Exhibit 10.1












                        AMENDED AND RESTATED DECLARATION

                                    OF TRUST

                           GRANDSOUTH CAPITAL TRUST I

                            Dated as of May 10, 2006





















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                                                      TABLE OF CONTENTS
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                                                                                                              Page

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ARTICLE I            INTERPRETATION AND DEFINITIONS..............................................................1

         Section 1.1.          Definitions.......................................................................1

ARTICLE II           ORGANIZATION................................................................................9

         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...................................................10

         Section 2.6.          Powers and Duties of the Trustees and the Administrators.........................10

         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.......17

         Section 2.10.         Certain Rights of Institutional Trustee..........................................19

         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................................................................22

         Section 2.15.         Mergers..........................................................................22

ARTICLE III          SPONSOR....................................................................................24

         Section 3.1.          Sponsor's Purchase of Common Securities..........................................24

         Section 3.2.          Responsibilities of the Sponsor..................................................24

ARTICLE IV           TRUSTEES AND ADMINISTRATORS................................................................24

         Section 4.1.          Number of Trustees...............................................................24

         Section 4.2.          Delaware Trustee.................................................................25

         Section 4.3.          Institutional Trustee; Eligibility...............................................25

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

         Section 4.5.          Administrators...................................................................26

         Section 4.6.          Initial Delaware Trustee.........................................................26

         Section 4.7.          Appointment, Removal and Resignation of the Trustees and the Administrators......26

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                                                      TABLE OF CONTENTS
                                                         (continued)
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         Section 4.8.          Vacancies Among Trustees.........................................................28

         Section 4.9.          Effect of Vacancies..............................................................28

         Section 4.10.         Meetings of the Trustees and the Administrators..................................28

         Section 4.11.         Delegation of Power..............................................................29

         Section 4.12.         Merger, Conversion, Consolidation or Succession to Business......................29

ARTICLE V            DISTRIBUTIONS..............................................................................29

         Section 5.1.          Distributions....................................................................29

ARTICLE VI           ISSUANCE OF SECURITIES.....................................................................29

         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..................................................................31

         Section 6.4.          Mutilated, Destroyed, Lost or Stolen Certificates................................31

         Section 6.5.          Temporary Certificates ..........................................................32

         Section 6.6.          Cancellation.....................................................................32

         Section 6.7.          Rights of Holders; Waivers of Past Defaults......................................32

ARTICLE VII          DISSOLUTION AND TERMINATION OF TRUST.......................................................34

         Section 7.1.          Dissolution and Termination of Trust.............................................34

ARTICLE VIII         TRANSFER OF INTERESTS......................................................................35

         Section 8.1.          General..........................................................................35

         Section 8.2.          Transfer Procedures and Restrictions.............................................36

         Section 8.3.          Deemed Security Holders..........................................................39

         Section 8.4.          Transfer of Initial Securities...................................................39

ARTICLE IX           LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS.......................39

         Section 9.1.          Liability........................................................................39

         Section 9.2.          Exculpation......................................................................40

         Section 9.3.          Fiduciary Duty...................................................................40

         Section 9.4.          Indemnification..................................................................41

         Section 9.5.          Outside Businesses...............................................................44

         Section 9.6.          Compensation; Fee................................................................44

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                                                      TABLE OF CONTENTS
                                                         (continued)
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ARTICLE X            ACCOUNTING.................................................................................44

         Section 10.1.         Fiscal Year......................................................................45

         Section 10.2.         Certain Accounting Matters.......................................................45

         Section 10.3.         Banking..........................................................................46

         Section 10.4.         Withholding......................................................................46

ARTICLE XI           AMENDMENTS AND MEETINGS....................................................................46

         Section 11.1.         Amendments.......................................................................46

         Section 11.2.         Meetings of the Holders of the Securities; Action by Written Consent.............48

ARTICLE XII          REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE..............................50

         Section 12.1.         Representations and Warranties of Institutional Trustee..........................50

         Section 12.2.         Representations and Warranties of Delaware Trustee...............................50

ARTICLE XIII         MISCELLANEOUS..............................................................................51

         Section 13.1.         Notices..........................................................................51

         Section 13.2.         Governing Law....................................................................52

         Section 13.3.         Submission to Jurisdiction.......................................................53

         Section 13.4.         Intention of the Parties.........................................................53

         Section 13.5.         Headings.........................................................................53

         Section 13.6.         Successors and Assigns...........................................................53

         Section 13.7.         Partial Enforceability...........................................................53

         Section 13.8.         Counterparts.....................................................................54

                                                    ANNEXES AND EXHIBITS

ANNEX I              TERMS OF FLOATING RATE CAPITAL SECURITIES AND FLOATING RATE COMMON SECURITIES.............A-1

EXHIBIT A-1          FORM OF CAPITAL SECURITY CERTIFICATE......................................................A-1

EXHIBIT A-2          FORM OF COMMON SECURITY CERTIFICATE.......................................................A-2

EXHIBIT B            FORM OF TRANSFEREE CERTIFICATE TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBs..............B-1

EXHIBIT C            FORM OF TRANSFEROR CERTIFICATE TO BE EXECUTED FOR QIBs....................................C-1

EXHIBIT D            FORM OF ADMINISTRATOR'S CERTIFICATE OF THE TRUST..........................................D-1

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                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                           GRANDSOUTH CAPITAL TRUST I

                                  May 10, 2006

         AMENDED AND RESTATED DECLARATION OF TRUST (this  "Declaration"),  dated
and  effective as of May 10, 2006,  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 and the Sponsor  established  GrandSouth
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 May 3, 2006
(the  "Original  Declaration"),  and a  Certificate  of  Trust  filed  with  the
Secretary of State of the State of Delaware on May 3, 2006, for the sole purpose
of issuing and selling  certain  securities  representing  undivided  beneficial
interests in the assets of the Trust  investing the proceeds  thereof in certain
debentures  of the  Debenture  Issuer (as defined  herein) and engaging in those
activities necessary, advisable or incidental thereto;

         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  Ronald  K.  Earnest  and John  Butler
Garrett,  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.

         "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,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of such Person or 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.



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         "Business Day" means any day other than  Saturday,  Sunday or any other
day on which banking  institutions  in  Wilmington,  Delaware,  New York City or
Greenville,  South  Carolina 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 Placement Agreement.

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

         "Commission" means the 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 Rodney Square North, 1100 North Market Street,  Wilmington,  Delaware
19890-0001, Attention: Corporate Capital Markets.

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

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



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

         "Debenture  Trustee" means Wilmington Trust Company, a Delaware banking
corporation,  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  Floating  Rate  Junior   Subordinated   Debt
Securities due 2036 to be issued by the Debenture Issuer under the Indenture.

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

         "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 in effect for each 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.

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

         "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.

         "Federal Reserve" has the meaning set forth in paragraph 3 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,


                                       4
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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.

         "Guarantee"  means the  Guarantee  Agreement,  dated as of the  Closing
Date, of the Sponsor in respect of the Capital Securities.

         "Holder"  means a Person in whose  name a  Certificate  representing  a
Security  is  registered  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 the Closing Date,  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.

