Document:

Certificate Number C-I                                     310 Common Securities

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

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

                                  June 26, 2002
                 Certificate Evidencing Floating Rate Securities

                                     [COPY]

                           North Bay Statutory Trust I

          North Bay Statutory  Trust I, a statutory trust created under the laws
of the State of  Connecticut  (the  "Trust"),  hereby  certifies  that North Bay
Bancorp (the "Holder") is the registered owner of common securities of the Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common  Securities").  The  designation,   rights,  privileges,   restrictions,
preferences and other terms and provisions of the Common Securities  represented
hereby are issued  pursuant  to, and shall in all  respects  be subject  to, the
provisions of the Amended and Restated  Declaration  of Trust of the Trust dated
as of June 26, 2002, among Terry L. Robinson,  Dale Brain and Lee-Ann Cimino, as
Administrators,  State Street Bank and Trust  Company of  Connecticut,  National
Association,  as Institutional  Trustee,  North Bay Bancorp, as Sponsor, and the
holders from time to time of undivided  beneficial interest in the assets of the
Trust  including the  designation  of the terms of the Common  Securities as set
forth in Annex I to such  amended and restated  declaration,  as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled to the benefits of the Guarantee to the extent  provided  therein.  The
Sponsor will provide a copy of the Declaration,  the Guarantee and the Indenture
to the  Holder  without  charge  upon  written  request  to the  Sponsor  at its
principal place of business.

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

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

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

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

                     Signature appears on the following page

<PAGE>

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

                                          NORTH BAY STATUTORY TRUST I

                                          By:   /s/ Terry L. Robinson
                                             -----------------------------------
                                              Name: Robinson
                                              Title: Administrator

                                                      [COPY]
<PAGE>

                           REVERSE OP COMMON SECURITY

          Distributions  payable on each Common  Security  will be  identical in
amount to the  Distributions  payable on each Capital  Security,  which is at an
annual rate equal to 5.3369%  beginning on (and  including) the date of original
issuance and ending on (but excluding)  September 26, 2002 and at an annual rate
for each successive period beginning on (and including)  September 26, 2002, and
each  succeeding  Distribution  Payment Date, and ending on (but  excluding) the
next succeeding Distribution Payment Date (each a "Distribution Period"),  equal
to 3-Month LIBOR, determined as described below, plus 3.45% (the "Coupon Rate");
provided, however, that prior to June 26, 2007, the Coupon Rate shall not exceed
11.95%,  applied  to the  stated  liquidation  amount of  $l,000.00  per  Common
Security,  such rate being the rate of  interest  payable on the  Debentures  to
be held by the Institutional Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon  compounded at the Distribution Rate
(to the extent  permitted by applicable law). The term  "Distributions"  as used
herein includes payments of Interest and any principal on the Debentures held by
the  Institutional  Trustee 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 therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant  Distribution Period. In the event that any date on
which a Distribution  is payable on this Common  Security is not a Business Day,
then a payment of the Distribution payable on such date will be made on the next
succeeding  day which is a Business Day (and without any  Distribution  or other
payment in respect of any such delay),  except that,  if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding  Business  Day, in each case with the same force and effect as if made
on the date the payment was originally  payable.  The amount of interest payable
for the Distribution  Period  commencing  September 26, 2002 and each succeeding
Distribution  Period  will be  calculated  by  applying  the Coupon  Rate to the
principal amount outstanding at the commencement of the Distribution  Period and
multiplying  each such amount by the actual  number of days in the  Distribution
Period concerned divided by 360.

