Document:

Exhibit 10.2

STATE OF SOUTH CAROLINA    )
                           )              EMPLOYMENT AGREEMENT
COUNTY OF CHARLESTON       )

         THIS EMPLOYMENT AGREEMENT  (hereinafter referred to as the "Agreement")
made  and  entered  into  as of  this  12th  day of May,  2006,  by and  between
Southcoast  Community  Bank,  (hereinafter  the  "Bank"),  Southcoast  Financial
Corporation  (the "Company") and William C. Heslop  (hereinafter  referred to as
the "Employee"), is made with reference to the following facts:

                                   RECITALS:

         A. The  Employee  shall be  employed  as the Vice  President  and Chief
Financial  Officer of the Bank and as Vice President and Chief Financial Officer
of the Company.

         B. The Employee has obtained  substantial  senior financial  management
experience  throughout  his  career,  and can be  expected  to make  substantial
contributions  to the  financial  success  of the  Bank and the  Company  and to
contribute to the growth and development of the Bank and the Company through his
knowledge and experience in the business,  affairs,  and management of financial
organizations such as the Bank and the Company.

         C. The Bank and the Company  consider the  retention of the Employee in
their service to be in their best interests in order to insure and contribute to
the  continuity  of  management  of the Bank and the  Company  and to insure and
contribute  to the future  progress  and  financial  success of the Bank and the
Company.

         D. The Bank  and the  Company  recognize  that in order to  retain  the
Employee's services, they must offer him compensation,  benefits and termination
rights  which  executives  of  comparable  background,  experience,  ability and
expertise receive for such an executive position with a business organization of
similar size and complexity.

         E. The parties  desire to enter into this  Agreement  setting forth the
terms and conditions of the employment  relationship among the Bank, the Company
and the Employee.

         THEREFORE,  in  consideration  of the premises and the mutual covenants
herein set forth, it is mutually understood,  stipulated,  covenanted and agreed
by and between the parties hereto, as follows:

         1. Employment. The Bank and the Company each hereby employ the Employee
in a principal  executive and managerial capacity as an officer having the title
of Vice President and, after May 12, 2006, Chief Financial  Officer of each, and
the  Employee  hereby  accepts  such  employment  upon the terms and  conditions
hereinafter set forth.

         2. Term.  The  initial  term of this  Agreement  shall be for three (3)
years beginning on the date of execution hereof (the  "Commencement  Date").  At
the end of each day, the term of this Agreement shall be automatically  extended
for one  additional day unless the Employee is terminated or unless either party
gives written notice to the other that the term of this Agreement will not be so
extended.  References in this Agreement to the term of this  Agreement  refer to
the initial term and any extended term.

         3.  Compensation.  The basic annual  salary which the Bank shall pay to
the Employee for his services  shall be not less than  $100,000,  payable in not
less than 12 installments  for each full year during the term of this Agreement.
To the  extent  not paid by the  Bank,  such  compensation  shall be paid by the
Company.

         4.  Benefits.  In addition to the basic  compensation  hereinabove  set
forth, the Bank agrees to pay or supply the following benefits:

         (a) Life  Insurance.  The Bank  shall  provide  Employee  with the life
insurance benefits provided on Schedule A hereto.

         (b) Health  Insurance.  The Bank shall  provide the Employee  with such
health and dental insurance benefits as may hereafter be made available to other
executive officers of the Bank.

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         (c)  Disability.  The Bank shall provide the Employee  with  disability
insurance  in an  amount  equal at all times to not less  than  one-half  of his
annual base salary.

         (d)  Retirement  and Employee  Benefit  Plans.  The  Employee  shall be
entitled to participate in any plan adopted by the Bank or the Company  relating
to stock options, stock appreciation rights, stock purchases,  pension,  thrift,
profit sharing, bonus, performance award and incentive compensation,  group life
insurance,  medical  insurance,  education  and  other  retirement  or  employee
benefits  that the Bank or the  Company  may have  already  established,  or may
hereafter  adopt,  for the benefit of the executive  employees of the Employee's
class or all employees of the Bank or the Company, including executive employees
of the Employee's class.

         (e) Disability/Salary Continuation. The Bank shall pay the Employee his
full salary then in effect and continue all benefits then in effect for a period
of one year after the Date of Termination (as hereafter defined) in the event of
the partial or complete Disability of the Employee.  "Disability" shall mean the
Employee's  failure to  satisfactorily  perform the  essential  functions of his
office on a full-time basis for one hundred and eighty (180)  consecutive  days,
with or without accommodation,  by reason of the Employee's incapacity resulting
from physical or mental illness or impairment,  except where within fifteen (15)
days after Notice of Termination  (as  hereinafter  defined) is given  following
such absence,  the Employee shall have returned to the  satisfactory,  full time
performance of such duties.  Any determination of Disability  hereunder shall be
made by the Board of Directors of the Bank in good faith and on the basis of the
certificates  of at  least  three  qualified  physicians  chosen  by it for such
purpose, one of whom shall be the Employee's regular attending physician.

         (f) Other  Benefits.  The Bank shall  provide  the  Employee  all other
remunerations and fringe benefits as are available to executive  officers of the
Bank,  and any  other  benefits  commensurate  with  the  responsibility  of and
functions performed by the Employee under this Agreement.

         (g) Payment of Shortfall by Company.  To the extent not provided by the
Bank,  the benefits set forth in this Section 4 will be provided by the Company.

         5.  Duties.  The Bank and the  Company  recognize  the  managerial  and
executive  ability of the Employee,  and in recognition of those abilities,  the
Bank  designates  the Employee as its Vice  President  and,  after May 12, 2006,
Chief  Financial  Officer and the Company  designates  the  Employee as its Vice
President and, after May 12, 2006, Chief Financial  Officer,  which titles carry
with them the  duties as  specified  in the bylaws  and the  resolutions  of the
Boards of Directors of the Bank and the Company. In this capacity,  the Employee
is granted such  authority and is responsible  for such executive  duties as are
commensurate  with the authority  being  exercised and duties being performed by
the Chief Financial Officer immediately prior to the date of May 12, 2006 and as
may  hereafter  be  designated  by the  Boards of  Directors  of the Bank or the
Company.  The  Employee  shall  perform  his  duties  in  accordance  with  such
reasonable standards established from time to time by the Boards of Directors of
the Bank and the Company.  In the performance of his duties, the Bank and/or the
Company will continue to make available to the Employee offices, secretarial and
other  assistance,  facilities and amenities  commensurate with his position and
duties.

         6. Termination of Employment.

         (a) Termination by the Company and the Bank.

          (i) Termination for Cause.  The Employee shall be subject to discharge
     for  Cause,  and  this  Agreement  thereby  terminated.  As  used  in  this
     Agreement, "Termination for Cause" shall mean termination on account of the
     following acts:

               (A) the breach by  Employee  of any  material  provision  of this
          Agreement,  provided  that the Company or the Bank gives the  Employee
          written  notice of such  failure and such  failure is not cured within
          thirty (30) days thereafter;

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               (B)  the  willful  and  continued  failure  by  the  Employee  to
          substantially  perform his duties under this Agreement (other than the
          Employee's   inability   to  perform,   with  or  without   reasonable
          accommodation, resulting from his incapacity due to physical or mental
          illness or impairment),  after a demand for substantial performance is
          delivered to him by the Company or the Bank, which demand specifically
          identifies  the  manner in which the  Employee  is alleged to have not
          substantially performed his duties;

               (C) the willful engaging by the Employee in misconduct (criminal,
          immoral or  otherwise)  which is, or is likely to  become,  materially
          injurious to the Company or the Bank;

               (D) the Employee's conviction of a felony;

               (E)  the  commission  by  the  Employee  in  the  course  of  his
          employment  of  an  act  of  fraud,  embezzlement,   theft  or  proven
          dishonesty,  or  any  other  illegal  act  or  practice,  which  would
          constitute a felony, (whether or not resulting in criminal prosecution
          or  conviction),  or any act or  practice  which has  resulted  in the
          Employee's  becoming  unbondable  under the Bank's  "banker's  blanket
          bond;"

               (F) failure by the  Employee to comply with clear  provisions  of
          law and regulations applicable to the Company or the Bank which is, or
          is likely to become,  materially injurious to the Company or the Bank;
          or

               (G) removal or permanent  prohibition  from  participating in the
          affairs  of the Bank by an  order  or  consent  issued  under  Section
          8(e)(4) or (g)(1) of the Federal Deposit Insurance Act.

The Employee  shall have no right to receive  from the Bank or the Company,  and
shall not receive from the Bank or the Company,  compensation  or other benefits
provided  for herein or  otherwise  provided  by the Bank or the Company for any
period after the date of Termination  for Cause.  Notwithstanding  the foregoing
provisions  of this  paragraph,  no  Termination  for Cause shall affect  vested
rights of the parties hereto.

                    (ii) Termination Other Than For Cause.

                    (A)  The  Employee  may be  discharged  and  this  Agreement
               terminated for reasons other than those specified in subparagraph
               6.(a)(i) in the discretion of the Company or the Bank.  Except as
               otherwise   limited  herein  or  as  otherwise   limited  by  the
               regulations of the Federal  Deposit  Insurance  Corporation,  the
               Bank agrees that a termination by it of the Employee's employment
               prior to the expiration of the term of this Agreement pursuant to
               this  subparagraph  6.(a)(ii)  shall not prejudice the Employee's
               right to full compensation or other benefits provided for in this
               Agreement  until the  expiration  of the  remaining  term of this
               Agreement,  unless the Employee  shall take a leave of absence or
               shall become disabled as described in paragraph (4)(e) hereof, in
               which case the provisions of paragraph (4)(e) shall apply.

                    (B) Any  resignation  by the Employee  pursuant to paragraph
               6.(b) below at any time following a change in control of the Bank
               or the  Company,  as  hereinafter  defined,  shall  constitute  a
               termination  of  employment by the Bank or the Company other than
               Termination for Cause and shall entitle Employee to the following
               compensation  and  benefits,  but  only  if such  resignation  is
               preceded  by  either  (1) any  material  decrease,  or  series of
               decreases  which taken as a whole are material,  in the nature or
               scope of the Employee's duties, responsibilities and authorities,
               without the written  consent of the Employee as to each and every
               such decrease, from the greater of those duties, responsibilities
               or  authorities  being  exercised  and  performed by the Employee
               immediately  after  the date of the  execution  hereof,  or those
               being exercised and performed  immediately prior to the reduction

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               or series of reductions  thereof;  or (2) any attempt by the Bank
               or the Company to relocate the Employee to a location  outside of
               Mount  Pleasant,  South  Carolina  without  his  written  consent
               thereto given not more than one (1) year prior thereto.