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

         "Interest"  means any interest  due on the  Debentures,  including  any
Deferred  Interest and  Defaulted  Interest (as each such term is defined in the
Indenture).

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

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

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

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

         "LIBOR" means the London  Interbank  Offered Rate for three-month  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.



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         "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.

         "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.

         "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.

         "Placement  Agreement"  means the Placement  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).



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         "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.

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

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

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

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

         "Sponsor" means GrandSouth Bancorporation,  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. Code ss. 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).



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<PAGE>

         "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.

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

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

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

         "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.

         "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  "GrandSouth  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.



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<PAGE>

         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
381 Halton Road, Greenville, South Carolina 29606. 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 in the Debentures and (c) 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  2.8 with  respect  to the  Debentures  and the  Property  Account or as
otherwise  provided in this Declaration,  legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided  beneficial  interest in
the assets of the Trust.

         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:



                                       9
<PAGE>

               (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  cause  the  Trust  to enter  into,  and to  execute,
               deliver and perform on behalf of the Trust,  such  agreements  as
               may be necessary or desirable in connection with the purposes and
               function  of the  Trust,  including  agreements  with the  Paying
               Agent,  the  Placement   Agreement,   a  Debenture   subscription
               agreement  between  the  Trust  and  the  Sponsor  and  a  Common
               Securities  subscription  agreement  between  the  Trust  and the
               Sponsor;

                    (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;

                    (H) execution and delivery of closing certificates  pursuant
               to the  Placement  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);



                                       10
<PAGE>

                    (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  Placement  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,  substantially  in the form of
               Exhibit D attached hereto, 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.

               (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;



                                       11
<PAGE>

                    (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.

               (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


                                       12
<PAGE>

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 subject to reimbursement  under
Section  9.6(a),  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
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);  (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,


                                       13
<PAGE>

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;

         (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



                                       14
<PAGE>

         (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  Regulations section  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

               (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.



                                       15
<PAGE>

                  (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 premium, if any, or principal on the Debentures on the
date such interest or premium,  if any, 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  premium,  if  any,  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); 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  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


                                       16
<PAGE>

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
6.7),  the  Institutional  Trustee shall  exercise such of the rights and powers
vested in it by this  Declaration,  and use the same degree of care and skill in
their   exercise,   as  a  prudent  person  would  exercise  or  use  under  the
circumstances in the conduct of his or her own affairs.

         (b)  The  duties  and   responsibilities   of  the   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
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


                                       17
<PAGE>

          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
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


                                       18
<PAGE>

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;

         (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


                                       19
<PAGE>

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), 5.01(b) or 5.01(c) 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

         (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.



                                       20
<PAGE>

         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 five (5) years
from the Maturity 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:

               (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;



                                       21
<PAGE>

               (ii)  the  Sponsor  expressly  appoints,  as  the  holder  of the
          Debentures,  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 rating on the Capital
          Securities  (including  any Successor  Securities) to be downgraded or
          withdrawn   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);

                    (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;



                                       22
<PAGE>

               (viii) the Sponsor  guarantees the  obligations of such Successor
          Entity under the Successor  Securities to the same extent  provided by
          the Indenture, 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  to engage in, or direct the  Administrators to engage
in, the following activities:

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

         (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
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 Placement  Agreement and other related  agreements  providing for
the sale of the Capital Securities.



                                       23
<PAGE>

                                   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,
          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.



                                       24
<PAGE>

         (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  Wilmington  Trust
Company.

         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 Wilmington 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.   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
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.



                                       25
<PAGE>

         (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  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").

         (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 (i)
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 (ii) shall add to or change any of the  provisions
of this  Declaration  as shall be  necessary  to provide for or  facilitate  the
administration  of the  Trust  by more  than  one  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


                                       26
<PAGE>

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.

         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


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<PAGE>

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 may be, 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
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)  or premium,  if any, on 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


                                       28
<PAGE>

case of withholding  taxes,  as determined by the  Institutional  Trustee or any
Paying  Agent  and,  in the case of  taxes  other  than  withholding  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
Certificate, 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 the  Certificate
evidencing  it is  authenticated  by the  manual or  facsimile  signature  of an
Authorized  Officer  of the  Institutional  Trustee.  Such  signature  shall  be
conclusive  evidence that the Certificate  evidencing such Capital  Security has
been  authenticated  under this  Declaration.  Upon  written  order of the Trust
signed by one Administrator, the Institutional Trustee shall authenticate one or
more  Certificates  evidencing 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  Certificates  evidencing  the Capital
Securities.  A Common Security need not be so  authenticated  and shall be valid
upon execution by one or more Administrators.

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



                                       29
<PAGE>

         (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  (the  "Securities  Register")  for the
purpose of  registering  Securities  and transfers and exchanges of  Securities,
such  Securities  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.

         Section 6.3. Form and Dating.

         (a)  The  Capital   Securities  shall  be  evidenced  by  one  or  more
Certificates  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 evidenced by one or more  Certificates  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.
Certificates evidencing Securities may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule,  agreements to which the Trust is subject,  if any,
or usage (provided,  that any such notation,  legend or endorsement is in a form
acceptable  to the  Sponsor).  The Trust at the  direction of the Sponsor  shall
furnish  any such  legend  not  contained  in Exhibit  A-1 to the  Institutional
Trustee in writing. Each Capital Security Certificate shall be dated the date of
its  authentication.  The terms and  provisions of the  Securities  set forth in
Annex I and the forms of Certificates set forth in Exhibits A-1 and A-2 are part


                                       30
<PAGE>

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 an aggregate liquidation amount of not less than $100,000.

         (b) The  Capital  Securities  are being  offered  and sold by the Trust
pursuant to the Placement  Agreement in definitive form,  registered in the name
of the  Holder  thereof,  without  coupons  and with the  Restricted  Securities
Legend.

         Section 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If:

         (a) any mutilated  Certificate  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)  the  related   Holder  shall   deliver  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  to such  Holder,  in  exchange  for or in lieu of any  such  mutilated,
destroyed,  lost or stolen Certificate,  a new Certificate of like denomination.
In connection with the issuance of any new  Certificate  under this Section 6.4,
the  Registrar  or the  Administrators  may  require  such  Holder  to pay a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection  therewith.  Any Certificate  executed and delivered pursuant to this
Section shall  constitute  conclusive  evidence of an ownership  interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

         Section 6.5. Temporary Certificates.  Until definitive Certificates are
ready for delivery,  the Administrators may prepare and execute on behalf of the
Trust  and,  in the case of Capital  Security  Certificates,  the  Institutional
Trustee shall authenticate, temporary Certificates. Temporary Certificates shall
be substantially in the form of definitive  Certificates but may have variations
that the Administrators consider appropriate for temporary Certificates. Without
unreasonable  delay, the  Administrators  shall prepare and execute on behalf of
the  Trust  and,  in  the  case  of  the  Capital  Security  Certificates,   the
Institutional Trustee shall authenticate definitive Certificates in exchange for
temporary Certificates.