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

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

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

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 26, June 26, September 26 and
December 26 of each year, commencing on September 26, 2002. 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") on the Debentures, subject to the
conditions  described below,  although such interest would continue to accrue on
the  Debentures  at an annual  rate equal to the  Distribution  Rate  compounded
quarterly  to the  extent  permitted  by law  during any  Extension  Period.  No
Extension  Period may end on a date other than an Interest  Payment Date. At the
end of any such Extension Period the Sponsor shall pay all interest then accrued
and  unpaid on the  Debentures  (together  with  Additional  Interest  thereon);
provided, however, that no Extension Period may extend beyond the Maturity Date.
Prior to the termination of any Extension Period, the Sponsor may further extend
such  period,  provided  that such period  together  with all such  previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Sponsor may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension  Period shall bear  Additional  Interest.  If  Distributions  are
deferred,  the  Distributions  due  shall be paid on the date  that the  related
Extension Period terminates,  to Holders of the Securities as they appear on the
books and records of the Trust on the record  date  immediately  preceding  such
date.  Distributions  on the Securities must be paid on the dates payable (after
giving  effect to any  Extension  Period) to the extent that the Trust has funds
available for the payment of such  distributions  in the Property Account of the
Trust.  The  Trust's  funds  available  for  Distribution  to the Holders of the
Securities will be limited to payments received from the Debenture  Issuer.  The
payment of  Distributions  out of moneys held by the Trust is  guaranteed by the
Guarantor pursuant to the Guarantee.

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

<PAGE>

                                   ASSIGNMENT

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

       -------------------------------------------------------------------------

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

       -------------------------------------------------------------------------

       -------------------------------------------------------------------------

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

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

                              Date:_____________________________________________

                              Signature:________________________________________

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

                              Signature:________________________________________

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

        Signature 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.-----------------------------------

                              GUARANTEE AGREEMENT

                                 by and between

                                NORTH BAY BANCORP

                                       and

                       STATE STREET BANK AND TRUST COMPANY
                      OF CONNECTICUT, NATIONAL ASSOCIATION

                            Dated as of June 26, 2002

                      -----------------------------------

<PAGE>

                               GUARANTEE AGREEMENT

          This  GUARANTEE  AGREEMENT  (this  "Guarantee"),  dated as of June 26,
2002, is executed and delivered by North Bay Bancorp,  a California  corporation
(the  "Guarantor"),  and State  Street  Bank and Trust  Company of  Connecticut,
National Association,  a national banking association,  organized under the laws
of the United States of America, as trustee (the "Guarantee  Trustee"),  for the
benefit of the  Holders  (as  defined  herein)  from time to time of the Capital
Securities  (as defined  herein) of North Bay  Statutory  Trust I, a Connecticut
statutory trust (the "Issuer").

          WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"),  dated as of the date hereof  among State  Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity but
solely as institutional trustee, the administrators of the Issuer named therein,
the  Guarantor,  as  sponsor,  and the  holders  from time to time of  undivided
beneficial  interests in the assets of the Issuer,  the Issuer is issuing on the
date  hereof  those  undivided   beneficial   interests,   having  an  aggregate
liquidation amount of $10,000,000.00 (the "Capital Securities"); and

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

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

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

         Section 1.1. Definitions and Interpretation.  In this Guarantee, unless
the context otherwise requires:

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

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

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

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

         (e) terms  defined in the  Declaration  as at the date of  execution of
this  Guarantee  have the same  meanings  when  used in this  Guarantee,  unless
otherwise  defined in this Guarantee or unless the context  otherwise  requires;
and

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

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
the  Securities  Act of 1933,  as amended,  or any  successor  rule  thereunder.

<PAGE>

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

         "Capital  Securities" has the meaning set forth in the recitals to this
Guarantee.

         "Common Securities" means the common securities issued by the Issuer to
the Guarantor pursuant to the Declaration.

         "Corporate  Trust Office" means the office of the Guarantee  Trustee at
which the  corporate  trust  business of the  Guarantee  Trustee  shall,  at any
particular  time,  be  principally  administered,  which  office  at the date of
execution of this  Guarantee is located at 225 Asylum  Street,  Goodwin  Square,
Hartford, Connecticut 06103.

         "Covered Person" means any Holder of Capital Securities.

         "Debentures" means the debt securities of the Guarantor  designated the
Floating Rate Junior  Subordinated  Deferrable Interest Debentures due 2032 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

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

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

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

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

         "Guarantor"  means  North Bay Bancorp  and each of its  successors  and
assigns.

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

         "Indemnified  Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders,  members, partners,
employees,  representatives,  nominees,  custodians  or agents of the  Guarantee
Trustee.

                                       2
<PAGE>

         "Indenture" means the Indenture dated as of the date hereof between the
Guarantor  and State  Street  Bank and Trust  Company of  Connecticut,  National
Association,  not in its  individual  capacity  but solely as  trustee,  and any
indenture supplemental thereto pursuant to which the Debentures are to be issued
to the institutional trustee of the Issuer.