                    The  compensation  and  benefits  which  shall  be paid  and
               provided,   respectively,   to  the  Employee  pursuant  to  this
               paragraph   6.(a)(ii)(B)  shall  be  the  full  compensation  and
               benefits provided for in this Agreement for a period of three (3)
               years from the Date of  Termination.  Such payments shall be made
               and such  benefits  shall be provided  notwithstanding  any other
               employment  obtained by Employee.  For purposes of the foregoing,
               the phrase  "change in control" of the Bank or the Company  shall
               refer to either or both of the following:  (1) acquisition in any
               manner of the  beneficial  ownership of shares of the Bank or the
               Company  having 51% or more of the total number of votes that may
               be cast for the election of one or more  directors of the Bank or
               the Company,  respectively, by any person, or persons acting as a
               group  within  the  meaning of  Section  13(d) of the  Securities
               Exchange Act of 1934;  or (2) any other  circumstances  which the
               Board of Governors of the Federal  Reserve  System has determined
               constitutes or will constitute a change in control of the Bank or
               the Company.

          (iii) Excess Parachute Payment.  Notwithstanding the foregoing, if the
     payments  under  Section  6(a)(ii),  either  alone or  together  with other
     payments  which the Employee has the right to receive from the Bank and the
     Company, would constitute a "parachute payment" (as defined in Section 280G
     of the  Internal  Revenue  Code of 1986,  as amended  (the  "Code")),  such
     severance  payment shall be reduced to the largest amount as will result in
     no portion of the  severance  payment under this Section 6 being subject to
     the excise tax imposed by Section 4999 of the Code or the disallowance of a
     deduction to the Bank under Section 280G(a) of the Code.

          (iv)  Determination.  The  decision  of the  Bank  or the  Company  to
     terminate  the  Employee's  employment  for  Cause  shall  be  made  in the
     following  manner.  The full Board of Directors of the  terminating  entity
     shall  review   completely   the  evidence  and   justification   for  such
     termination.  The Employee  shall be given notice and an  opportunity to be
     heard in order to rebut such  evidence.  Thereafter,  termination  shall be
     voted upon by the full Board of Directors of the terminating entity by roll
     call vote. The Employee shall be so terminated upon a vote of not less than
     two-thirds  (2/3)  of  all  members  of  the  Board  of  Directors  of  the
     terminating  entity. The Board of Directors of the terminating entity shall
     specify an effective date of termination in the Notice of Termination.  Any
     termination not meeting these  requirements  shall not be a Termination for
     Cause under Section  6.(a)(i) but shall be deemed to be a  Termination  for
     Other Than Cause under Section 6.(a)(ii).

              (b)  Termination by Employee.  This Agreement may be terminated by
Employee at any time by Employee's  giving  written Notice of Termination to the
Bank and the  Company  not  less  than  ninety  (90)  days  prior to the Date of
Termination.  In such event, the Bank and the Company shall be obligated only to
continue to compensate and provide the benefits  hereunder to Employee up to the
Date of  Termination.  This provision  shall not be interpreted as in any manner
whatsoever limiting the rights of the Employee under any other agreement between
the Employee and the Bank or the Company,  including,  without  limitation,  any
retirement,  deferred compensation,  or fringe benefit agreement, whether or not
such agreements are in existence at the time of the execution hereof.

              (c)    Required    Suspension    and    Termination    Provisions.
Notwithstanding any other provision of this agreement,  the following provisions
are included in this Agreement concerning its termination.

                    (i) If the Employee is suspended or  temporarily  prohibited
     from  participating in the Bank's affairs by a notice served under 12 U. S.
     C.  Section  1818(e)(3)  or  (g)(1),  the  Bank's  obligations  under  this
     Agreement  shall be  suspended as of the date of service  unless  stayed by
     appropriate  proceedings.  If the charges in the notice are dismissed,  the
     Bank  may in its  discretion  (i)  pay  the  Employee  all or  part  of the
     compensation  withheld  while the  obligations  under this  Agreement  were
     suspended and (ii) reinstate (in whole or in part) any of such  obligations
     which were suspended.

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                    (ii) If Employee is removed  and/or  permanently  prohibited
     from  participating  in the affairs of the Bank by an order issued under 12
     U.S.C.  ss.  1818(e)(4)  or  (g)(1),  all  obligations  of the Bank and the
     Company under this  Agreement  shall  terminate as of the effective date of
     the order.

                    (iii) If the Bank is in default  (as  defined in 12 U. S. C.
     Section  1813(x)(1)),  all obligations under this Agreement shall terminate
     as of the date of default.

                    (iv) Any  payments  made to the  Employee  pursuant  to this
     Agreement,  or  otherwise,  are  subject  to  and  conditioned  upon  their
     compliance  with 12  U.S.C.  Section  1828(k)  or any  successor  provision
     thereof and any regulations  promulgated  thereunder.  Notwithstanding  the
     provisions of t his subsection (c) of Section 7, no termination pursuant to
     this subsection (c) shall affect vested rights of the parties hereto.

         (d) Date of Termination. "Date of Termination" shall mean:

                    (i) if the Employee's  employment is terminated by reason of
     his death, his date of death;

                    (ii) if the Employee's employment is terminated for
     Disability, thirty (30) days after Notice of Termination is given (provided
     that the Employee shall not have returned to the  performance of his duties
     as provided under Section 4(e) hereof); or

                    (iii) if the  Employee's  employment is terminated by action
     of either party for any other reason,  the date  specified in the Notice of
     Termination;  provided,  however, that if within thirty (30) days after any
     Notice  of  Termination  is  given,  the  party  receiving  such  Notice of
     Termination  notifies the other party that a dispute exists  concerning the
     termination, the Date of Termination shall be the date on which the dispute
     is finally resolved,  either by mutual written agreement of the parties, or
     by a  final  judgment,  order  or  decree  of an  arbitrator,  a  panel  of
     arbitrators  or a court of  competent  jurisdiction  (the  time for  appeal
     therefrom having expired and no appeal having been perfected).

         "Notice of Termination" shall mean a written notice which shall include
the specific  termination  provision under this Agreement relied upon, and shall
set forth in reasonable detail the facts and circumstances  claimed to provide a
basis for termination of the Employee's employment. Any purported termination of
the  Employee's  employment  hereunder  by  action  of  either  party  shall  be
communicated by delivery of a Notice of Termination to the other party.

         7. Relocation.  The Bank and the Company hereby agree that the Employee
shall not be required to relocate  his  residence at any time during the term of
this Agreement  without the Employee's  written  consent  thereto given not less
than one (1) year prior  thereto.  Furthermore,  Employee shall continue to make
his primary business headquarters in Mount Pleasant, South Carolina.

         8. Confidentiality.

         (a) The Employee  recognizes  that his activities on behalf of the Bank
require   considerable   responsibility  and  trust.   Relying  on  the  ethical
responsibilities  and undivided  loyalty of the Employee,  the Bank has and will
and the Company and its  subsidiaries  will in the future  entrust the  Employee
with highly  sensitive  confidential,  restricted  and  proprietary  information
involving Confidential Information (as defined below).

         (b) For the  purposes  of this  Agreement,  "Confidential  Information"
means any data or information,  that is material to the Bank, the Company or the
subsidiaries  of the  Company,  and not  generally  known by the public.  To the
extent  consistent  with  the  foregoing  definition,  Confidential  Information
includes (without limitation):  (i) the profit and performance reports,  pricing
policies, training manuals, marketing and pricing procedures,  financing methods
of the Bank,  the  Company or the  subsidiaries  of the  Company,  and all other
business  records of the Bank, the Company or the  subsidiaries  of the Company;
(ii)  the  identities  of  the  customers  of  the  Bank,  the  Company  or  the
subsidiaries  of the Company,  their  specific  demands,  and their  current and

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anticipated  requirements for the products and services of the Bank, the Company
or the  subsidiaries  of the  Company;  (iii) the  business  plans and  internal
financial   statements  and   projections  of  the  Bank,  the  Company  or  the
subsidiaries of the Company;  and (iv) the specifics of any specialized products
or services of the Bank,  the Company or the subsidiary of the Company may offer
or provide to its customers.

         (c) The Employee recognizes the proprietary and sensitive nature of the
Bank, the Company and its subsidiaries'  Confidential Information.  The Employee
agrees to abide by all of the  Bank's  and the  Company's  rules and  procedures
designed to protect their Confidential  Information and to preserve and maintain
all such information in strict  confidence  during the Employee's  employment by
the Bank and as long thereafter as the Confidential  Information remains, in the
sole  opinion of the Bank,  the Company and its  subsidiaries,  proprietary  and
confidential to the Bank, the Company and its subsidiaries.  The Employee agrees
not to use,  disclose or in any other way use or  disseminate  any  Confidential
Information  to any person not properly  authorized by the Bank,  the Company or
the subsidiaries of the Company.

         9.  Return of  Materials.  Upon the request of the Company or the Bank,
and in any  event,  upon  the  termination  of the  Employee's  employment,  the
Employee must return to the Bank, the Company or the subsidiaries of the Company
and leave at the disposal of the Bank,  the Company or the  subsidiaries  of the
Company, all memoranda,  notes, records, and other documents or electronic files
pertaining to the business of the Bank, the Company and the  subsidiaries of the
Company,  or the  Employee's  specific  duties for such entities  (including all
copies  of such  materials).  The  Employee  must also  return to the Bank,  the
Company and the  subsidiaries  of the Company,  and leave at the disposal of the
Bank, the Company and the subsidiaries of the Company,  all materials  involving
any Confidential Information of the respective entities.

         10.  Implementation.  The covenants contained herein shall be construed
as covenants  independent of one another,  and as obligations  distinct from any
other  contract  between the Employee and the Company or the Bank. Any claim the
Employee may have against the Company or the Bank shall not constitute a defense
to enforcement by the Bank of this Agreement. The covenants made by the Employee
herein shall survive termination of the Employee's employment, regardless of who
causes the termination and under what circumstances.