         Section 6.6.  Cancellation.  The Administrators at any time may deliver
Certificates   evidencing   Securities   to  the   Institutional   Trustee   for
cancellation.  The  Registrar  shall  forward to the  Institutional  Trustee any
Certificates  evidencing  Securities  surrendered  to  it  for  registration  of
transfer, redemption or payment. The Institutional Trustee shall promptly cancel
all Certificates surrendered for registration of transfer, payment,  replacement
or  cancellation  and  shall  dispose  of  such  canceled  Certificates  as  the
Administrators  direct.  The  Administrators  may not issue new  Certificates to
replace  Certificates  evidencing  Securities that have been paid or, except for
Certificates  surrendered  for  purposes  of the  transfer  or  exchange  of the


                                       31
<PAGE>

Securities  evidenced  thereby,  that have been  delivered to the  Institutional
Trustee for cancellation.

         Section 6.7. Rights of Holders; Waivers of Past Defaults.

         (a) The legal title to the Trust Property is vested  exclusively in the
Institutional  Trustee (in its capacity as such) in accordance with Section 2.5,
and the  Holders  shall  not have any  right or  title  therein  other  than the
undivided  beneficial  interest  in the assets of the Trust  conferred  by their
Securities and they shall have no right to call for any partition or division of
property,  profits  or rights  of the  Trust  except  as  described  below.  The
Securities  shall be personal  property giving only the rights  specifically set
forth therein and in this  Declaration.  The  Securities  shall have no, 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 pursuant to Section 5.01(b), 5.01(e) or 5.01(f) of
the Indenture 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 the  acceleration  of maturity of 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
acceleration 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 acceleration 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  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



                                       32
<PAGE>

               (ii) all Events of Default with respect to the Debentures,  other
          than the  non-payment  of the  principal of or premium,  if any on 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,  premium,  if any,  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 6.7.

         (f) Except as  otherwise  provided in this  Section 6.7, 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 :



                                       33
<PAGE>

               (i) unless earlier dissolved, on June 23, 2041, 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. (a) Where a Holder of Capital Securities delivers
to the  Registrar in  accordance  with this  Declaration a request to register a
transfer of such  Holder's  Capital  Securities or to exchange them for an equal
aggregate  liquidation  amount of Capital  Securities  represented  by different
Certificates,  the  Registrar  shall  register the transfer or make the exchange
when the  requirements  specified  in this  Article  VIII for such  transfer  or
exchange are met. To facilitate  registrations  of transfers and exchanges,  the
Trust shall execute and the  Institutional  Trustee shall  authenticate  Capital
Security Certificates at the Registrar's request.



                                       34
<PAGE>

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

         (c) Capital Securities may only be transferred, in whole or in part, in
accordance  with the terms and conditions set forth in this  Declaration  and in
the  terms  of the  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 purported  transferee shall be deemed
not to be the Holder of such Capital Securities for any purpose,  including, but
not limited to, the receipt of  Distributions  on such Capital  Securities,  and
such transferee  shall be deemed to have no interest  whatsoever in such Capital
Securities.

         (d) The  Registrar  shall  provide in the  Securities  Register 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  reasonably  require) in respect of any tax or other  governmental
charges that may be imposed in relation to it. Upon its receipt of the documents
required  under  this  Section  8.1(d)  for  registration  of  transfer  of  any
Securities, the Registrar shall register in the Securities Register, in the name
of the designated  transferee or transferees,  the Securities being  transferred
and  thereupon,  for all purposes of this  Declaration,  such transfer  shall be
effective and such transferee or transferees shall be, and such transferor shall
no longer be, the Holder of the transferred Securities. Upon the registration of
transfer of a Security  pursuant to the terms of this Declaration in the name of
the new Holder thereof,  such Security shall constitute the same Security as the
Security so  transferred  and shall be entitled to the same benefits  under this
Declaration  as  the  Security  so  transferred.  The  Registrar  shall,  and is
authorized to, record and register in the Securities  Register the transfer of a
Security  upon the  Registrar's  receipt of originals or copies (which may be by
facsimile or other form of electronic  transmission) of (i) a written instrument
of transfer in form  reasonably  satisfactory  to the Registrar duly executed by
the Holder or such  Holder's  attorney duly  authorized in writing,  and (ii) if
such Security is being  transferred other than in accordance with Section 8.4, a
certificate  substantially  in  the  form  set  forth  as  Exhibit  B or  C,  as
applicable,  hereto,  executed by the transferor or  transferee,  as applicable;
thereupon,  the Registrar is authorized to confirm in writing to the  transferee
and, if  requested,  to the  transferor  of such Security that such transfer has
been  registered  in the  Securities  Register and that such  transferee  is the
Holder of such Security. The Certificate evidencing the Security so transferred,
duly endorsed by the  transferor,  shall be  surrendered to the Registrar at the
time the transfer conditions specified in the immediately preceding sentence are
satisfied or within five (5) Business Days after the  Registrar  has  registered
the transfer of such Security on the  Securities  Register,  and promptly  after
such surrender,  an  Administrator  on behalf of the Trust shall execute and, in
the case of a Capital Security Certificate, the Institutional Trustee shall, and
is authorized  to,  authenticate  a Certificate in the name of the transferee as
the  new  Holder  of the  Security  evidenced  thereby.  Until  the  Certificate
evidencing the Security so  transferred  is  surrendered to the Registrar,  such
Security may not be transferred by such new Holder. Each Certificate surrendered
in  connection  with  a  registration  of  transfer  shall  be  canceled  by the
Institutional  Trustee pursuant to Section 6.6. A transferee of a Security shall
be entitled to the rights and subject to the  obligations of a Holder  hereunder


                                       35
<PAGE>

upon the  registration  of such transfer in the Securities  Register.  Each such
transferee shall be deemed to have agreed to be bound by this Declaration.

         (e) Neither the Trust nor the Registrar  shall be required (i) to issue
Certificates representing Securities or 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  Certificates  evidencing  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 Trustee,  as may be
reasonably required by the Trust, that neither the Restricted  Securities 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 to ensure
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  Certificates  that do not bear the  Restricted
Securities Legend in exchange for the Capital  Securities  Certificates  bearing
the Restricted Securities Legend.

         (b) Without the written consent of the Sponsor,  Capital Securities may
only be  transferred:  (i) to a QIB if the instrument of transfer is accompanied
by a  certificate  of the  transferor  substantially  in the form  set  forth as
Exhibit C hereto;  or (ii) otherwise than to a QIB if the instrument of transfer
is accompanied by a certificate of the transferee  substantially in the form set
forth as Exhibit B hereto.  Each certificate  furnished pursuant to this Section
8.2(b) may be an original  or a copy (which may be  furnished  by  facsimile  or
other form of electronic transmission).