         "Issuer"  has the meaning set forth in the  opening  paragraph  to this
Guarantee.

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

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

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

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

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

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

                  (c) a statement that the 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 the officer,
         such condition or covenant has been complied with.

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

         "Redemption Price" has the meaning set forth in the Indenture.

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President,  Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily  performing functions similar
to those  performed  by any of the above  designated  officers  and  also,  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.

         "Special Event" has the meaning set forth in the Indenture.

                                       3
<PAGE>

         "Special Redemption Price" has the meaning set forth in the Indenture.

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

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

                                   ARTICLE II

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

         Section 2.1. Powers and Duties of the Guarantee Trustee.

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

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

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

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

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

                           (A)  the  duties  and  obligations  of the  Guarantee
                  Trustee shall be determined  solely by the express  provisions
                  of this  Guarantee,  and the  Guarantee  Trustee  shall not be
                  liable  except  for  the   performance   of  such  duties  and
                  obligations as are  specifically  set forth in this Guarantee,
                  and no implied  covenants  or  obligations  shall be read into
                  this Guarantee against the Guarantee Trustee; and

                           (B) in the  absence  of bad  faith on the part of the
                  Guarantee  Trustee,  the  Guarantee  Trustee may  conclusively
                  rely, as to the truth of the statements and the correctness of
                  the  opinions  expressed  therein,  upon any  certificates  or
                  opinions furnished

                                       4
<PAGE>

                  to the Guarantee Trustee and conforming to the requirements of
                  this  Guarantee;  but in the case of any such  certificates or
                  opinions  that  by  any  provision   hereof  are  specifically
                  required  to  be  furnished  to  the  Guarantee  Trustee,  the
                  Guarantee Trustee shall be under a duty to examine the same to
                  determine  whether or not they conform to the  requirements of
                  this Guarantee;

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

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

         (iv) no provision of this Guarantee shall require the Guarantee Trustee
to expend or risk its own funds or otherwise incur personal financial  liability
in the  performance of any of its duties or in the exercise of any of its rights
or powers, if the Guarantee Trustee shall have reasonable  grounds for believing
that the repayment of such funds is not reasonably assured to it under the terms
of this  Guarantee or security and  indemnity,  reasonably  satisfactory  to the
Guarantee  Trustee,  against such risk or liability is not reasonably assured to
it.

Section 2.2. Certain Rights of Guarantee Trustee.

         (a) Subject to the provisions of Section 2.1:

              (i) The  Guarantee  Trustee may  conclusively  rely,  and shall be
         fully   protected  in  acting  or  refraining  from  acting  upon,  any
         resolution,   certificate,   statement,  instrument,  opinion,  report,
         notice,  request,  direction,  consent,  order, bond, debenture,  note,
         other evidence of indebtedness  or other paper or document  believed by
         it to be genuine  and to have been  signed,  sent or  presented  by the
         proper party or parties.

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

              (iii)  Whenever,  in the  administration  of this  Guarantee,  the
         Guarantee  Trustee  shall deem it desirable  that a matter be proved or
         established before taking,  suffering or omitting any action hereunder,
         the Guarantee  Trustee  (unless other  evidence is herein  specifically
         prescribed)  may, in the absence of bad faith on its part,  request and
         conclusively rely upon an Officer's Certificate of the Guarantor which,
         upon  receipt  of such  request,  shall be  promptly  delivered  by the
         Guarantor.

              (iv)  The  Guarantee  Trustee  shall  have  no  duty to see to any
         recording,   filing  or   registration   of  any   instrument  (or  any
         re-recording, refiling or re-registration thereof).

              (v)  The  Guarantee  Trustee  may  consult  with  counsel  of  its
         selection,  and the advice or opinion of such  counsel  with respect to
         legal matters shall be full and complete  authorization  and protection
         in respect of any action taken,  suffered or omitted by it hereunder in
         good faith and

                                       5
<PAGE>

         in accordance with such advice or opinion.  Such counsel may be counsel
         to the  Guarantor or any of its  Affiliates  and may include any of its
         employees.  The  Guarantee  Trustee shall have the right at any time to
         seek instructions  concerning the administration of this Guarantee from
         any court of competent jurisdiction.