         11. Restrictive Covenants. In consideration of the Bank's employment of
the Employee  and the  benefits  provided  hereby,  the Employee  agrees that in
addition to any other  limitation:  (i) for a period of twelve (12) months after
the termination of this Agreement by the Employee for other than Good Reason; or
(ii)  during  the  continuation  of base  salary  payments  pursuant  to Section
6(a)(ii)(A)  above,  whichever is later, he will not, within a twenty-five  (25)
mile radius of any operating office of the Company, any of its subsidiaries,  or
the Bank, manage,  operate or be employed by, participate in, or be connected in
any manner with the management,  operation,  or control of any banking  business
whether or not carried on by a bank.  The Employee  further  agrees,  that for a
period of twelve (12) months after the termination of his employment  hereunder,
by the  Employee  for other than Good  Reason or the  completion  of Base Salary
payments pursuant to Section 6(a)(ii)(A) above,  whichever is later, he will not
solicit the business or patronage, directly or indirectly, from any customers of
the Bank (or any other office of the Company or of a  subsidiary  of the Company
if  Employee  should have been  employed by and located at such  office) and the
Employee  will not seek to or assist others to persuade any employee of the Bank
engaged in similar work or related to the Bank's work to discontinue  employment
with  the  Bank or seek  employment  or  engage  in any  business  of the  Bank.
Furthermore,   the  Employee  will  not  communicate  to  any  person,  firm  or
corporation any information related to customer lists, prices,  secrets or other
Confidential  Information  which he might from time to time acquire with respect
to the business of the Bank, the Company,  or its subsidiaries,  or any of their
affiliates.  The Employee  agrees to disclose the contents of this  Agreement to
any subsequent employer for a period of twelve (12) months following termination
of his employment hereunder,  the termination of this Agreement or completion of
base salary payments pursuant to Section 6(a)(ii)(A) above, whichever is later.

         12. Remedies for Breach of Employment Contract.  Irreparable harm shall
be  presumed if the  Employee  breaches  any  covenant  of this  Agreement.  The
faithful observance of all covenants in this Agreement is an essential condition
to the Employee's employment,  and the Bank, the Company and the subsidiaries of
the Company are depending  upon absolute  compliance.  Damages would probably be

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very  difficult  to  ascertain  if the  Employee  breached  any covenant in this
Agreement.  This Agreement is intended to protect the proprietary  rights of the
Bank, the Company and the subsidiaries of the Company in many important ways. In
light  of  these  facts,  the  Employee  agrees  that  any  court  of  competent
jurisdiction  should immediately  enjoin any breach of this Agreement,  upon the
request of the Bank,  the Company,  the  subsidiaries  of the  Company,  and the
Employee  specifically  releases the Bank, the Company,  and the subsidiaries of
the  Company,  from  the  requirement  to post  any  bond in  connection  with a
temporary or interlocutory injunctive relief, to the extent permitted by law.

         13.  Assignment.  This Agreement shall be construed as an agreement for
personal services and shall not be subject to assignment by either party without
the written consent of both parties.

         14.  Acceleration  of Stock  Options  and  Rights.  In the event of any
termination of this Agreement  pursuant to section  6(a)(ii),  outstanding stock
options and stock appreciation  rights, and any and all rights under performance
stock  award  plans,  restricted  stock  plans and any other  stock  option,  or
incentive  stock plans shall  become  immediately  and fully  exercisable  for a
period of sixty (60) days following the last payment  required by this Agreement
to be made by the Bank or the Company to Employee,  provided,  however,  that no
such option or right shall be  exercisable  after the  termination  date of such
option or right.  The  provisions  of this  section  shall be in addition to the
Employee's rights granted in connection with such stock options or other rights,
and such rights and options shall continue to be  exercisable  pursuant to their
terms and their governing plans.

         15.  Governing  Law.  The  law of  South  Carolina  shall  govern  this
Agreement,  subject only to any conflicting  federal statutes and regulations as
they  exist  or may be  adopted  or  promulgated  from  time to  time  affecting
financial institutions whose deposit accounts are insured by the Federal Deposit
Insurance Corporation and their operations;  in the event of such conflict,  the
appropriate federal statutes and regulations shall govern this Agreement.

         16.  Arbitration.  Unless otherwise  provided by the regulations of the
Federal Deposit Insurance  Corporation or otherwise  provided in this Agreement,
any dispute or  controversy,  arising under or in connection with this Agreement
shall be settled  exclusively by arbitration in Mount Pleasant,  South Carolina,
by three  arbitrators  pursuant  to the  Federal  Arbitration  Act or the  South
Carolina Uniform Arbitration Act, as applicable, in accordance with the rules of
the American Arbitration  Association then in effect. Judgment may be entered on
the arbitrators'  award in any court having  jurisdiction.  Notwithstanding  the
foregoing,  Employee,  the  Bank  or the  Company  shall  be  entitled  to  seek
injunctive relief in any court of competent  jurisdiction  without initiating an
arbitration  proceeding.  Further,  Employee  shall be entitled to seek specific
performance  of his right to be paid  until the Date of  Termination  during the
pendency of any dispute or controversy  arising under or in connection with this
Agreement.  Any civil action seeking  injunctive relief,  specific  performance,
challenging  an  arbitration  proceeding  or award or otherwise  related to this
Agreement  will be instituted  and maintained in the federal or state courts for
Charleston  County,  South  Carolina,  and the  parties  hereby  consent  to the
personal jurisdiction of such courts. Each party to any such judicial proceeding
shall bear its own attorneys' fees, provided,  however,  that the Company or the
Bank  shall  bear  all  costs  and  expenses  arising  in  connection  with  any
arbitration  proceeding pursuant to this Section including Employee's reasonable
attorney's fees.

         17. Binding  Effect.  This Agreement and the rights,  powers and duties
set forth  herein  shall  bind and inure to the  benefit of the  successors  and
assigns of the parties hereto.

         18. Entire Agreement.  This Agreement  constitutes the entire agreement
between the parties  hereto with respect to the subject  hereof,  and supercedes
all prior agreements, written or oral, with respect to such subject matter.

         19.  Waiver.  The failure of either  party to insist in any one or more
instances upon  performance  of any terms or conditions of this Agreement  shall
not be construed a waiver of future  performance  of any such term,  covenant or
condition,  but the  obligations  of either  party with  respect  thereto  shall
continue in full force and effect.

                                       7
<PAGE>

         20.  Severability.  All agreements,  provisions and covenants contained
herein  are  severable,  and in the event  that any one or more of them shall be
held to be  invalid,  illegal or  unenforceable  in any  respect by any court of
competent  jurisdiction,  the  validity,  legality  and  enforceability  of  the
remaining  provisions  contained herein shall not in any way be affected thereby
and  this  Agreement  shall  be  interpreted  as if  such  invalid,  illegal  or
unenforceable agreements, provisions or covenants were not contained herein.

         21.  Indemnification.  The Bank and the  Company  shall  indemnify  the
Employee to the extent of the  indemnification  provided  for in any  agreement,
bylaw or charter provision of the Bank or the Company,  or any provision of law,
rule or regulation,  any of which may be applicable to the Employee or generally
applicable to other  executive  officers of the  Employee's  class or any lesser
class.

         22.  Payment  Obligation.  The Bank and the Company  recognize that the
provisions of this Agreement,  including the termination provisions,  protecting
the Employee's rights to compensation and benefits in the event of a termination
hereof, other than Termination for Cause, leave of absence or Disability, are an
essential  element of the basis of the bargain with the  Employee.  Accordingly,
all amounts  payable by the Bank or the Company  hereunder shall be paid without
notice or demand.  The Employee shall not be obligated to seek other  employment
in mitigation of the amounts payable or arrangements made under any provision of
this  Agreement;  provided,  however,  that  the  obtaining  of any  such  other
employment  shall reduce the Bank's and the  Company's  obligations  to make the
payments  and  provide  at its  expense  the  benefits  required  to be paid and
provided  under this  Agreement  by an amount  equal to the payments or benefits
received  from such other  employment  and Employee  shall  promptly  notify the
Company or the Bank of his employment and receipts therefrom.

         23.  Notices.  Any notices to be given hereunder by either party to the
other may be  effected  either  by  personal  delivery  in  writing  or by mail,
registered or certified postage prepaid,  with return receipt requested.  Mailed
notices shall be addressed to the parties at the addresses appearing herein, but
each party may change its  address  by written  notice in  accordance  with this
paragraph.  Notices  delivered  personally  shall be deemed  communicated  as of
actual receipt;  mailed notices shall be deemed communicated as of five (5) days
after mailing.

TO THE BANK:                                Chairman of the Board of Directors
                                            Southcoast Community Bank
                                            530 Johnnie Dodds Boulevard
                                            Mt. Pleasant, S.C. 29464

TO THE COMPANY:                             Chairman of the Board of Directors
                                            Southcoast Financial Corporation
                                            530 Johnnie Dodds Boulevard
                                            Mt. Pleasant, S.C. 29464

TO THE EMPLOYEE:                            William C. Heslop
                                            Southcoast Community Bank
                                            530 Johnnie Dodds Boulevard
                                            Mt. Pleasant, S.C. 29464

     IN  WITNESS  WHEREOF,  the Bank and the  Company  have duly  executed  this
Agreement by their duly  authorized  corporate  officers set forth below and the
Employee  has duly  executed  this  Agreement as of the day and year first above
written.

                              [SIGNATURES OMITTED]

                                       8EXHIBIT 10.1

                        AMENDED AND RESTATED DECLARATION

                                    OF TRUST

                           REGIONAL STATUTORY TRUST I

                           Dated as of April 20, 2006

<PAGE>

<TABLE>
<CAPTION>
                                                    TABLE OF CONTENTS

                                                                                                               Page
                                                        ARTICLE I
                                              INTERPRETATION AND DEFINITIONS

<S>                                                                                                            <C>
SECTION 1.1.               Definitions...........................................................................1

                                                        ARTICLE II
                                                       ORGANIZATION

SECTION 2.1.               Name..................................................................................8

SECTION 2.2.               Office................................................................................8

SECTION 2.3.               Purpose...............................................................................8

SECTION 2.4.               Authority.............................................................................8

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

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

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

SECTION 2.8.               Powers and Duties of the Institutional Trustee.......................................14

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

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

SECTION 2.11.              Execution of Documents...............................................................20

SECTION 2.12.              Not Responsible for Recitals or Issuance of Securities...............................20

SECTION 2.13.              Duration of Trust....................................................................20

SECTION 2.14.              Mergers..............................................................................21

                                                       ARTICLE III
                                                         SPONSOR

SECTION 3.1.               Sponsor's Purchase of Common Securities..............................................22

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

                                                        ARTICLE IV
                                               TRUSTEES AND ADMINISTRATORS

SECTION 4.1.               Number of Trustees...................................................................23

SECTION 4.2.               Institutional Trustee; Eligibility...................................................23

SECTION 4.3.               Administrators.......................................................................24

SECTION 4.4.               Appointment, Removal and Resignation of the Trustees and the Administrators..........24

SECTION 4.5.               Vacancies Among Trustees.............................................................26

                                       i
<PAGE>
                                                    TABLE OF CONTENTS
                                                       (continued)
                                                                                                               Page

SECTION 4.6.               Effect of Vacancies..................................................................26

SECTION 4.7.               Meetings of the Trustees and the Administrators......................................26

SECTION 4.8.               Delegation of Power..................................................................26

SECTION 4.9.               Merger, Conversion, Consolidation or Succession to Business..........................27