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

         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


                                       36
<PAGE>

TO AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT TO AN
"ACCREDITED  INVESTOR"  WITHIN THE MEANING OF SUBPARAGRAPH  (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE  SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN  CONNECTION  WITH,  ANY
DISTRIBUTION  IN  VIOLATION  OF THE  SECURITIES  ACT, OR (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) ABOVE 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 EXEMPTIVE  RELIEF  AVAILABLE
UNDER U.S.  DEPARTMENT OF LABOR  PROHIBITED  TRANSACTION  CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE  EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS  SECURITY IS NOT  PROHIBITED  BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH  RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER  OR
HOLDER  OF  THIS  SECURITY  OR ANY  INTEREST  THEREIN  WILL  BE  DEEMED  TO HAVE
REPRESENTED  BY ITS  PURCHASE  AND HOLDING  THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE  BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS  APPLICABLE,  A TRUSTEE OR OTHER PERSON ACTING


                                       37
<PAGE>

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 AND HOLDING  WILL NOT RESULT IN A PROHIBITED  TRANSACTION
UNDER  SECTION  406 OF ERISA OR SECTION  4975 OF THE CODE FOR WHICH  THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE HOLDER OF THIS  SECURITY  WILL
DELIVER  TO THE  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.

         Section 8.3. Deemed Security  Holders.  The Trust, the  Administrators,
the Trustees,  the Paying Agent,  the Transfer  Agent or the Registrar may treat
the Person in whose name any  Security  shall be  registered  on the  Securities
Register of the Trust as the sole Holder and owner of such Security 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  Security on the part of any other  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.

         Section  8.4.  Transfer  of  Initial  Securities.  Notwithstanding  the
foregoing  provisions  of this  Article  VIII  or any  other  provision  of this
Declaration  (including all Annexes and Exhibits hereto) to the contrary, any or
all of the Capital  Securities  initially  issued to SCP Structured Fund I, Ltd.
(the "Initial  Securities") may be transferred by SCP Structured Fund I, Ltd. to
any  transferee  selected by it that meets the parameters  specified  below and,


                                       38
<PAGE>

upon  delivery  to the  Registrar,  of  originals  or  copies  (which  may be by
facsimile or other form of electronic  transmission) of a written  instrument of
transfer in form  reasonably  satisfactory to the Registrar duly executed by SCP
Structured  Fund  I,  Ltd.  or SCP  Structured  Fund  I,  Ltd.'s  attorney  duly
authorized in writing (it being understood that no signature  guarantee shall be
required),  then the Registrar  shall, and is authorized to, record and register
on the  Securities  Register  the transfer of such  Initial  Securities  to such
transferee;  thereupon, the Registrar is authorized to confirm in writing to the
transferee and, if requested,  to the transferor of such Initial Securities that
such  transfer  has been  registered  in the  Securities  Register and that such
transferee is the Holder of such Initial Securities; provided, however, that SCP
Structured  Fund I, Ltd.,  by its  acceptance  thereof,  agrees  that it may not
transfer  any  Initial  Securities  to any  transferee  that is not a  permitted
transferee  as provided  herein and in the legend  attached  to the  Certificate
representing  any  Capital  Security.  The  Certificate  evidencing  the Initial
Securities  to be  transferred,  duly endorsed by SCP  Structured  Fund I, Ltd.,
shall be  surrendered  to the  Registrar  at the time  the  transfer  conditions
specified in the immediately preceding sentence are satisfied or within five (5)
Business Days after the Registrar  has  registered  the transfer of such Initial
Securities in the Securities  Register,  and promptly after such  surrender,  an
Administrator on behalf of the Trust shall execute and, in the case of a Capital
Security  Certificate,  the  Institutional  Trustee shall, and is authorized to,
authenticate  a Certificate  in the name of the  transferee as the new Holder of
the Initial Securities evidenced thereby.  Until the Certificate  evidencing the
Initial Securities so transferred is surrendered to the Registrar,  such Initial
Securities  may not be  transferred  by such new  Holder.  No other  conditions,
restrictions or other provisions of this Declaration or any other document shall
apply to a transfer of Initial Securities by SCP Structured Fund I, Ltd.

                                   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) 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


                                       39
<PAGE>

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.

         (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


                                       40
<PAGE>

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
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.



                                       41
<PAGE>

               (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
          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.



                                       42
<PAGE>

         (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
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


                                       43
<PAGE>

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
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) 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  section
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be  maintained on the accrual  method of  accounting,  in accordance  with
generally accepted accounting principles, consistently applied.

         (b) The  Sponsor  shall  cause the  Administrators  to  deliver to each
Holder of the Securities:  (i) if the Sponsor or any of its  Subsidiaries is not


                                       44
<PAGE>

then (x) subject to Section 13 or 15(d) of the  Exchange  Act or (y) exempt from
reporting  pursuant to Rule 12g3-2(b)  thereunder,  the information  required by
Rule  144A(d)(4)  under the  Securities  Act,  (ii) if the  Sponsor  is not then
required  to file Form FR Y-9C,  the  audited  financial  statements  (or, if no
audited financial statements are prepared,  the unaudited financial  statements)
of the Sponsor and any  Subsidiaries  within 90 days after the end of the Fiscal
Year,  and (iii)  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 statements of income or loss for the
Fiscal Year then ended,  that are prepared at the principal  office of the Trust
in the United States,  as defined for purposes of Treasury  Regulations  section
301.7701-7.

         (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 section 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) So long as the only  Holder  or  beneficial  owner  of the  Capital
Securities is an entity that holds a pool of trust  preferred  securities,  debt
securities and/or similar  securities or a trustee thereof,  the  Administrators
will cause the Sponsor's  reports on Forms FR Y-9LP, FR Y-6 and FR Y-9C, each 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
section 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


                                       45
<PAGE>

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.  (a) Except as  otherwise  provided in this
Declaration or by any applicable  terms of the ecurities,  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;



                                       46
<PAGE>

                    (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 Debentures as "Tier
               1  Capital"  (or its  equivalent)  for  purposes  of the  capital
               adequacy  guidelines  of the Federal  Reserve  (or any  successor
               regulatory   authority  with   jurisdiction   over  bank  holding
               companies).

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

         (f) 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) 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


                                       47
<PAGE>

          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.

         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  notices 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  liquidation  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;



                                       48
<PAGE>

               (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 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 Regulations section 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;



                                       49
<PAGE>

         (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,  and  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);

         (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  Trustee  is  duly
organized,  validly existing and in good standing under the laws of 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 charter 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



                                       50
<PAGE>

         (f) the Delaware  Trustee is a natural  person who is a resident of the
State of Delaware  or, if not a natural  person,  it is an entity  which has its
principal  place of  business in the State of Delaware  and, in either  case,  a
Person that  satisfies  for the Trust the  requirements  of Section  3807 of the
Statutory Trust Act.

                                  ARTICLE XIII

                                  MISCELLANEOUS

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

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

                       GrandSouth Capital Trust I
                       381 Halton Road
                       Greenville, South Carolina 29606
                       Attention: John Butler Garrett
                       Telecopy: (864) 770-1081
                       Telephone:  (864) 770-1000

         (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):

                        Wilmington Trust Company
                        Rodney Square North
                        1100 North Market Street
                        Wilmington, Delaware 19890-0001
                        Attention: Corporate Capital Markets
                        Telecopy: (302) 636-4140
                        Telephone: (302) 651-1000

         (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):

                         Wilmington Trust Company
                         Rodney Square North
                         1100 North Market Street
                         Wilmington, Delaware 19890-0001
                         Attention: Corporate Capital Markets
                         Telecopy: (302) 636-4140
                         Telephone: (302) 651-1000



                                       51
<PAGE>

         (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):

                          GrandSouth Bancorporation
                          381 Halton Road
                          Greenville, South Carolina 29606
                          Attention: John Butler Garrett
                          Telecopy: (864) 770-1081
                          Telephone: (864) 770-1000

         (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 and the United States District Courts,  in each case located in the Borough
of Manhattan,  City and State of New York,  and further  agrees to submit to the
jurisdiction  of 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


                                       52
<PAGE>

on it in any such suit,  action or  proceeding  in any such court 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.

