 common  securities of the Trust
representing   undivided  beneficial  interests  in  the  assets  of  the  Trust
(liquidation amount $1,000 per Common Security) (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 January 30, 2004, (the  "Declaration")  among Barry L. Slider and V. Lewis
Shuler,  as  Administrators,  Wells Fargo Delaware  Trust  Company,  as Delaware
Trustee,  Wells Fargo Bank, National Association,  as Institutional Trustee, the
Holder,  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 Common  Securities as set forth in Annex I to the  Declaration,  as the same
may be amended from time to time.  Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Sponsor will provide a
copy of the  Declaration  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.

         By  acceptance  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  shall be  construed  in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.




                                     A-2-2
<PAGE>



         IN WITNESS WHEREOF, the Trust has executed this certificate January 30,
2004.

                              [SIGNATURES OMITTED]





















                                     A-2-3
<PAGE>



                          [FORM OF REVERSE OF SECURITY]

         Distributions  payable on each Common  Security  will be  identical  in
amount to the  Distributions  payable on each  Capital  Security,  which is at a
variable per annum rate of interest, reset quarterly, equal to LIBOR (as defined
in the  Declaration)  plus 2.80% (the  "Initial  Rate") from January 30, 2004 to
April 7, 2009 (the  "Initial  Rate  Period") and  thereafter at LIBOR plus 2.85%
("Subsequent  Rate") of the  stated  liquidation  amount of $1,000  per  Capital
Security,   such  rate  (provided,   however,  that  the  Coupon  Rate  for  any
Distribution  Payment  Period may not exceed the highest  rate  permitted by New
York  law,  as  the  same  may be  modified  by  United  States  law of  general
applicability),  such  Coupon  Rate  being the rate of  interest  payable on the
Debentures to be held by the Institutional Trustee (provided, that LIBOR may not
fall below __________% during the Initial Rate Period). Distributions in arrears
for more  than one  quarterly  period  will  bear  interest  thereon  compounded
quarterly at the applicable Coupon Rate (defined to include the Initial Rage and
Subsequent  Rate, as applicable)  for each such quarterly  period (to the extent
permitted by applicable law). The term  "Distributions"  as used herein includes
cash  distributions,  any  such  compounded  distributions  and  any  Additional
Interest payable on the Debentures  unless  otherwise  stated. 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  legally  available in the Property  Account  therefor.  The amount of
Distributions  payable for any period will be  computed  for any full  quarterly
Distribution period on the basis of a 360-day year and the actual number of days
elapsed in the relevant Distribution Payment Period.

         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  January 7, April 7, July 7 and
October 7 of each  year,  commencing  on April 7, 2004  (each,  a  "Distribution
Payment Date").  Upon submission of Notice,  the Debenture  Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest  distribution  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 (except any Additional Interest that
may be due and payable).  During any Extension Period, interest will continue to
accrue on the  Debentures,  and interest on such accrued  interest (such accrued
interest and interest  thereon  referred to herein as "Deferred  Interest") will
accrue at an  annual  rate  equal to the  Coupon  Rate in  effect  for each such
Extension  Period,  compounded  quarterly  from the date such Deferred  Interest
would have been  payable  were it not for the  Extension  Period,  to the extent
permitted  by  law.  No  Extension  Period  may  end  on a  date  other  than  a
Distribution  Payment  Date.  At the  end  of any  such  Extension  Period,  the
Debenture Issuer shall pay all Deferred  Interest then accrued and unpaid on the
Debentures;  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  Deferred
Interest,  the Debenture Issuer may commence a new Extension Period,  subject to
the foregoing  requirements.  No interest or Deferred  Interest shall be due and


                                     A-2-4
<PAGE>

payable  during an Extension  Period,  except at the end  thereof,  but Deferred
Interest  shall accrue upon each  installment  of interest that would  otherwise
have been due and payable during such Extension Period until such installment is
paid. 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 legally  available for the payment of such  distributions  in the Property
Account of the Trust.  The Trust's funds legally  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  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.



















                                     A-2-5
<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  ________ as 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 Guarantee:2 _________________



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


                                       C-1