                                                        ARTICLE V
                                                      DISTRIBUTIONS

SECTION 5.1.               Distributions........................................................................27

                                                        ARTICLE VI
                                                  ISSUANCE OF SECURITIES

SECTION 6.1.               General Provisions Regarding Securities..............................................28

SECTION 6.2.               Paying Agent, Transfer Agent, Calculation Agent and Registrar........................29

SECTION 6.3.               Form and Dating......................................................................29

SECTION 6.4.               Mutilated, Destroyed, Lost or Stolen Certificates....................................30

SECTION 6.5.               Temporary Securities.................................................................30

SECTION 6.6.               Cancellation.........................................................................30

SECTION 6.7.               Rights of Holders; Waivers of Past Defaults..........................................30

                                                       ARTICLE VII
                                           DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1.               Dissolution and Termination of Trust.................................................32

                                                       ARTICLE VIII
                                                  TRANSFER OF INTERESTS

SECTION 8.1.               General..............................................................................33

SECTION 8.2.               Transfer Procedures and Restrictions.................................................34

SECTION 8.3.               Deemed Security Holders..............................................................37

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

SECTION 9.1.               Liability............................................................................37

SECTION 9.2.               Exculpation..........................................................................38

SECTION 9.3.               Fiduciary Duty.......................................................................39

SECTION 9.4.               Indemnification......................................................................39

SECTION 9.5.               Outside Businesses...................................................................42

SECTION 9.6.               Compensation; Fee....................................................................43

                                       ii
<PAGE>

                                                    TABLE OF CONTENTS
                                                       (continued)
                                                                                                               Page

                                                        ARTICLE X
                                                        ACCOUNTING

SECTION 10.1.              Fiscal Year..........................................................................43

SECTION 10.2.              Certain Accounting Matters...........................................................43

SECTION 10.3.              Banking..............................................................................44

SECTION 10.4.              Withholding..........................................................................44

                                                        ARTICLE XI
                                                 AMENDMENTS AND MEETINGS

SECTION 11.1.              Amendments...........................................................................45

SECTION 11.2.              Meetings of the Holders of the Securities; Action by Written Consent.................47

                                                       ARTICLE XII
                                         REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

SECTION 12.1.              Representations and Warranties of Institutional Trustee..............................48

                                                       ARTICLE XIII
                                                      MISCELLANEOUS

SECTION 13.1.              Notices..............................................................................49

SECTION 13.2.              Governing Law........................................................................50

SECTION 13.3.              Submission to Jurisdiction...........................................................50

SECTION 13.4.              Intention of the Parties.............................................................51

SECTION 13.5.              Headings.............................................................................51

SECTION 13.6.              Successors and Assigns...............................................................51

SECTION 13.7.              Partial Enforceability...............................................................51

SECTION 13.8.              Counterparts.........................................................................51

                                      iii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)
                                                                                                                    Page

ANNEXES AND EXHIBITS

ANNEX I                    Terms of TP Securities and Common Securities

EXHIBIT A-1                Form of Capital Security Certificate
EXHIBIT A-2                Form of Common Security Certificate
</TABLE>

                                       iv
<PAGE>

                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                           Regional Statutory Trust I

                                 April 20, 2006

         AMENDED AND RESTATED DECLARATION OF TRUST (this  "Declaration"),  dated
and  effective as of April 20,  2006,  by the Trustee (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,  the Trustee,  the Administrators and the Sponsor  established
Regional Statutory Trust I (the "Trust"),  a statutory trust under the Statutory
Trust Act (as defined herein),  pursuant to a Declaration of Trust,  dated as of
April 18, 2006 (the  "Original  Declaration"),  and a Certificate of Trust filed
with the Secretary of State of the State of  Connecticut  on April 18, 2006, for
the  sole  purpose  of  issuing  and  selling  certain  securities  representing
undivided  beneficial  interests  in the assets of the Trust and  investing  the
proceeds  thereof in the Debentures (as defined herein) of the Debenture  Issuer
(as defined  herein) in connection  with the issuance of the Capital  Securities
(as defined herein);

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

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

         NOW,  THEREFORE,  it being  the  intention  of the  parties  hereto  to
continue the Trust as a statutory  trust under the Statutory  Trust Act and that
this Declaration  constitutes the governing  instrument of such statutory trust,
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;

<PAGE>

                  (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 Curtis A.  Tyner,  Sr.  and  Shannon R.
Morrison,  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

                                       2
<PAGE>

                  (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 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.

         "Business Day" means any day other than  Saturday,  Sunday or any other
day on which banking  institutions in Boston,  Massachusetts or New York City or
the  city of the  Corporate  Trust  Office  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  Securities  Purchase  Agreement" means the Capital Securities
Purchase  Agreement dated as of April 18, 2006 among the Trust,  the Sponsor and
Merrill Lynch International.

         "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  Connecticut  with  respect to the Trust,  as
amended and restated from time to time.

         "Closing  Date"  means  the  date of  execution  and  delivery  of this
Declaration.

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

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

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

         "Common Security Certificate" means a definitive Certificate registered
in the name of the Holder  representing a Common Security  substantially  in the
form of Exhibit A-2.

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

         "Corporate Trust Office" means the office of the Institutional  Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office shall at all times be
located in the United States and at the date of execution of this Declaration is
located at 225 Asylum Street,  23rd Floor,  Hartford,  Connecticut  06103, Attn:
Corporate Trust Services - Regional Statutory Trust I.

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

                                       3
<PAGE>

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

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

         "Debenture  Trustee" means U.S. Bank National  Association,  not in its
individual  capacity but solely as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.

         "Debentures" means the Junior Subordinated Debt Securities due June 15,
2036 to be issued by the Debenture Issuer under the Indenture.

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

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

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

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

         "Distribution Payment Date" has the meaning set forth in paragraph 2(e)
of Annex I.

         "Distribution  Payment  Period"  means the period from and  including a
Distribution  Payment  Date,  or in the case of the first  Distribution  Payment
Period, the original date of issuance of the Securities,  to, but excluding, the
next  succeeding  Distribution  Payment  Date  or,  in  the  case  of  the  last
Distribution  Payment Period,  the Redemption Date,  Special  Redemption Date or
Maturity  Date (each as defined in the  Indenture),  as the case may be, for the
related Debentures.

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

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

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

         "Fiduciary  Indemnified  Person" shall mean the  Institutional  Trustee
(including  in its  individual  capacity),  any  Affiliate of the  Institutional
Trustee,  and  any  officers,   directors,   shareholders,   members,  partners,

                                       4
<PAGE>

employees, representatives,  custodians, nominees or agents of the Institutional
Trustee.

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

         "Guarantee"  means the  Guarantee  Agreement,  dated as of the  Closing
Date, of the Sponsor (the "Guarantor") 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, between
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.

         "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  U.S.  Dollar
deposits in Europe as determined by the Calculation Agent according to paragraph
2(b) of Annex I.

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

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

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

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

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

         "Majority in  liquidation  amount of the  Securities"  means Holders of
outstanding  Securities voting together as a single class or, as the context may

                                       5
<PAGE>

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.

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

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

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

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

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

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

         "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)(E).

         "Property Account" has the meaning set forth in Section 2.8(c).

         "Pro Rata" has the meaning set forth in paragraph 8 of Annex I.

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

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

                                       6
<PAGE>

         "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.

         "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, as
applicable.

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

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

         "Statutory  Trust Act" means Chapter 615 of Title 34 of the Connecticut
General  Statutes,  34 C.G.S. ss. 500 et seq., as it may be amended from time to
time, or any successor legislation.

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

         "Successor  Institutional Trustee" has the meaning set forth in Section
4.4(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

                                       7
<PAGE>

Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate  liquidation  amount  (including the stated amount that
would be paid on redemption,  liquidation or otherwise,  plus accrued and unpaid
Distributions  to the date upon which the voting  percentages are determined) of
all outstanding Securities of the relevant class.

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

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

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

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

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

                                   ARTICLE II
                                  ORGANIZATION

         SECTION 2.1. Name. The Trust is continued  hereby and shall be known as
"Regional  Statutory Trust I," as such name may be modified from time to time by
the Administrators following written notice to the Institutional Trustee and the
Holders of the  Securities.  The Trust's  activities may be conducted  under the
name of the Trust or any other name deemed advisable by the Administrators.

         SECTION 2.2. Office.  The address of the principal office of the Trust,
which shall be in a state of the United  States or the District of Columbia,  is
225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Corporate
Trust  Services - Regional  Statutory  Trust I. On ten  Business  Days'  written
notice to the  Institutional  Trustee  and the  Holders of the  Securities,  the
Administrators may designate another principal office, which shall be in a state
of the United States or the District of Columbia.

         SECTION 2.3. Purpose. The exclusive purposes and functions of the Trust
are (a) to issue  and  sell the  Securities  representing  undivided  beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the  Debentures,  (c) to  facilitate  direct  investment  in the
assets of the Trust through  issuance of the Common  Securities  and the Capital
Securities and (d) except as otherwise  limited herein,  to engage in only those
other  activities  incidental  thereto that are deemed necessary or advisable by
the  Institutional  Trustee,  including,  without  limitation,  those activities
specified in this Declaration.  The Trust shall not borrow money,  issue debt or
reinvest  proceeds  derived  from  investments,  pledge  any of its  assets,  or
otherwise  undertake (or permit to be undertaken)  any activity that would cause

                                       8
<PAGE>

the Trust not to be classified  for United States federal income tax purposes as
a grantor trust.

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

         SECTION  2.5.  Title to  Property  of the Trust.  Except as provided in
Section  2.6(g) and Section 2.8 with respect to the  Debentures and the Property
Account or as otherwise provided in this Declaration,  legal title to all assets
of the Trust  shall be vested in the  Trust.  The  Holders  shall not have legal
title to any part of the  assets  of the  Trust,  but  shall  have an  undivided
beneficial interest in the assets of the Trust.