         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.


                                       53
<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]


























                                       54
<PAGE>

                                     ANNEX I

                                    TERMS OF
                      FLOATING RATE CAPITAL SECURITIES AND
                         FLOATING RATE COMMON SECURITIES

         Pursuant  to Section 6.1 of the Amended  and  Restated  Declaration  of
Trust,   dated  as  of  May  10,  2006  (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.  8,000 Capital Securities of GrandSouth Capital
Trust I (the "Trust"),  with an aggregate stated liquidation amount with respect
to the assets of the Trust of EIGHT MILLION  Dollars  ($8,000,000)  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
"Floating  Rate Capital  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.  248 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 TWO HUNDRED FORTY EIGHT THOUSAND Dollars  ($248,000) 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  which,  with  respect to any
Distribution  Period (as defined herein),  will be equal to LIBOR, as determined
on the LIBOR  Determination Date for such Distribution  Period,  plus 1.85% (the
"Coupon Rate"),  such rate being the rate of interest  payable on the Debentures
to be held by the Institutional Trustee. Except as set forth below in respect of
an Extension  Period,  Distributions  in arrears for more than one  Distribution
Period will bear interest thereon compounded  quarterly at the applicable Coupon
Rate for each such  Distribution  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 available in the
Property  Account  therefor.   The  amount  of  Distributions  payable  for  any
Distribution  Period  will be  computed  on the basis of a 360-day  year and the


                                      A-I-1
<PAGE>

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.

         The term "Distribution Period" means the period from and including each
Distribution  Payment Date or, in the case of the first Distribution 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  Distribution
Period,  the  Redemption  Date,  Special  Redemption  Date or Maturity  Date, as
applicable.

         (b)  LIBOR  shall  be  determined  by the  Calculation  Agent  for each
Distribution Period in accordance with the following provisions:

               (1) On the second LIBOR Business Day (provided,  that on such day
          commercial banks are open for business  (including dealings in foreign
          currency  deposits) in London (a "LIBOR Banking  Day"),  and otherwise
          the next  preceding  LIBOR  Business Day that is also a LIBOR  Banking
          Day) prior to March 23, June 23,  September 23 and December 23, as the
          case  may  be,   immediately   preceding  the   commencement  of  such
          Distribution Period (or, in the case of the first Distribution Period,
          prior to May 10, 2006), (each such day, a "LIBOR Determination Date"),
          LIBOR shall equal the rate, as obtained by the  Calculation  Agent for
          three-month U.S. Dollar deposits in Europe,  which appears on Telerate
          (as defined in the  International  Swaps and Derivatives  Association,
          Inc. 2000 Interest Rate and Currency  Exchange  Definitions) Page 3750
          or such other page as may replace such Telerate Page 3750, as of 11:00
          a.m.  (London time) on such LIBOR  Determination  Date, as reported by
          Bloomberg   Financial  Markets  Commodities  News  (or  any  successor
          service).  "LIBOR  Business Day" means any day that is not a Saturday,
          Sunday or other day on which  commercial  banking  institutions in New
          York, 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 LIBOR  Determination
          Date.

               (2) If,  on any  LIBOR  Determination  Date,  such  rate does not
          appear  on  Telerate  Page 3750 as  reported  by  Bloomberg  Financial
          Markets  Commodities  News or such  other  page  as may  replace  such
          Telerate  Page  3750,  the  Calculation   Agent  shall  determine  the
          arithmetic  mean of the offered  quotations of the Reference Banks (as
          defined  below) to leading  banks in the London  interbank  market for
          three-month U.S. Dollar deposits in Europe (in an amount determined by
          the  Calculation  Agent) by reference to requests for quotations as of
          approximately 11:00 a.m. (London time) on the LIBOR Determination Date
          made by the Calculation Agent to the Reference Banks. If, on any LIBOR
          Determination  Date, at least two of the Reference  Banks provide such
          quotations,  LIBOR shall equal the arithmetic mean of such quotations.
          If, on any LIBOR Determination Date, only one or none of the Reference
          Banks  provide  such a  quotation,  LIBOR  shall be  deemed  to be the
          arithmetic  mean of the offered  quotations  that at least two leading


                                     A-I-2
<PAGE>

          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 shall be LIBOR in effect on the previous LIBOR
          Determination  Date  (whether or not LIBOR for such period was in fact
          determined on such LIBOR Determination Date).

         (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 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 Periods as described herein, quarterly in arrears on March 23, June
23,  September  23 and  December  23 of each year,  commencing  on June 23, 2006
(each, a "Distribution  Payment Date"). The Debenture Issuer has the right under
the Indenture to defer  payments of interest on the  Debentures by extending the
interest  payment period for up to 20 consecutive  quarterly  periods (each,  an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions  described below.  During 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


                                     A-I-3
<PAGE>

Maturity Date, Redemption Date or Special Redemption 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,  (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  or (iii)  make any  payment  under any
guarantees of the Debenture  Issuer that rank pari passu in all respects with or
junior in interest to the Guarantee (other than (a) repurchases,  redemptions or
other  acquisitions  of shares of capital stock of the  Debenture  Issuer (I) in
connection  with  any  employment  contract,   benefit  plan  or  other  similar
arrangement  with  or  for  the  benefit  of one or  more  employees,  officers,
directors or  consultants,  (II) in connection  with a dividend  reinvestment or
stockholder  stock  purchase  plan or (III) in  connection  with the issuance of
capital  stock  of the  Debenture  Issuer  (or  securities  convertible  into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  occurrence  of (I), (II) or (III) above,
(b) as a result  of any  exchange  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 in interest
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. 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 (except any Additional  Interest that may be due and payable)
shall be due and payable during an Extension Period,  except at the end thereof,
but 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  payment  dates.  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
the Board of Governors of the Federal Reserve System (the "Federal Reserve"), if
then required  under  applicable  capital  guidelines or policies of the Federal
Reserve 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) June 23,  2041,
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


                                     A-I-6
<PAGE>

bearing  accrued and unpaid  interest equal to accrued and unpaid  distributions
on, the Securities until such certificates are presented to the Debenture Issuer
or its agent for  transfer or  reissuance  (and until such  certificates  are so
surrendered,  no payments of interest or  principal  shall be made to Holders of
Securities in respect of any payments due and payable under the  Debentures) 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 June 23, 2036. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, on any March 23, June 23,
September 23 and December 23 on or after June 23, 2011, 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 the Federal Reserve,
if then required under applicable  capital guidelines or policies of the Federal
Reserve.