              (vi)  The  Guarantee  Trustee  shall be  under  no  obligation  to
         exercise any of the rights or powers vested in it by this  Guarantee at
         the request or direction  of any Holder,  unless such Holder shall have
         provided  to  the  Guarantee   Trustee  such  security  and  indemnity,
         reasonably  satisfactory to the Guarantee  Trustee,  against the costs,
         expenses  (including  attorneys'  fees and expenses and the expenses of
         the Guarantee Trustee's agents, nominees or custodians) and liabilities
         that  might  be  incurred  by it in  complying  with  such  request  or
         direction,  including such  reasonable  advances as may be requested by
         the Guarantee  Trustee;  provided,  however,  that nothing contained in
         this Section 2.2(a)(vi) shall relieve the Guarantee  Trustee,  upon the
         occurrence  of an Event of Default,  of its  obligation to exercise the
         rights and powers vested in it by this Guarantee.

              (vii)  The  Guarantee  Trustee  shall  not be  bound  to make  any
         investigation  into the  facts or  matters  stated  in any  resolution,
         certificate,  statement,  instrument, opinion, report, notice, request,
         direction,  consent,  order, bond,  debenture,  note, other evidence of
         indebtedness or other paper or document,  but the Guarantee Trustee, in
         its  discretion,  may make such further inquiry or  investigation  into
         such facts or matters as it may see fit.

              (viii) The  Guarantee  Trustee  may  execute  any of the trusts or
         powers  hereunder or perform any duties hereunder either directly or by
         or through agents, nominees, custodians or attorneys, and the Guarantee
         Trustee shall not be  responsible  for any  misconduct or negligence on
         the  part of any  agent  or  attorney  appointed  with  due  care by it
         hereunder.

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

              (x) Whenever in the administration of this Guarantee the Guarantee
         Trustee shall deem it desirable to receive instructions with respect to
         enforcing any remedy or right or taking any other action hereunder, the
         Guarantee  Trustee (i) may request  instructions  from the Holders of a
         Majority  in  liquidation  amount of the Capital  Securities,  (ii) may
         refrain from enforcing such remedy or right or taking such other action
         until such  instructions are received,  and (iii) shall be protected in
         conclusively relying on or acting in accordance with such instructions.

              (xi) The  Guarantee  Trustee  shall not be liable  for any  action
         taken,  suffered,  or omitted to be taken by it in good faith,  without
         negligence,  and  reasonably  believed by it to be authorized or within
         the discretion or rights or powers conferred upon it by this Guarantee.

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

                                       6
<PAGE>

         Section 2.3. Not Responsible for Recitals or Issuance of Guarantee. The
recitals  contained in this  Guarantee  shall be taken as the  statements of the
Guarantor,  and the  Guarantee  Trustee does not assume any  responsibility  for
their  correctness.  The  Guarantee  Trustee makes no  representation  as to the
validity or sufficiency of this Guarantee.

         Section 2.4. Events of Default; Waiver.

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

         (b) The  Holders of a Majority  in  liquidation  amount of the  Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver,  any such Event of Default shall cease to exist,  and shall be
deemed to have been  cured,  for every  purpose of this  Guarantee,  but no such
waiver shall extend to any  subsequent  or other  default or Event of Default or
impair any right consequent thereon.

         Section 2.5. Events of Default: Notice.

         (a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default,  transmit  by mail,  first class  postage  prepaid,  to the
Holders of the Capital  Securities and the  Guarantor,  notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee, unless
such  defaults  have been  cured  before the  giving of such  notice,  provided,
however,  that the  Guarantee  Trustee  shall be protected in  withholding  such
notice if and so long as a Responsible  Officer of the Guarantee Trustee in good
faith  determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.

         (b) The Guarantee  Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
from the Guarantor or a Holder of the Capital  Securities (except in the case of
a payment  default),  or a Responsible  Officer of the Guarantee Trustee charged
with the  administration  of this Guarantee shall have obtained actual knowledge
thereof.

                                   ARTICLE III

                                GUARANTEE TRUSTEE

         Section 3.1. Guarantee Trustee: Eligibility.