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

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

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

                             (A) the issuance and sale of the Securities;

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

                             (C) 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, a Debenture
                         subscription   agreement  between  the  Trust  and  the

                                       9
<PAGE>

                         Sponsor and a Common Securities  subscription agreement
                         between the Trust and the Sponsor;

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

                             (E) 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;

                             (F) 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;

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

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

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

                             (J) 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;

                             (K) 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);

                             (L) 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;

                                       10
<PAGE>

                             (M) 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;

                             (N) to  negotiate  the terms of, and the  execution
                         and  delivery  of,  the  Placement  Agreement  and  the
                         Capital Securities  Purchase Agreement related thereto,
                         providing for the sale of the Capital Securities;

                             (O) 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;

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

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

                             (R) 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  Connecticut) 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;

                             (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;

                                       11
<PAGE>

                             (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;

                             (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 Connecticut  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 any business,  activities or transaction  except as expressly provided
herein or  contemplated  hereby.  In  particular,  neither the  Trustees nor the
Administrators  may cause the Trust to (i) acquire any  investments or engage in
any activities not authorized by this Declaration,  (ii) sell, assign, transfer,
exchange,  mortgage,  pledge,  set-off or otherwise  dispose of any of the Trust
Property  or  interests  therein,  including  to  Holders,  except as  expressly
provided  herein,  (iii) take any action that would cause (or in the case of the
Institutional  Trustee,  to the actual knowledge of a Responsible  Officer would
cause) the Trust to fail or cease to  qualify  as a  "grantor  trust" for United
States federal  income tax purposes,  (iv) incur any  indebtedness  for borrowed
money or issue any other debt or (v) take or  consent  to any action  that would
result  in  the  placement  of  a  lien  on  any  of  the  Trust  Property.  The
Institutional  Trustee shall, at the sole cost and expense of the Trust,  defend

                                       12
<PAGE>

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  Administrators of actions they must take on behalf of the
                  Trust,  and the  preparation  for  execution and filing of any
                  documents  to be executed  and filed by the Trust or on behalf
                  of the Trust,  as the Sponsor deems  necessary or advisable in
                  order to comply with the applicable laws of any such States in
                  connection with the sale of the Capital Securities; 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 (in the case of the Institutional
Trustee, to the actual knowledge of a Responsible  Officer),  and (ii) the Trust
will not fail to be  classified  as a grantor  trust for United  States  federal
income tax purposes  (in the case of the  Institutional  Trustee,  to the actual
knowledge of a Responsible Officer) and (iii) the Trust will not take any action
inconsistent  with  the  treatment  of the  Debentures  as  indebtedness  of the
Debenture  Issuer for United States  federal income tax purposes (in the case of
the Institutional Trustee, to the actual knowledge of a Responsible Officer). In
this connection,  the Institutional  Trustee, the Administrators and the Holders
of a Majority in liquidation  amount of the Common  Securities are authorized to
take any action,  not inconsistent with applicable laws or this Declaration,  as
amended  from  time  to  time,  that  each  of the  Institutional  Trustee,  the
Administrators and such Holders determine in their discretion to be necessary or
desirable for such purposes, even if such action adversely affects the interests
of the Holders of the Capital Securities.

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

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

                                       13
<PAGE>

                  (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

                  (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.

                                       14
<PAGE>

         SECTION 2.8. Powers and Duties of the Institutional Trustee.

                  (a) The legal  title to the  Debentures  shall be owned by and
held of record in the name of the Institutional Trustee in trust for the benefit
of the Trust. 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.

                  (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 ss. 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.

                  (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, on or principal of the Debentures on
the date such interest,  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

                                       15
<PAGE>

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

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

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

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

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

                  (a) The  Institutional  Trustee,  before the occurrence of any
Event of Default (of which the Institutional  Trustee has knowledge (as provided
in Section  2.10(m)  hereof)) and after the curing of all Events of Default that
may  have  occurred,  shall  undertake  to  perform  only  such  duties  as  are
specifically  set forth in this  Declaration  and no implied  covenants shall be
read into this Declaration  against the Institutional  Trustee. In case an Event
of Default (of which the  Institutional  Trustee has  knowledge  (as provided in
Section  2.10(m)  hereof)),  has  occurred  (that  has not been  cured or waived
pursuant to Section 6.7), 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

                                       16
<PAGE>

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 or bad faith. 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 or
bad  faith.  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  or bad faith
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 a  Responsible
                  Officer  of the  Institutional  Trustee,  unless  it  shall be
                  proved  that  the  Institutional   Trustee  was  negligent  in
                  ascertaining the pertinent facts;

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

                                       17
<PAGE>

                         (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
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,
willful misconduct or bad faith;

                  (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

                                       18
<PAGE>

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 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

                                       19
<PAGE>

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.

         SECTION 2.11.  Execution of Documents.  Unless otherwise  determined in
writing by the Institutional  Trustee,  and except as otherwise  required by the
Statutory  Trust  Act,  the  Institutional  Trustee,  or any  one or more of the
Administrators,  as the case may be, is  authorized  to execute  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 2.12. Not  Responsible  for Recitals or Issuance of Securities.
The recitals  contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their  correctness.  The Trustees make no representations as to the value or

                                       20
<PAGE>

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

         SECTION 2.14. Mergers.

                  (a) The Trust may not consolidate,  amalgamate,  merge with or
into, or be replaced by, or convey,  transfer or lease its properties and assets
substantially  as an  entirety to any  corporation  or other  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 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;

                         (ii) the  Sponsor  expressly  appoints 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 of 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;

                                       21
<PAGE>

                         (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;

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

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

                  (c)  Notwithstanding  Section  2.15(b),  the Trust  shall not,
except  with  the  consent  of  Holders  of 100% in  liquidation  amount  of the
Securities,  consolidate,  amalgamate, merge with or into, or be replaced by, or
convey,  transfer  or  lease  its  properties  and  assets  as  an  entirety  or
substantially  as an entirety to, any other Person or permit any other Person to
consolidate,   amalgamate,   merge   with  or  into,   or  replace  it  if  such
consolidation,  amalgamation, merger, replacement, conveyance, transfer or lease
would  cause the Trust or  Successor  Entity to be  classified  as other  than a
grantor trust for United States federal income tax purposes.

                                       22
<PAGE>

                                  ARTICLE III
                                     SPONSOR

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

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

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

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

                                   ARTICLE IV
                           TRUSTEES AND ADMINISTRATORS

         SECTION 4.1. Number of Trustees. The number of Trustees initially shall
be one, 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 always
be one Trustee who shall be the Institutional Trustee.

         SECTION 4.2. 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

                                       23
<PAGE>

                         (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.

                  (b) If at any time the Institutional Trustee shall cease to be
eligible  to so act  under  Section  4.2(a),  the  Institutional  Trustee  shall
immediately resign in the manner and with the effect set forth in Section 4.5.

                  (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 U.S.  Bank
National Association.

         SECTION 4.3. 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 4.4.  Appointment,  Removal and Resignation of the Trustees and
the Administrators.

                  (a)  No   resignation   or  removal  of  any  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 4.4.

                  (b)  Subject to Section  4.4(a),  a Trustee  may resign at any
time by giving  written  notice  thereof to the Holders of the Securities and by
appointing  a  successor  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 reasonable
expense and charges (the "Successor  Institutional  Trustee"). If the instrument
of acceptance by the  successor  Trustee  required by this Section 4.4 shall not
have been  delivered  to the  Trustee  within 60 days  after the  giving of such

                                       24
<PAGE>

notice of resignation or delivery of the instrument of removal,  the 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
Trustee. Such court may thereupon,  after prescribing such notice, if any, as it
may deem proper,  appoint a Trustee.  The  Institutional  Trustee  shall have no
liability for the selection of such successor pursuant to this Section 4.4.

                  (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
Trustee,  shall promptly appoint a successor Trustee, and such successor Trustee
shall comply with the applicable  requirements  of this Section 4.4. If an Event
of Default shall have occurred and be continuing,  the Institutional Trustee may
be removed by the act of the Holders of a Majority in liquidation  amount of the
Capital Securities,  delivered to the 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 Trustee,  shall promptly
appoint a successor Trustee or Trustees, and such successor Trustee shall comply
with the applicable  requirements  of this Section 4.4. If no successor  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 4.4 within 30 days after delivery of an instrument of removal,  the
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 Trustee. Such court may thereupon,  after prescribing
such  notice,  if any, as it may deem  proper,  appoint a  successor  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 Trustee and the address of its Corporate Trust Office if it is the
Institutional Trustee.

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

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<PAGE>

Securities and the Trust subject to the payment of all unpaid fees, expenses and
indemnities of such retiring Trustee.

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

                  (g) 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.

         SECTION 4.5.  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 4.4.

         SECTION 4.6. 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 4.4, 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 4.7. Meetings of the Trustees and the Administrators.  Meetings
of the Trustees or the  Administrators  shall be held from time to time upon the
call of any Trustee or  Administrator,  as applicable.  Regular  meetings of the
Trustees and the  Administrators,  respectively,  may be in person in the United
States or by telephone,  at a place (if applicable) and time fixed by resolution
of the Trustees or the  Administrators,  as applicable.  Notice of any in-person
meetings  of the  Trustees  or the  Administrators  shall be hand  delivered  or
otherwise  delivered in writing  (including  by  facsimile,  with a hard copy by
overnight  courier)  not less than 48 hours before such  meeting.  Notice of any
telephonic  meetings of the  Trustees  or the  Administrators  or any  committee
thereof shall be hand delivered or otherwise  delivered in writing (including by
facsimile,  with a hard copy by overnight courier) not less than 24 hours before
a  meeting.  Notices  shall  contain a brief  statement  of the time,  place and
anticipated  purposes  of the  meeting.  The  presence  (whether in person or by
telephone)  of a Trustee or an  Administrator,  as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or an
Administrator,  as the case may be, attends a meeting for the express purpose of
objecting to the  transaction of any activity on the ground that the meeting has
not  been  lawfully  called  or  convened.  Unless  provided  otherwise  in this
Declaration,  any action of the Trustees or the Administrators,  as the case may
be,  may be taken at a meeting  by vote of a  majority  of the  Trustees  or the
Administrators  present (whether in person or by telephone) and eligible to vote
with respect to such matter;  provided, that, in the case of the Administrators,
a Quorum is present,  or without a meeting by the unanimous  written  consent of
the Trustees or the Administrators, as the case may be. Meetings of the Trustees

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<PAGE>

and the Administrators together shall be held from time to time upon the call of
any Trustee or Administrator.

         SECTION 4.8. 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  4.9.  Merger,  Conversion,   Consolidation  or  Succession  to
Business.

         Any  Person  into  which  the  Institutional  Trustee  may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger,  conversion or consolidation to which the Institutional Trustee shall be
a party,  or any Person  succeeding  to all or  substantially  all the corporate
trust  business  of the  Institutional  Trustee  shall be the  successor  of the
Institutional Trustee hereunder, 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.

                                   ARTICLE V
                                  DISTRIBUTIONS

         SECTION 5.1. Distributions.

                  (a) 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  case of
withholding  taxes,  as  determined by the  Institutional  Trustee or any Paying
Agent and, in the case of taxes other than  withholding tax taxes, as determined
by the Administrators in a written notice to the Institutional Trustee.