         "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 or otherwise  required to pay, or required to withhold from
distributions to holders of Trust  Securities,  more than a de minimis amount of
other  taxes  (including  withholding  taxes),  duties,   assessments  or  other
governmental charges.

         "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


                                     A-I-7
<PAGE>

that,  as a  result  of a change  in law or  regulation  or  written  change  in
interpretation  or  application  of law or regulation by any  legislative  body,
court,  governmental  agency  or  regulatory  authority,  there is more  than an
insubstantial  risk  that the  Trust is or,  within  90 days of the date of such
opinion  will be,  considered  an  "investment  company"  that is required to be
registered under the Investment  Company Act, which change becomes  effective 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  in full at  maturity,  the
Maturity  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 June 23, 2011.

         "Special Redemption Price" means, with respect to the redemption of any
Debenture  following a Special Event,  an amount in cash equal to the percentage
for the  principal  amount of the  Debentures  that is  specified  below for the
Special  Redemption  Date plus unpaid  interest  accrued  thereon to the Special
Redemption Date:

              Special Event Redemption During
                    Period Beginning On           Percentage of Principal Amount
                    -------------------           ------------------------------

                        May 10, 2006                            104.40
                       June 23, 2007                            103.52
                       June 23, 2008                            102.64
                       June 23, 2009                            101.76
                       June 23, 2010                            100.88
                       June 23, 2011                            100.00




                                     A-I-8
<PAGE>

         "Redemption  Date" means the date fixed for the  redemption  of Capital
Securities,  which shall be any March 23, June 23,  September 23 and December 23
on or after June 23, 2011.

         (b) Upon the repayment in full at maturity or redemption in whole or in
part of the Debentures  (other than following the distribution of the Debentures
to the Holders of the  Securities),  the proceeds from such repayment or payment
shall  concurrently  be applied to redeem Pro Rata at the applicable  Redemption
Price or Special  Redemption  Price,  as the case may be,  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).

         (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  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


                                     A-I-9
<PAGE>

          has a  sufficient  amount  of  cash in  connection  with  the  related
          redemption or maturity of the Debentures,  the  Institutional  Trustee
          will  pay  the  relevant  redemption  price  to the  Holders  of  such
          Securities  by  check  mailed  to the  address  of  each  such  Holder
          appearing  on the books  and  records  of the Trust on the  redemption
          date.  If a  Redemption/Distribution  Notice shall have been given and
          funds deposited as required,  then  immediately  prior to the close of
          business  on the date of such  deposit,  Distributions  will  cease to
          accrue on the  Securities so called for  redemption  and all rights of
          Holders of such Securities so called for redemption will cease, except
          the right of the Holders of such  Securities to receive the applicable
          redemption  price  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 (and without any interest or other  payment in respect of
          any such delay)  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  any  time  and  from  time  to  time  purchase
          outstanding  Capital  Securities  by tender,  in the open market or by
          private agreement.

         5. Voting  Rights - Capital  Securities.  (a) Except as provided  under
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.



                                     A-I-10
<PAGE>

         (b)  Subject to the  requirements  of  obtaining  a tax  opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph,  the Holders of a Majority in liquidation  amount of the Capital
Securities,  voting  separately  as a class,  have the right to direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available  under the Indenture as the holder of the  Debentures,  (ii) waive any
past default that is waivable under the  Indenture,  (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and  payable  or (iv)  consent on behalf of all the  Holders of the  Capital
Securities to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required;  provided, however, that, where
a consent or action under the Indenture  would require the consent or act of the
holders of greater than a simple  majority in 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 or Super  Majority,
as the case may be, 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
premium,  if any, on or principal of the  Debentures  on the date the  interest,
premium,  if any, 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  premium,  if any,  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,


                                     A-I-11
<PAGE>

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
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.



                                     A-I-12
<PAGE>

         (c) Subject to Section 6.7 of the Declaration and only after each Event
of Default  (if any) with  respect to the  Capital  Securities  has been  cured,
waived or otherwise  eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common  Securities,  voting  separately as a class,  may direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including (i) directing the time,
method,  place of  conducting  any  proceeding  for any remedy  available to the
Debenture  Trustee,  or exercising any trust or power conferred on the Debenture
Trustee  with respect to the  Debentures,  (ii) waiving any past default and its
consequences  that 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)


                                     A-I-13
<PAGE>

any action that would adversely affect the powers, preferences or special rights
of the Securities,  whether by way of amendment to the Declaration or otherwise,
or (ii) the Liquidation of the Trust,  other than as described in Section 7.1 of
the Declaration,  then the Holders of outstanding Securities, voting together as
a single class,  will be entitled to vote on such amendment or proposal and such
amendment  or proposal  shall not be  effective  except with the approval of the
Holders  of 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


                                     A-I-14
<PAGE>

each  Holder  of the  Common  Securities  Pro Rata  according  to the  aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.

         9. Ranking.  The Capital  Securities  rank pari passu with, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to  receive  payment  of  Distributions  and  payments  upon
liquidation,  redemption  and  otherwise are  subordinated  to the rights of the
Holders  of the  Capital  Securities  with the  result  that no  payment  of any
Distribution  on, or  redemption  price 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 the full amount of such  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 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]

         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
"ACCREDITED  INVESTOR"  WITHIN THE MEANING OF SUBPARAGRAPH  (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE  SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN  CONNECTION  WITH,  ANY
DISTRIBUTION  IN  VIOLATION  OF THE  SECURITIES  ACT, OR (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) ABOVE 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


                                     A-1-1
<PAGE>

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

         IN  CONNECTION  WITH ANY  TRANSFER,  THE HOLDER OF THIS  SECURITY  WILL
DELIVER  TO THE  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.






                                     A-1-2
<PAGE>



Certificate Number _____                      Number of Capital Securities _____

                    Certificate Evidencing Capital Securities

                                       of

                           GRANDSOUTH CAPITAL TRUST I

                        Floating Rate Capital Securities

                (liquidation amount $1,000 per Capital Security)

         GrandSouth Capital Trust I, a statutory trust created under the laws of
the State of Delaware (the  "Trust"),  hereby  certifies  that SIGLER & CO. (the
"Holder")  is the  registered  owner  of [ ]  capital  securities  of the  Trust
representing  undivided  beneficial  interests  in  the  assets  of  the  Trust,
designated the Floating Rate Capital 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 May 10,
2006,  among  Ronald K.  Earnest and John  Butler  Garrett,  as  Administrators,
Wilmington Trust Company,  as Delaware  Trustee,  Wilmington  Trust Company,  as
Institutional Trustee,  GrandSouth  Bancorporation,  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 (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

         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 Capital Securities as evidence of beneficial ownership in the Debentures.

         This  Certificate  and the  Capital  Securities  evidenced  hereby  are
governed by, and shall be construed in accordance with, the laws of the State of
Delaware, without regard to principles of conflict of laws.

         This Certificate may contain more than one counterpart of the signature
page and this  Certificate may be executed and  authenticated by the affixing of
the signature of an  Administrator  on behalf of the Trust, and the signature of
the Institutional Trustee providing  authentication,  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  the Trust had
executed,  and the Institutional  Trustee had authenticated,  a single signature
page.