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

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

                  (ii) be a corporation  organized and doing  business under the
         laws of the United States of America or any State or Territory  thereof
         or of the District of Columbia, or Person authorized under such laws to
         exercise corporate trust powers,  having a combined capital and surplus
         of at least 50  million  U.S.  dollars  ($50,000,000),  and  subject to
         supervision or examination by Federal,  State,  Territorial or District
         of  Columbia  authority.  If  such  corporation  publishes  reports  of
         condition at least annually,  pursuant to law or to the requirements of
         the supervising or examining authority referred to above, then, for the
         purposes of this Section 3.1 (a)(ii),  the combined capital and surplus
         of such  corporation  shall be deemed to be its  combined  capital  and
         surplus  as set  forth  in its  most  recent  report  of  condition  so
         published.

                                       7
<PAGE>

         (b) If at any time the Guarantee  Trustee shall cease to be eligible to
so act under Section 3.1(a),  the Guarantee Trustee shall immediately  resign in
the manner and with the effect set out in Section 3.2(c).

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

         Section 3.2. Appointment, Removal and Resignation of Guarantee Trustee.

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

         (b) The  Guarantee  Trustee  shall not be  removed in  accordance  with
Section  3.2(a) until a Successor  Guarantee  Trustee has been appointed and has
accepted  such  appointment  by written  instrument  executed by such  Successor
Guarantee Trustee and delivered to the Guarantor.

         (c) The Guarantee Trustee appointed to office shall hold office until a
Successor  Guarantee  Trustee shall have been  appointed or until its removal or
resignation.  The  Guarantee  Trustee may resign from office  (without  need for
prior or subsequent  accounting)  by an  instrument  in writing  executed by the
Guarantee  Trustee and delivered to the Guarantor,  which  resignation shall not
take effect  until a Successor  Guarantee  Trustee  has been  appointed  and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee  Trustee and delivered to the  Guarantor  and the resigning  Guarantee
Trustee.

         (d) If no Successor  Guarantee  Trustee  shall have been  appointed and
accepted  appointment  as  provided  in this  Section  3.2  within 60 days after
delivery of an  instrument  of removal or  resignation,  the  Guarantee  Trustee
resigning or being removed may petition any court of competent  jurisdiction for
appointment of a Successor  Guarantee Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any, as it may deem  proper,  appoint a Successor
Guarantee Trustee.

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

         (f) Upon termination of this Guarantee or removal or resignation of the
Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee  Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                    GUARANTEE

         Section 4.1. Guarantee.

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

                                       8
<PAGE>

         (b) The Guarantor  hereby also agrees to assume any and all Obligations
of the Issuer and in the event any such Obligation is not so assumed, subject to
the  terms  and  conditions   hereof,   the  Guarantor  hereby  irrevocably  and
unconditionally  guarantees to each  Beneficiary  the full payment,  when and as
due,  of any and  all  Obligations  to such  Beneficiaries.  This  Guarantee  is
intended  to be  for  the  benefit  of,  and  to be  enforceable  by,  all  such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

         Section 4.2. Waiver of Notice and Demand.  The Guarantor  hereby waives
notice of acceptance of this  Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first  against  the Issuer or any other  Person  before  proceeding  against the
Guarantor,  protest,  notice  of  nonpayment,  notice  of  dishonor,  notice  of
redemption and all other notices and demands.

         Section 4.3.  Obligations  Not Affected.  The  obligations,  covenants,
agreements and duties of the Guarantor  under this Guarantee  shall in no way be
affected or impaired by reason of the happening  from time to time of any of the
following:

         (a) the release or waiver,  by  operation of law or  otherwise,  of the
performance  or  observance  by the Issuer of any express or implied  agreement,
covenant,  term or condition  relating to the Capital Securities to be performed
or observed by the Issuer;

         (b) the  extension  of time for the payment by the Issuer of all or any
portion  of the  Distributions,  Redemption  Price,  Special  Redemption  Price,
Liquidation  Distribution  or any  other  sums  payable  under  the terms of the
Capital  Securities  or the extension of time for the  performance  of any other
obligation under,  arising out of or in connection with, the Capital  Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special  Redemption  Price,  Liquidation  Distribution or other sum payable that
results from the extension of any interest  payment  period on the Debentures or
any  extension  of  the  maturity  date  of  the  Debentures  permitted  by  the
Indenture);

         (c) any  failure,  omission,  delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

         (d) the voluntary or involuntary liquidation,  dissolution, sale of any
collateral, receivership,  insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,  arrangement, composition or readjustment of debt of,
or other similar proceedings  affecting,  the Issuer or any of the assets of the
Issuer;

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

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

         (g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable  discharge or defense of a guarantor,  it being the intent of
this  Section  4.3 that the  obligations  of the  Guarantor  hereunder  shall be
absolute and unconditional under any and all circumstances.