                  (b) As a  condition  to the  payment  of any  principal  of or
interest on the  Securities  without the  imposition  of  withholding  tax,  the
Administrators  shall  require the previous  delivery of properly  completed and
signed applicable U.S. federal income tax certifications (generally, an Internal

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<PAGE>

Revenue Service Form W-9 (or applicable  successor form) in the case of a person
that is a "United States  person"  within the meaning of Section  7701(a)(30) of
the Code or an Internal Revenue Service Form W-8 (or applicable  successor form)
in the case of a person that is not a "United  States person" within the meaning
of Section 7701(a)(30) of the Code, and any other certification acceptable to it
to enable  the  Institutional  Trustee or any Paying  Agent to  determine  their
respective  duties and  liabilities  with respect to any taxes or other  charges
that  they may be  required  to pay,  deduct  or  withhold  in  respect  of such
Securities.

                                   ARTICLE VI
                             ISSUANCE OF SECURITIES

         SECTION 6.1. General Provisions Regarding Securities.

                  (a) The Administrators  shall on behalf of the Trust issue one
series of capital  securities,  evidenced by a certificate  substantially in the
form of Exhibit A-1,  representing  undivided beneficial interests in the assets
of the Trust and  having  such  terms as are set forth in Annex I (the  "Capital
Securities"),  and one series of common  securities,  evidenced by a certificate
substantially  in the form of Exhibit  A-2,  representing  undivided  beneficial
interests  in the assets of the Trust and having  such terms as are set forth in
Annex I (the "Common Securities").  The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital  Securities  and the
Common  Securities.  The Capital  Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event of
Default  has  occurred  and is  continuing,  the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption  and  otherwise  are  subordinated  to the  rights to  payment of the
Holders of the Capital Securities.

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

                  (c) The  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.

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<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 New York, New York, 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 Trustee hereby
appoints the  Institutional  Trustee as Paying Agent and Transfer  Agent at U.S.
Bank  National  Association,  100 Wall Street,  19th Floor,  New York,  New York
10005,  Attn:  Corporate Trust Services - Regional  Statutory Trust I. The Trust
shall also keep or cause to be kept a register  for the  purpose of  registering
Securities and transfers and exchanges of  Securities,  such register to be held
by a registrar  (the  "Registrar").  The  Administrators  may appoint the Paying
Agent,  the  Registrar  and the  Transfer  Agent,  and may  appoint  one or more
additional Paying Agents, one or more co-Registrars,  or one or more co-Transfer
Agents in such other  locations as it shall  determine.  The term "Paying Agent"
includes  any  additional  Paying  Agent,  the  term  "Registrar"  includes  any
additional  Registrar or co-Registrar and the term "Transfer Agent" includes any
additional  Transfer Agent or co-Transfer  Agent. The  Administrators may change
any Paying Agent,  Transfer  Agent or Registrar at any time without prior notice
to any Holder. The Administrators shall notify the Institutional  Trustee of the
name and address of any Paying Agent,  Transfer  Agent and Registrar not a party
to  this   Declaration.   The   Administrators   hereby  initially  appoint  the
Institutional  Trustee to act as 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  and the  Institutional  Trustee's
certificate  of  authentication  thereon shall be  substantially  in the form of
Exhibit A-1, and the Common  Securities  shall be  substantially  in the form of
Exhibit A-2, each of which is hereby  incorporated  in and expressly made a part
of  this  Declaration.  Certificates  may be  typed,  printed,  lithographed  or
engraved or may be produced in any other manner as is  reasonably  acceptable to
the Administrators,  as conclusively  evidenced by their execution thereof.  The
Certificates   may  have   letters,   numbers,   notations  or  other  marks  of
identification or designation and such legends or endorsements  required by law,
stock exchange rule,  agreements to which the Trust is subject, if any, or usage
(provided, that any such notation, legend or endorsement is in a form acceptable
to the  Sponsor).  The Trust at the  direction of the Sponsor  shall furnish any
such  legend  not  contained  in  Exhibit  A-1 to the  Institutional  Trustee in
writing.  Each Capital  Security shall be dated the date of its  authentication.
The terms and provisions of the Securities set forth in Annex I and the forms of

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<PAGE>

Securities  set  forth in  Exhibits  A-1 and A-2 are  part of the  terms of this
Declaration  and  to the  extent  applicable,  the  Institutional  Trustee,  the
Administrators  and  the  Sponsor,  by  their  execution  and  delivery  of this
Declaration,  expressly  agree  to such  terms  and  provisions  and to be bound
thereby.  Capital  Securities  will be  issued  only in  blocks  having a stated
liquidation  amount of not less than  $100,000 and multiples of $1,000 in excess
thereof.

                  (b) The  Capital  Securities  sold by the Trust to the initial
purchasers  pursuant  to the  Placement  Agreement  and the  Capital  Securities
Purchase Agreement shall be issued 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  Certificates  should be surrendered  to the Registrar,  or if the
Registrar shall receive evidence to its satisfaction of the destruction, loss or
theft of any Certificate; and (b) there shall be delivered to the Registrar, the
Administrators  and the Institutional  Trustee such security or indemnity as may
be  required  by them to hold each of them  harmless;  then,  in the  absence of
notice that such Certificate  shall have been acquired by a bona fide purchaser,
an  Administrator  on behalf of the Trust  shall  execute  (and in the case of a
Capital Security Certificate,  the Institutional Trustee shall authenticate) and
deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen Certificate,  a new Certificate of like denomination.  In connection with
the issuance of any new Certificate under this Section 6.4, the Registrar or the
Administrators  may require the payment of a sum  sufficient to cover any tax or
other  governmental  charge  that may be imposed in  connection  therewith.  Any
duplicate   Certificate   issued  pursuant  to  this  Section  shall  constitute
conclusive evidence of an ownership interest in the relevant  Securities,  as if
originally  issued,  whether or not the lost,  stolen or  destroyed  Certificate
shall be found at any time.

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

         SECTION 6.6.  Cancellation.  The Administrators at any time may deliver
Securities to the Registrar for cancellation. The Registrar shall forward to the
Institutional  Trustee any  Securities  surrendered  to it for  registration  of
transfer, redemption or payment. The Institutional Trustee shall promptly cancel
all Securities surrendered for registration of transfer, payment, replacement or
cancellation  and shall dispose of such canceled  Securities in accordance  with
its  standard  procedures  or  otherwise  as  the  Administrators   direct.  The
Administrators may not issue new Securities to replace Securities that have been
paid or that have been delivered to the Institutional Trustee for cancellation.

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<PAGE>

         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 under Section 5.01(c),  (e) or (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) Upon an Indenture Event of Default under Sections 5.01(c),
(e) or (f) at any time after a declaration  of  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  declaration  and waive such default,  the Holders of not less
than a Majority  in  liquidation  amount of the Capital  Securities,  by written
notice to the Institutional  Trustee, the Sponsor and the Debenture Trustee, may
rescind and annul such declaration and its consequences if:

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

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

                             (B) any  accrued  Deferred  Interest  on all of the
                         Debentures;

                             (C) all payments on any Debentures that have become
                         due otherwise than by such  declaration of acceleration
                         and interest and Deferred  Interest thereon at the rate
                         borne by the Debentures; and

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

                         (ii)  all  Events  of  Default   with  respect  to  the
                  Debentures,  other than the non-payment of the principal of or

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<PAGE>

                  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 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

                         (i) unless  earlier  dissolved,  on June 15, 2041,  the
                  expiration of the term of the Trust;

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<PAGE>

                         (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 all 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, and subject to the terms
set forth in Annex I, the  Institutional  Trustee  shall  terminate the Trust by
filing,  at the expense of the Sponsor,  a certificate of cancellation  with the
Secretary of State of the State of Connecticut in accordance with Section 34-503
of the Statutory Trust Act.

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

                                  ARTICLE VIII
                              TRANSFER OF INTERESTS

         SECTION 8.1. General.

                  (a) Subject to Section 6.4 and Section  8.1(c),  when  Capital
Securities  are presented to the Registrar with a request to register a transfer
or to exchange  them for an equal number of Capital  Securities  represented  by
different  Certificates,  the Registrar  shall register the transfer or make the
exchange if the requirements  provided for herein for such transactions are met.
To permit  registrations  of transfers and exchanges,  the Trust shall issue and
the  Institutional   Trustee  shall  authenticate   Capital  Securities  at  the
Registrar's request.

                  (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

                                       33
<PAGE>

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

                  (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 transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities,  and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.

                  (d)  The  Registrar  shall  provide  for the  registration  of
Securities and of transfers of Securities, which will be effected without charge
but only upon  payment  (with such  indemnity as the  Registrar  may require) in
respect of any tax or other governmental charges that may be imposed in relation
to it. Upon  surrender  for  registration  of transfer  of any  Securities,  the
Registrar shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees.  Any Security issued upon any registration
of transfer or exchange pursuant to the terms of this Declaration shall evidence
the  same  Security  and  shall be  entitled  to the same  benefits  under  this
Declaration as the Security  surrendered  upon such  registration of transfer or
exchange.  Every  Security  surrendered  for  registration  of transfer shall be
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Registrar duly executed by the Holder or such Holder's  attorney duly authorized
in writing.  Each Security  surrendered  for  registration  of transfer shall be
canceled by the Institutional Trustee pursuant to Section 6.6. A transferee of a
Security  shall be entitled to the rights and  subject to the  obligations  of a
Holder  hereunder  upon  the  receipt  by  such  transferee  of a  Security.  By
acceptance of a Security,  each transferee  shall be deemed to have agreed to be
bound by this Declaration.

                  (e) Neither the Trust nor the Registrar  shall be required (i)
to issue,  register the transfer of, or exchange any Securities  during a period
beginning at the opening of business 15 days before the day of any  selection of
Securities  for  redemption  and ending at the close of business on the earliest
date on which the relevant  notice of redemption is deemed to have been given to
all Holders of the  Securities to be redeemed,  or (ii) to register the transfer
or exchange of any  Security so  selected  for  redemption  in whole or in part,
except the unredeemed portion of any Security being redeemed in part.

         SECTION 8.2. Transfer Procedures and Restrictions.

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

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<PAGE>

the  Administrators,  shall  authenticate and deliver Capital Securities that do
not bear the Restricted Securities Legend (other than the legend contemplated by
Section 8.2(d)).

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

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

         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) TO A "NON
U.S.  PERSON" IN AN "OFFSHORE  TRANSACTION"  PURSUANT TO  REGULATION S UNDER THE
SECURITIES ACT, (D) 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 (E)  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 (D) OR (E) 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

                                       35
<PAGE>

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

         IN CONNECTION  WITH ANY TRANSFER,  THE HOLDER OF THE  CERTIFICATE  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

                                       36
<PAGE>

THE HOLDER OF THIS SECURITY FOR ANY PURPOSE,  INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS SECURITY,  AND SUCH PURPORTED  TRANSFEREE SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

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

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

                  (f) Neither the Institutional  Trustee nor the Registrar shall
be responsible for ascertaining whether any transfer hereunder complies with the
registration provisions of or any exemptions from the Securities Act, applicable
state securities laws or the applicable laws of any other  jurisdiction,  ERISA,
the Code or the Investment Company Act.