                                     A-1-3
<PAGE>


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

                                      GRANDSOUTH CAPITAL TRUST I

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




                          CERTIFICATE OF AUTHENTICATION

         This  Certificate  represents  Capital  Securities  referred  to in the
within-mentioned Declaration.

                                  WILMINGTON TRUST COMPANY,
                                  not in its individual capacity but solely
                                  as the Institutional Trustee




                                  By:_______________________________
                                      Authorized Officer

                                  Dated: ___________________________


                                     A-1-4
<PAGE>


                          [FORM OF REVERSE OF SECURITY]

         Distributions  payable on each  Capital  Security  will be payable at a
variable per annum rate of  interest,  which,  with respect to any  Distribution
Period  (as  defined  herein)  will  be  equal  to  LIBOR  (as  defined  in  the
Declaration)  plus  1.85%  (the  "Coupon  Rate"),  such  rate  being the rate of
interest  payable on the  Debentures  to be held by the  Institutional  Trustee.
Except as set forth below in respect of an Extension  Period,  Distributions  in
arrears  for more  than one  Distribution  Period  will  bear  interest  thereon
compounded  quarterly at the applicable  Coupon Rate for each such  Distribution
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 Period will
be computed on the basis of a 360-day year and the actual number of days elapsed
in the relevant Distribution 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 March 23, June 23, September 23 and
December 23 of each year,  commencing  on June 23, 2006 (each,  a  "Distribution
Payment Date").  The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest  payment period
for up to 20 consecutive  quarterly periods (each, an "Extension Period") at any
time  and  from  time to  time  on the  Debentures,  subject  to the  conditions
described below.  During 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,
Redemption  Date or Special  Redemption  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,  Redemption Date or Special  Redemption 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  (except any
Additional Interest that may be due and payable) shall be due and payable during
an Extension Period,  except at the end thereof,  but 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 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-1-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned  assigns and transfers the Capital
Securities evidenced by 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 the Capital Securities  evidenced
by 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-1-6
<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 _____                        Number of Common Securities ____

                    Certificate Evidencing Common Securities

                                       of

                           GRANDSOUTH CAPITAL TRUST I

         GrandSouth Capital Trust I, a statutory trust created under the laws of
the  State  of  Delaware  (the  "Trust"),   hereby   certifies  that  GrandSouth
Bancorporation  (the "Holder") is the registered owner of 248 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 May 10,  2006,  among  Ronald  K.  Earnest  and John  Butler  Garrett,  as
Administrators,  Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, 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 (the
"Declaration").  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  Certificate  and  the  Common  Securities  evidenced  hereby  are
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 this ___
day of ____, 20__.

                                       GRANDSOUTH CAPITAL TRUST I

                                       By:______________________________
                                           Name:
                                           Title: Administrator



























                                     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,  which,  with respect to any  Distribution
Period  (as  defined  herein)  will  be  equal  to  LIBOR  (as  defined  in  the
Declaration)  plus  1.85%  (the  "Coupon  Rate"),  such  rate  being the rate of
interest  payable on the  Debentures  to be held by the  Institutional  Trustee.
Except as set forth below in respect of an Extension  Period,  Distributions  in
arrears  for more  than one  Distribution  Period  will  bear  interest  thereon
compounded  quarterly at the applicable  Coupon Rate for each such  Distribution
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 Period will
be computed on the basis of a 360-day year and the actual number of days elapsed
in the relevant Distribution 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 March 23, June 23, September 23 and
December 23 of each year,  commencing  on June 23, 2006 (each,  a  "Distribution
Payment Date").  The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest  payment period
for up to 20 consecutive  quarterly periods (each, an "Extension Period") at any
time  and  from  time to  time  on the  Debentures,  subject  to the  conditions
described below.  During 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,
Redemption  Date or Special  Redemption  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,  Redemption Date or Special  Redemption 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  (except any
Additional Interest that may be due and payable) shall be due and payable during
an Extension Period,  except at the end thereof,  but 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


                                     A-2-4
<PAGE>

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  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.






















                                     A-2-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the  undersigned  assigns and transfers the Common
Securities evidenced by 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 the Common
Securities  evidenced by 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:(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-2-6
<PAGE>




                                                                       EXHIBIT B

                         FORM OF TRANSFEREE CERTIFICATE
                  TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS

                                                                     ----------,

GrandSouth Bancorporation
GrandSouth Capital Trust I
381 Halton Road
Greenville, South Carolina 29606

     Re:  Purchase of $1,000 stated  liquidation amount of Floating Rate Capital
          Securities (the "Capital Securities") of GrandSouth Capital Trust I

Ladies and Gentlemen:

         In  connection  with our purchase of the Capital  Securities we confirm
that:

         1. We  understand  that  the  Floating  Rate  Capital  Securities  (the
"Capital Securities") of GrandSouth Capital Trust I (the "Trust") (including the
guarantee  (the  "Guarantee")  of  GrandSouth   Bancorporation  (the  "Company")
executed in connection therewith) and the Floating Rate Junior Subordinated Debt
Securities due 2036 of the Company (the  "Subordinated  Debt  Securities")  (the
Capital Securities,  the Guarantee and the Subordinated Debt Securities together
being referred to herein as the "Offered Securities"),  have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold except as permitted in the  following  sentence.  We agree on
our own behalf and on behalf of any investor account for which we are purchasing
the Capital  Securities that, if we decide to offer, sell or otherwise  transfer
any such Capital Securities,  such offer, sale or transfer will be made only (a)
to the Company or the Trust, (b) pursuant to Rule 144A under the Securities Act,
to a person we reasonably believe is a qualified  institutional buyer under Rule
144A (a "QIB")  that  purchases  for its own account or for the account of a QIB
and to whom notice is given that the  transfer is being made in reliance on Rule
144A,  (c)  pursuant  to an  exemption  from  registration,  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  Capital  Securities for its own
account  or for the  account  of  such an  accredited  investor  for  investment
purposes and not with a view to, or for offer or sale in  connection  with,  any
distribution  thereof in  violation  of the  Securities  Act, or (d) pursuant to
another available exemption from the registration requirements of the Securities
Act, and in each of the foregoing cases in accordance with any applicable  state
securities  laws and any  requirements of law that govern the disposition of our
property.  The foregoing restrictions on resale will not apply subsequent to the
date on which, in the written opinion of counsel, the Capital Securities are not
"restricted securities" within the meaning of Rule 144 under the Securities Act.
If any resale or other transfer of the Capital Securities is proposed to be made
pursuant to clause (c) or (d) above,  the transferor shall deliver a letter from
the  transferee  substantially  in the form of this letter to the  Institutional
Trustee as  Transfer  Agent,  which  shall  provide as  applicable,  among other
things,  that the transferee is an "accredited  investor"  within the meaning of
subparagraph  (a)(1),  (2), (3) or (7) of Rule 501 under the Securities Act that
is acquiring such Securities for investment purposes and not for distribution in



                                      B-1
<PAGE>

violation of the  Securities  Act. We acknowledge on our behalf and on behalf of
any investor  account for which we are purchasing  Securities that the Trust and
the  Company  reserve  the  right  prior to any  offer,  sale or other  transfer
pursuant to clause (c) or (d) to require the delivery of any opinion of counsel,
certifications  and/or  other  information  satisfactory  to the  Trust  and the
Company.  We understand that the  certificates  for any Capital Security that we
receive will bear a legend substantially to the effect of the foregoing.