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

                                       9
<PAGE>

         Section 4.4. Rights of Holders.

         (a) The  Holders of a Majority  in  liquidation  amount of the  Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee  Trustee in respect of this
Guarantee  or to direct the  exercise of any trust or power  conferred  upon the
Guarantee  Trustee under this  Guarantee;  provided,  however,  that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the  action  or  proceeding  so  directed  may not  lawfully  be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees  or a trust  committee of directors  or trustees  and/or  Responsible
Officers  shall  determine  that the action or  proceedings  so  directed  would
involve the Guarantee Trustee in personal liability.

         (b) Any Holder of Capital  Securities may institute a legal  proceeding
directly  against the Guarantor to enforce the Guarantee  Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the  Guarantee  Trustee or any other Person.  The Guarantor  waives any right or
remedy to require that any such action be brought first against the Issuer,  the
Guarantee Trustee or any other Person before so proceeding  directly against the
Guarantor.

         Section 4.5.  Guarantee of Payment.  This Guarantee creates a guarantee
of payment and not of collection.

         Section 4.6. Subrogation.  The Guarantor shall be subrogated to all (if
any) rights of the Holders of Capital  Securities  against the Issuer in respect
of any  amounts  paid to such  Holders by the  Guarantor  under this  Guarantee;
provided,  however,  that the Guarantor shall not (except to the extent required
by  mandatory  provisions  of law) be entitled to enforce or exercise  any right
that it may acquire by way of  subrogation or any  indemnity,  reimbursement  or
other agreement,  in all cases as a result of payment under this Guarantee,  if,
after giving  effect to any such  payment,  any amounts are due and unpaid under
this Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding  sentence,  the Guarantor  agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

         Section 4.7. Independent  Obligations.  The Guarantor acknowledges that
its obligations  hereunder are independent of the obligations of the Issuer with
respect to the  Capital  Securities  and that the  Guarantor  shall be liable as
principal and as debtor  hereunder to make  Guarantee  Payments  pursuant to the
terms of this Guarantee  notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof

         Section 4.8.  Enforcement by a Beneficiary.  A Beneficiary  may enforce
the obligations of the Guarantor  contained in Section 4.1(b)  directly  against
the Guarantor  and the Guarantor  waives any right or remedy to require that any
action be  brought  against  the  Issuer or any  other  person or entity  before
proceeding  against the  Guarantor.  The  Guarantor  shall be  subrogated to all
rights (if any) of any Beneficiary  against the Issuer in respect of any amounts
paid to the  Beneficiaries  by the  Guarantor  under this  Guarantee;  provided,
however,  that the  Guarantor  shall  not  (except  to the  extent  required  by
mandatory  provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any  indemnity,  reimbursement  or other
agreement,  in all cases as a result of payment under this Guarantee,  if at the
time of any such payment,  and after giving effect to such payment,  any amounts
are due and unpaid under this Guarantee.