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

                                       37
<PAGE>

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

         SECTION 9.1. Liability.

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

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

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

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

                  (c)  Except to the extent  provided  in  Section  9.1(b),  and
pursuant  to ss.  34-523(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
Connecticut  Business  Corporation Act,  Chapter 601 of the Connecticut  General
Statutes,  Section 33-600 et seq.,  except as otherwise  specifically  set forth
herein.

         SECTION 9.2. Exculpation.

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

                                       38
<PAGE>

                  (c) It is  expressly  understood  and  agreed  by the  parties
hereto that insofar as any  document,  agreement or  certificate  is executed on
behalf of the Trust by any Trustee (i) such  document,  agreement or certificate
is executed and delivered by such Trustee, not in its individual  capacity,  but
solely as  Trustee  under this  Declaration  in the  exercise  of the powers and
authority  conferred  and  vested  in it,  (ii)  each  of  the  representations,
undertakings  and agreements  made on the part of the Trust is made and intended
not as representations,  warranties,  covenants,  undertakings and agreements by
any Trustee in its individual capacity, but is made and intended for the purpose
of binding only the Trust and (iii) under no circumstances  shall any Trustee in
its individual capacity be personally liable for the payment of any indebtedness
or  expenses  of the  Trust  or be  liable  for the  breach  or  failure  of any
obligation, representation, warranty or covenant made or undertaken by the Trust
under this Declaration or any other document, agreement or certificate.

         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

                                       39
<PAGE>

                  expenses (including attorneys' fees and expenses),  judgments,
                  fines and amounts paid in settlement  actually and  reasonably
                  incurred by such Person in connection  with such action,  suit
                  or  proceeding  if such  Person  acted in good  faith and in a
                  manner such Person reasonably believed to be in or not opposed
                  to the best  interests of the Trust,  and, with respect to any
                  criminal  action or  proceeding,  had no  reasonable  cause to
                  believe  such conduct was  unlawful.  The  termination  of any
                  action,  suit or  proceeding by judgment,  order,  settlement,
                  conviction,   or  upon  a  plea  of  nolo  contendere  or  its
                  equivalent,  shall not, of itself,  create a presumption  that
                  the  Indemnified  Person  did not act in good  faith  and in a
                  manner which such Person  reasonably  believed to be in or not
                  opposed to the best 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 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.

                                       40
<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, willful misconduct or bad faith with
respect to such acts or omissions.

                                       41
<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 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

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<PAGE>

improper.  None of any Covered Person, the Sponsor or the Institutional  Trustee
shall be obligated to present any particular  investment or other opportunity to
the Trust even if such  opportunity is of a character  that, if presented to the
Trust,  could be taken by the Trust, and any Covered Person, the Sponsor and the
Institutional  Trustee  shall  have  the  right  to take  for  its  own  account
(individually  or as a partner or  fiduciary) or to recommend to others any such
particular  investment  or  other  opportunity.  Any  Covered  Person,  and  the
Institutional  Trustee may engage or be  interested  in any  financial  or other
transaction  with the Sponsor or any  Affiliate  of the  Sponsor,  or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.

         SECTION 9.6. Compensation; Fee.

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

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

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

                  (b) The  provisions  of this  Section  9.6 shall  survive  the
dissolution of the Trust and the termination of this Declaration and the removal
or resignation of any Trustee.

                                   ARTICLE X
                                   ACCOUNTING

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

         SECTION 10.2. Certain Accounting Matters.

                  (a) At all  times  during  the  existence  of the  Trust,  the
Administrators  shall keep, or cause to be kept at the  principal  office of the
Trust in the United States, as defined for purposes of Treasury  Regulations ss.
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be  maintained on the accrual  method of  accounting,  in accordance  with
generally accepted accounting principles, consistently applied.

                  (b) The  Administrators  shall either (i) cause each Form 10-K
and  Form  10-Q  prepared  by the  Sponsor  and  filed  with the  Commission  in

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<PAGE>

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

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

                  (d) The Administrators  shall cause to be duly prepared in the
United States, as defined for purposes of Treasury  Regulations ss.  301.7701-7,
and filed an annual  United States  federal  income tax return on a Form 1041 or
such other form required by United States  federal income tax law, and any other
annual income tax returns required to be filed by the  Administrators  on behalf
of the Trust with any state or local taxing authority.

                  (e) The  Administrators  will cause the  Sponsor's  regulatory
reports to be delivered to the Holder  promptly  following their filing with the
Federal Reserve.

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

         SECTION  10.4.  Withholding.  The  Institutional  Trustee or any Paying
Agent and the  Administrators  shall  comply with all  withholding  requirements
under United States federal,  state and local law. As a condition to the payment
of any principal of or interest on any Debt Security  without the  imposition of
withholding tax, the Institutional Trustee or any Paying Agent shall require the
previous  delivery of properly  completed  and signed  applicable  U.S.  federal
income tax certifications  (generally,  an Internal Revenue Service Form W-9 (or
applicable  successor  form) in the case of a person  that is a  "United  States
person"  within the  meaning of Section  7701(a)(30)  of the Code or an Internal
Revenue Service Form W-8 (or applicable  successor form) in the case of a person
that is not a "United States  person" within the meaning of Section  7701(a)(30)
of the  Code)  and  any  other  certification  acceptable  to it to  enable  the
Institutional  Trustee or any Paying  Agent and the Trustee to  determine  their
respective  duties and  liabilities  with respect to any taxes or other  charges
that they may be  required  to pay,  deduct or  withhold in respect of such Debt
Security or the holder of such Debt Security  under any present or future law or
regulation of the United States or any political  subdivision  thereof or taxing
authority  therein or to comply with any reporting or other  requirements  under
any such law or regulation.  The  Administrators  shall file required forms with

                                       44
<PAGE>

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 Securities,  this  Declaration may only be amended by a
written instrument approved and executed by:

                         (i) the Institutional Trustee,

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

                         (iii) 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;

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<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
                         Capital  Securities as "Tier 1 Capital" for purposes of
                         the  capital  adequacy  guidelines  of (x) the  Federal
                         Reserve  (or,  if the  Debenture  Issuer  is not a bank
                         holding company, such guidelines or policies applied to
                         the Debenture  Issuer as if the  Debenture  Issuer were
                         subject to such  guidelines  of policies) or of (y) any
                         other regulatory authority having jurisdiction over the
                         Debenture Issuer.

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

                  (d) In addition to and  notwithstanding any other provision in
this Declaration,  without the consent of each affected Holder, this Declaration
may not be amended to (i) change the amount or timing of any Distribution on the
Securities  or  any  redemption  or  liquidation  provisions  applicable  to 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)  Subject  to  Section  11.1(a),  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,

                                       46
<PAGE>

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

provided,  however, that no such modification,  elimination or addition referred
to in clauses  (i),  (ii),  (iii) or (iv)  shall  adversely  affect the  powers,
preferences or rights of Holders of Capital Securities.

         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  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

                                       47
<PAGE>

                  returned  to  the  Trust  within  the  time  specified  by the
                  Administrators;

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

                         (iii) unless the Statutory Trust Act, this Declaration,
                  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 ss. 301.7701-7).

                                  ARTICLE XII
                    REPRESENTATIONS OF INSTITUTIONAL 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 New York 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);

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<PAGE>

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

                  (d)  the   execution,   delivery   and   performance   by  the
Institutional  Trustee  of this  Declaration  has been  duly  authorized  by all
necessary action on the part of the Institutional  Trustee. This Declaration has
been  duly  executed  and  delivered  by the  Institutional  Trustee,  and under
Connecticut 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.

                                  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):

                           Regional Statutory Trust I
                           c/o Regional Bankshares, Inc.
                           206 South Fifth Street
                           Hartsville, South Carolina 29550
                           Attention: Curtis A. Tyner, Sr.
                           Telecopy: (843) 332-3218
                           Telephone: (843) 383-4333

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

                                       49
<PAGE>

                           U.S. Bank National Association
                           225 Asylum Street, 23rd Floor
                           Hartford, CT 06103
                           Attention:  Corporate Trust Services
                           Regional Statutory Trust I

With a copy to:

                           U.S. Bank National  Association  One Federal  Street,
                           3rd Floor Boston,  MA 02110 Telecopy:  (617) 603-6683
                           Telephone: (617) 603-6549

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

                           Regional Bankshares, Inc.
                           206 South Fifth Street
                           Hartsville, South Carolina 29550
                           Attention: Curtis A. Tyner, Sr.
                           Telecopy: (843) 332-3218
                           Telephone: (843) 383-4333

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

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

         SECTION  13.2.  Governing  Law.  This  Declaration  and the  rights and
obligations  of the parties  hereunder  shall be governed by and  interpreted in
accordance with the law of the State of Connecticut 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  Connecticut  or any other  jurisdiction  that
would call for the  application  of the law of any  jurisdiction  other than the
State of Connecticut.

         SECTION 13.3. Submission to Jurisdiction.

                  (a) Each of the parties hereto agrees that any suit, action or
proceeding  arising out of or based upon this  Declaration,  or the transactions
contemplated  hereby, may be instituted in any of the courts of the State of New
York located in the Borough of  Manhattan,  City and State of New York,  and any

                                       50
<PAGE>

competent  court in the place of its  corporate  domicile  in respect of actions
brought  against it as a  defendant.  In addition,  each such party  irrevocably
waives,  to the fullest extent  permitted by law, any objection which it may now
or hereafter have to the laying of the venue of such suit,  action or proceeding
brought in any such court and  irrevocably  waives any claim that any such suit,
action  or  proceeding  brought  in  any  such  court  has  been  brought  in an
inconvenient  forum and irrevocably waives any right to which it may be entitled
on  account  of  its  place  of  corporate  domicile.  Each  such  party  hereby
irrevocably  waives  any and all right to trial by jury in any legal  proceeding
arising out of or relating to this Declaration or the transactions  contemplated
hereby. Each such party agrees that final judgment in any proceedings brought in
such a court shall be conclusive  and binding upon it and may be enforced in any
court to the jurisdiction of which it is subject by a suit upon such judgment.

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

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

         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.

                                       51
<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]

                                       52
<PAGE>

                                     ANNEX I

                                    TERMS OF
                             CAPITAL SECURITIES AND
                                COMMON SECURITIES

         Pursuant  to Section 6.1 of the Amended  and  Restated  Declaration  of
Trust,  dated  as of  April  20,  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.  3,000 Capital Securities of Regional Statutory
Trust I (the "Trust"),  with an aggregate stated liquidation amount with respect
to the assets of the Trust of Three Million  Dollars  ($3,000,000)  and a stated
liquidation amount with respect to the assets of the Trust of $1,000 per Capital
Security,  are hereby designated for the purposes of identification  only as the
"TP Securities" (the "Capital  Securities").  The Capital Security  Certificates
evidencing the Capital  Securities shall be substantially in the form of Exhibit
A-1 to the  Declaration,  with such changes and  additions  thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock  exchange on which the Capital  Securities are listed,
if any.