         2. We are an "accredited  investor"  within the meaning of subparagraph
(a) (1), (2), (3) or (7) of Rule 501 under the Securities Act purchasing for our
own  account or for the  account of such an  "accredited  investor,"  and we are
acquiring the Capital  Securities for investment  purposes and not with view to,
or for offer or sale in connection  with, any  distribution  in violation of the
Securities  Act, and we have such  knowledge  and  experience  in financial  and
business  matters  as to be capable  of  evaluating  the merits and risks of our
investment  in the Capital  Securities,  and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.

         3. We are acquiring the Capital Securities  purchased by us for our own
account  (or for one or more  accounts  as to each of  which  we  exercise  sole
investment  discretion  and have  authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Capital
Securities,  subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.

         4.  In the  event  that  we  purchase  any  Capital  Securities  or any
Subordinated Debt Securities,  we will acquire such Capital Securities having an
aggregate  stated   liquidation  amount  of  not  less  than  $100,000  or  such
Subordinated Debt Securities having an aggregate  principal amount not less than
$100,000,  for our own  account and for each  separate  account for which we are
acting.

         5. We acknowledge  that we either (A) are not a fiduciary of a pension,
profit-sharing or other employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (a "Plan"), or an entity whose
assets  include "plan  assets" by reason of any Plan's  investment in the entity
and are not purchasing the Capital Securities on behalf of or with "plan assets"
by reason of any Plan's  investment  in the entity  and are not  purchasing  the
Capital  Securities  on behalf of or with  "plan  assets" of any Plan or (B) are
eligible for the exemptive  relief  available under one or more of the following
prohibited  transaction class exemptions ("PTCEs") issued by the U.S. Department
of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.

         6. We  acknowledge  that each  Plan,  by its  purchase  of the  Capital
Securities,  will be deemed to have  directed  the Trust to invest in the junior
subordinated  debt  securities  of the  Company,  and to have  consented  to the
appointment of the institutional trustee of the Trust.

         7. We  acknowledge  that the Trust and the Company and others will rely
upon the truth and accuracy of the foregoing  acknowledgments,  representations,



                                      B-2
<PAGE>

warranties  and  agreements  and  agree  that  if any  of  our  acknowledgments,
representations,  warranties  and agreements  are no longer  accurate,  we shall
promptly notify the Placement Agent. If we are acquiring any Capital  Securities
as a fiduciary or agent for one or more investor accounts,  we represent that we
have sole discretion with respect to each such investor account and that we have
full power to make the foregoing acknowledgments, representations and agreements
on behalf of each such investor account.

         You  are  entitled  to  rely  upon  this  letter  and  are  irrevocably
authorized  to produce this letter or a copy hereof to any  interested  party in
any  administrative  or legal proceeding or official inquiry with respect to the
matters covered hereby.



                                     ------------------------------------------
                                         (Name of Purchaser)


                                     By:
                                        ----------------------------------------

                                     Date:
                                          --------------------------------------


         Upon transfer,  the Capital Securities should be registered in the name
of the new beneficial owner as follows.

Name:--------------------------------------------------

Address: ----------------------------------------------

Taxpayer ID Number:------------------------------------





                                      B-3
<PAGE>


                                                                       EXHIBIT C

                         FORM OF TRANSFEROR CERTIFICATE
                             TO BE EXECUTED FOR QIBs

                                                                     ----------,

GrandSouth Bancorporation
GrandSouth Capital Trust I
381 Halton Road
Greenville, South Carolina 29606


     Re:  Purchase of $1,000 stated  liquidation amount of Floating Rate Capital
          Securities (the "Capital Securities") of GrandSouth Capital Trust I

         Reference  is hereby made to the Amended and  Restated  Declaration  of
Trust  of   GrandSouth   Capital  Trust  I,  dated  as  of  May  10,  2006  (the
"Declaration"),   among   Ronald  K.  Earnest  and  John  Butler   Garrett,   as
Administrators,  Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee,  GrandSouth  Bancorporation,  as Sponsor, and
the holders from time to time of undivided beneficial interests in the assets of
GrandSouth  Capital Trust I. Capitalized terms used but not defined herein shall
have the meanings given them in the Declaration.

         This letter relates to $[_______________]  aggregate liquidation amount
of Capital  Securities  which are held in the name of [name of transferor]  (the
"Transferor").

         In accordance  with Section 8.2(b) of the  Declaration,  the Transferor
does hereby  certify  that such  Capital  Securities  are being  transferred  in
accordance  with  (i)  the  transfer  restrictions  set  forth  in  the  Capital
Securities  and (ii) Rule 144A  under the  Securities  Act ("Rule  144A"),  to a
transferee  that the  Transferor  reasonably  believes is purchasing the Capital
Securities  for  its own  account  or an  account  with  respect  to  which  the
transferee exercises sole investment  discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
a  transaction  meeting the  requirements  of Rule 144A and in  accordance  with
applicable  securities  laws of any  state of the  United  States  or any  other
jurisdiction.

         You  are  entitled  to  rely  upon  this  letter  and  are  irrevocably
authorized  to produce this letter or a copy hereof to any  interested  party in
any  administrative  or legal proceeding or official inquiry with respect to the
matters covered hereby.


                                  (Name of Transferor)


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

                              Date:
                                   -------------------------------------------



                                       C-1
<PAGE>

                                                                       EXHIBIT D


                           ADMINISTRATOR'S CERTIFICATE
                                       OF
                           GRANDSOUTH CAPITAL TRUST I

         Pursuant  to  Section   2.6(a)(i)(P)   of  the  Amended  and   Restated
Declaration  of  Trust  of  GrandSouth  Capital  Trust  I  (the  "Trust")  among
GrandSouth Bancorporation as Sponsor, Wilmington Trust Company, as Institutional
Trustee, Wilmington Trust Company, as Delaware Trustee, the Administrators named
therein, and the holders from time to time of beneficial interests in the assets
of the Trust,  dated as of May 10, 2006 (as  modified,  supplemented  or amended
from time to time, the "Trust  Agreement"),  the  undersigned  (on behalf of the
Trust) hereby  certifies that he/she is an  Administrator of the Trust and that,
to  his/her  knowledge  under the terms of the  Trust  Agreement,  the Trust has
complied  (without  regard  to any  period  of grace or  requirement  of  notice
provided under the Trust  Agreement) with all conditions and covenants under the
Trust Agreement for the year 20__.

         Capitalized terms used herein,  and not otherwise defined herein,  have
the respective meanings ascribed thereto in the Trust Agreement.

         IN WITNESS WHEROF,  the  undersigned has executed this  Administrator's
Certificate as of __________, 20__.


                                            ------------------------------------
                                                  as Administrator







                                      D-1