                                       10
<PAGE>

                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

         Section  5.1.  Limitation  of  Transactions.  So  long  as any  Capital
Securities  remain  outstanding,  if  (a)  there  shall  have  occurred  and  be
continuing  an Event of  Default  or a  Declaration  Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and  such  period,  or  any  extension  thereof  shall  have  commenced  and  be
continuing,  then the Guarantor  shall not and shall not permit any Affiliate to
(x)  declare or pay any  dividends  or  distributions  on, or redeem,  purchase,
acquire,  or make a liquidation  payment with respect to, any of the Guarantor's
or  such  Affiliate's  capital  stock  (other  than  payments  of  dividends  or
distributions  to the Guarantor) or make any guarantee  payments with respect to
the foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay,  repurchase or redeem any debt  securities of the Guarantor or
any Affiliate that rank pari passu in all respects with or junior in interest to
the  Debentures  (other  than,  with  respect to clauses (x) and (y) above,  (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Guarantor in  connection  with any  employment  contract,  benefit plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Guarantor (or securities  convertible  into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the  occurrence  of the Event of  Default,  Declaration  Event of  Default or
Extension Period, as applicable,  (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a  subsidiary  of the  Guarantor)  for any class or  series  of the  Guarantor's
capital stock or of any class or series of the Guarantor's  indebtedness for any
class or  series  of the  Guarantor's  capital  stock,  (iii)  the  purchase  of
fractional  interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged,  (iv) any  declaration of a dividend in connection  with
any  stockholders'  rights  plan,  or the  issuance  of  rights,  stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights  pursuant  thereto,  (v) any  dividend  in the form of  stock,  warrants,
options or other  rights  where the dividend  stock or the stock  issuable  upon
exercise of such warrants,  options or other rights is the same stock as that on
which the  dividend  is being  paid or ranks  pari  passu with or junior to such
stock and any cash  payments in lieu of  fractional  shares issued in connection
therewith, or (vi) payments under this Guarantee).

         Section 5.2.  Ranking.  This  Guarantee  will  constitute  an unsecured
obligation  of the Guarantor  and will rank  subordinate  and junior in right of
payment  to all  present  and  future  Senior  Indebtedness  (as  defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities  agrees to the foregoing  provisions of this  Guarantee and the other
terms set forth herein.

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

                                       11
<PAGE>

                                   ARTICLE VI

                                   TERMINATION

         Section 6.1.  Termination.  This  Guarantee  shall  terminate as to the
Capital  Securities  (i) upon full  payment of the  Redemption  Price or Special
Redemption  Price of all  Capital  Securities  then  outstanding,  (ii) upon the
distribution  of all of The  Debentures  to the  Holders  of all of the  Capital
Securities or (iii) upon full payment of the amounts  payable in accordance with
the Declaration upon dissolution of the Issuer.  This Guarantee will continue to
be  effective  or will be  reinstated,  as the case  may be,  if at any time any
Holder of Capital  Securities  must  restore  payment of any sums paid under the
Capital Securities or under this Guarantee.

                                   ARTICLE VII

                                 INDEMNIFICATION

         Section 7.1. Exculpation.

         (a) No Indemnified  Person shall be liable,  responsible or accountable
in damages or  otherwise to the  Guarantor  or any Covered  Person for any loss,
damage or claim  incurred by reason of any act or omission  performed or omitted
by such  Indemnified  Person in good faith in accordance with this Guarantee and
in a manner that such Indemnified  Person  reasonably  believed to be within the
scope of the authority conferred on such Indemnified Person by this Guarantee or
by law,  except that an  Indemnified  Person  shall be liable for any such loss,
damage or claim incurred by reason of such  Indemnified  Person's  negligence or
willful misconduct with respect to such acts or omissions.

         (b) An Indemnified  Person shall be fully  protected in relying in good
faith upon the records of the Issuer or the Guarantor and upon such information,
opinions,  reports or statements presented to the Issuer or the Guarantor by any
Person as to matters the Indemnified Person reasonably  believes are within such
other Person's  professional  or expert  competence and who, if selected by such
Indemnified  Person,  has been selected with reasonable care by such Indemnified
Person, including information,  opinions,  reports or statements as to the value
and amount of the  assets,  liabilities,  profits,  losses,  or any other  facts
pertinent  to the  existence  and amount of assets from which  Distributions  to
Holders  of  Capital   Securities   might   properly  be  paid.

         Section 7.2. Indemnification.

         (a) The Guarantor agrees to indemnify each Indemnified  Person for, and
to hold each Indemnified Person harmless against,  any and all loss,  liability,
damage,  claim or expense incurred without  negligence or willful  misconduct on
the part of the  Indemnified  Person,  arising out of or in connection  with the
acceptance or administration of the trust or trusts  hereunder,  including,  but
not  limited to, the costs and  expenses  (including  reasonable  legal fees and
expenses) of the Indemnified Person defending itself against,  or investigating,
any claim or liability in connection  with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

         (b) Promptly after receipt by an Indemnified  Person under this Section
7.2 of notice of the commencement of any action,  such Indemnified  Person will,
if a claim in respect  thereof is to be made  against the  Guarantor  under this
Section 7.2, notify the Guarantor in writing of the commencement thereof but the
failure so to notify the  Guarantor  (i) will not  relieve  the  Guarantor  from
liability under

                                       12
<PAGE>

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

         Section 7.3.  Compensation:  Reimbursement  of Expenses. The  Guarantor
agrees:

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

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

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

                                  ARTICLE VIII

                                  MISCELLANEOUS

          Section 8.1.  Successors  and Assigns.  All  guarantees and agreements
contained  in this  Guarantee  shall bind the  successors,  assigns,  receivers,
trustees and  representatives of the Guarantor and shall inure to the benefit of
the Holders of the Capital  Securities  then  outstanding.  Except in connection
with any merger or consolidation of the Guarantor with or into another entity or
any sale, transfer or lease of the Guarantor's assets to another entity, in each
case, to the extent permitted under the Indenture,  the

                                       13
<PAGE>

Guarantor  may not assign  its rights or  delegate  its  obligations  under this
Guarantee  without  the prior  approval of the Holders of at least a Majority in
liquidation amount of the Capital Securities.

         Section 8.2. Amendments. Except with respect to any changes that do not
adversely affect the rights of Holders of the Capital Securities in any material
respect (in which case no consent of Holders will be required),  this  Guarantee
may be amended  only with the prior  approval  of the Holders of not less than a
Majority in liquidation amount of the Capital Securities.  The provisions of the
Declaration  with  respect  to  amendments  thereof  apply to the giving of such
approval.

         Section 8.3. Notices.  All notices provided for in this Guarantee shall
be in  writing,  duly  signed  by the party  giving  such  notice,  and shall be
delivered, telecopied or mailed by first class mail, as follows:

         (a) If given  to the  Guarantee  Trustee,  at the  Guarantee  Trustee's
mailing address set forth below (or such other address as the Guarantee  Trustee
may give notice of to the Holders of the Capital Securities and the Guarantor):

         State Street Bank and Trust Company of Connecticut,
         National Association
         225 Asylum Street, Goodwin Square
         Hartford, Connecticut 06103
         Attention:  Corporate Trust Department
         Telecopy:   860-244-1889

         With a copy to:

         State Street Bank and Trust Company
         P.O. Box 778
         Boston, Massachusetts 02102-0778
         Attention:  Paul D. Allen, Corporate Trust Department
         Telecopy:   617-662-1462

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

         North Bay Bancorp
         c/o The Vintage Bank
         1500 Soscol Avenue
         Napa, California 94559
         Attention:  Terry L. Robinson
         Telecopy:   707-259-2376

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

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

                                       14
<PAGE>

         Section 8.4.  Benefit.  This Guarantee is solely for the benefit of the
Beneficiaries  and,  subject to Section 2.1(a),  is not separately  transferable
from the Capital Securities.

         Section 8.5.  Governing Law. THIS  GUARANTEE  SHALL BE GOVERNED BY, AND
CONSTRUED AND 1NTERPRETED IN ACCORDANCE  WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).

         Section 8.6.  Counterparts.  This  Guarantee  may be executed in one or
more  counterparts,  each of which shall be an original,  but all of which taken
together shall constitute one and the same instrument.

         Section  8.7  Separability.  In  case  one or  more  of the  provisions
contained in this Guarantee shall for any reason be held to be invalid,  illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other  provisions  of this  Guarantee,  but this  Guarantee
shall be construed as if such invalid or illegal or unenforceable  provision had
never been contained herein.

                     Signatures appear on the following page

                                       15
<PAGE>

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

                                          NORTH BAY BANCORP, as Guarantor

                                          By: /s/ Terry L. Robinson
                                            ------------------------------------
                                                   Name:  Terry L. Robinson
                                                   Title:   President & CEO

                                          STATE STREET BANK AND TRUST COMPANY
                                          OF CONNECTICUT, NATIONAL
                                          ASSOCIATION, as Guarantee Trustee

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

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