         (b) Common  Securities.  93 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 Ninety Three Thousand Dollars ($93,000) and a stated  liquidation amount with
respect to the assets of the Trust of $1,000 per Common Security.

         2. Distributions.

         (a)  Distributions  payable  on  each  Security  will be  payable  at a
variable  per annum  rate of  interest,  reset  quarterly,  equal to  LIBOR,  as
determined on the LIBOR Determination Date for such Distribution Payment Period,
plus 1.77% (the "Coupon  Rate") of the stated  liquidation  amount of $1,000 per
Security (provided,  however,  that the Coupon Rate for any Distribution Payment
Period may not exceed the highest  rate  permitted  by New York law, as the same
may be modified by United States law of general applicability), such Coupon Rate
being  the  rate  of  interest  payable  on the  Debentures  to be  held  by the
Institutional  Trustee.  Except as set forth  below in respect  of an  Extension
Period,  Distributions  in arrears for more than one quarterly  period will bear
interest  thereon  compounded  quarterly at the applicable  Coupon Rate for each
such  quarterly  period (to the extent  permitted by applicable  law).  The term
"Distributions" as used herein includes cash distributions,  any such compounded
distributions  and any  Additional  Interest  payable on the  Debentures  unless

                                     A-I-1
<PAGE>

otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the  Institutional  Trustee and to the
extent the  Institutional  Trustee has funds  legally  available in the Property
Account  therefor.  The amount of  Distributions  payable  for any  Distribution
Payment  Period will be computed  for any full  quarterly  Distribution  Payment
Period on the basis of a 360-day  year and the actual  number of days elapsed in
the relevant Distribution period; provided, however, that upon the occurrence of
a Special Event redemption  pursuant to paragraph 4(a) below the amounts payable
pursuant to this Declaration  shall be calculated as set forth in the definition
of Special Redemption Price.

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

                  (1) On the second LIBOR Business Day  (provided,  that on such
             day commercial banks are open for business  (including  dealings in
             foreign  currency  deposits) in London (a "LIBOR Banking Day"), and
             otherwise  the next  preceding  LIBOR  Business  Day that is also a
             LIBOR  Banking  Day) prior to March 15, June 15,  September  15 and
             December 15 (or,  with  respect to the first  Distribution  Payment
             Period, on April 18, 2006), (each such day, a "LIBOR  Determination
             Date") for such Distribution Payment Period), the Calculation Agent
             shall  obtain the rate for  three-month  U.S.  Dollar  deposits  in
             Europe,  which  appears on  Telerate  Page 3750 (as  defined in the
             International Swaps and Derivatives Association, Inc. 2000 Interest
             Rate and Currency  Exchange  Definitions) or such other page as may
             replace such  Telerate Page 3750 on the  Moneyline  Telerate,  Inc.
             service (or such other  service or services as may be  nominated by
             the British Banker's  Association as the information vendor for the
             purpose  of  displaying  London  interbank  offered  rates for U.S.
             dollar  deposits),  as of 11:00  a.m.  (London  time) on such LIBOR
             Determination  Date,  and the rate so  obtained  shall be LIBOR for
             such  Distribution  Payment Period.  "LIBOR Business Day" means any
             day that is not a Saturday, Sunday or other day on which commercial
             banking   institutions   in  The  City  of  New  York  or   Boston,
             Massachusetts are authorized or obligated by law or executive order
             to be closed. If such rate is superseded on Telerate Page 3750 by a
             corrected  rate before 12:00 noon  (London  time) on the same LIBOR
             Determination  Date, the corrected  rate as so substituted  will be
             the applicable LIBOR for that Distribution Payment Period.

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

                                     A-I-2
<PAGE>

             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 banks in the City of
             New York (as selected by the Calculation  Agent) are quoting on the
             relevant  LIBOR  Determination  Date for  three-month  U.S.  Dollar
             deposits in Europe at approximately 11:00 a.m. (London time) (in an
             amount  determined  by the  Calculation  Agent).  As  used  herein,
             "Reference  Banks"  means four major banks in the London  Interbank
             market selected by the Calculation Agent.

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

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

         (d) As soon as practicable following each LIBOR Determination Date, but
in no event  later than the 30th day  following  such LIBOR  Determination,  the
Calculation Agent shall notify, in writing,  the Sponsor and the Paying Agent of
the  applicable  Coupon  Rate in effect  for the  related  Distribution  Payment
Period.  The  Calculation  Agent  shall,  upon the  request of the Holder of any
Securities, provide the Coupon Rate then in effect. All calculations made by the
Calculation  Agent in the absence of manifest  error shall be conclusive for all
purposes and binding on the Sponsor and the Holders of the Securities. Any error
in a calculation of the Coupon Rate by the Calculation Agent may be corrected at
any time by the  delivery  of notice of such  corrected  Coupon Rate as provided
above.  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.
Failure to notify the Company or the Paying Agent of the applicable  Coupon Rate
shall not affect the obligation of the Company to make payment on the Debentures
at such Coupon Rate.

         (e)  Distributions  on the Securities  will be cumulative,  will accrue
from the date of original issuance, and will be payable, subject to extension of
Distribution payment periods as described herein,  quarterly in arrears on March
15, June 15, September 15 and December 15 of each year, commencing June 15, 2006
(each, a "Distribution Payment Date"). Subject to prior submission of Notice (as
defined  in the  Indenture),  and so long as no Event  of  Default  pursuant  to
paragraphs  (c), (e) or (f) of Section 5.01 of the Indenture has occurred and is
continuing  the  Debenture  Issuer has the right  under the  Indenture  to defer
payments of interest on the  Debentures by extending  the interest  distribution
period for up to 20 consecutive  quarterly periods (each, an "Extension Period")
at any time and from time to time on the  Debentures,  subject to the conditions
described  below,  during which  Extension  Period no interest  shall be due and
payable (except any Additional Interest that may be due and payable). During any
Extension  Period,  interest  will  continue  to accrue on the  Debentures,  and

                                     A-I-3
<PAGE>

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 (to the extent
redeemed) 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
or (ii) make any  payment  of  principal  or premium  or  interest  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 in all
respects pari passu 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 (A) in connection with any employment contract, benefit plan or
other  similar  arrangement  with or for the  benefit of one or more  employees,
officers,   directors  or  consultants,   (B)  in  connection  with  a  dividend
reinvestment  or stockholder  stock purchase plan or (C) in connection  with the
issuance of capital stock of the  Debenture  Issuer (or  securities  convertible
into or exercisable for such capital stock),  as consideration in an acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any exchange, reclassification, combination or conversion of any class
or series of the  Debenture  Issuer's  capital  stock (or any capital stock of a
subsidiary  of the  Debenture  Issuer) for any class or series of the  Debenture
Issuer's  capital  stock or of any  class or series  of the  Debenture  Issuer's
indebtedness  for any class or series of the Debenture  Issuer's  capital stock,
(c) the purchase of  fractional  interests in shares of the  Debenture  Issuer's
capital stock pursuant to the conversion or exchange  provisions of such capital
stock or the security  being  converted or exchanged,  (d) any  declaration of a
dividend in connection  with any  stockholder's  rights plan, or the issuance of
rights,  stock or other  property  under any  stockholder's  rights plan, or the
redemption or repurchase of rights pursuant thereto,  or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock  issuable upon exercise of such  warrants,  options or other rights is the
same stock as that on which the  dividend is being paid or ranks pari passu with
or junior to such stock).  Prior to the termination of any Extension Period, the
Debenture  Issuer may further  extend such  period;  provided,  that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date,
Redemption Date (to the extent  redeemed) 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 shall be due and
payable  during an Extension  Period,  except at the end  thereof,  but Deferred
Interest  shall accrue upon each  installment  of interest that would  otherwise
have been due and payable during such Extension Period until such installment is
paid. If Distributions are deferred,  the Distributions due shall be paid on the
date that the related  Extension  Period  terminates,  or, if such date is not a
Distribution  Payment Date, on the immediately  following  Distribution  Payment
Date,  to Holders of the  Securities  as they appear on the books and records of

                                     A-I-4
<PAGE>

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.

         (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 15 days before the relevant
Distribution Payment Date.  Distributions payable on any Securities that are not
punctually paid on any  Distribution  Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case may be,
when due (taking into account any Extension Period), will cease to be payable to
the Person in whose name such  Securities are registered on the relevant  record
date, and such defaulted  Distribution  will instead be payable to the Person in
whose name such  Securities  are  registered on the special record date or other
specified  date  determined in accordance  with the  Indenture.  Notwithstanding
anything to the contrary  contained  herein,  if any Distribution  Payment Date,
other than on the Maturity Date, any Redemption  Date or the Special  Redemption
Date, falls on a day that is not a Business Day, then any 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.  If the Maturity  Date,  any
Redemption  Date or the  Special  Redemption  Date  falls on a day that is not a
Business Day, then the principal,  premium, if any, and/or Distributions payable
on such date will be paid on the next succeeding Business Day, and no additional
Distributions  will  accrue  in  respect  of such  payment  made  on  such  next
succeeding Business Day.

         (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  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, upon receipt of an opinion of  nationally  recognized  tax

                                     A-I-5
<PAGE>

counsel  that  Holders  will not  recognize  any gain or loss for United  States
federal income tax purposes as a result of the distribution Debentures, dissolve
the Trust (including  without  limitation upon the occurrence of a Tax Event, an
Investment  Company Event or a Capital Treatment Event),  subject to the receipt
by the Debenture  Issuer of prior approval from any regulatory  authority having
jurisdiction  over the Sponsor that is primarily  responsible for regulating the
activities  of the Sponsor if such approval is then  required  under  applicable
capital  guidelines  or  policies  of  such  regulatory  authority,  and,  after
satisfaction  of liabilities to creditors of the Trust,  cause the Debentures to
be  distributed  to the  Holders  of  the  Securities  on a Pro  Rata  basis  in
accordance with the aggregate stated liquidation amount thereof.

         The Trust shall  dissolve  on the first to occur of (i) June 15,  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 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 Connecticut.

         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.

                                     A-I-6
<PAGE>

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

         After the date for any  distribution of the Debentures upon dissolution
of the  Trust,  (i) the  Securities  of the Trust will be deemed to be no longer
outstanding,  (ii) any certificates  representing the Capital Securities will be
deemed to represent undivided  beneficial interests in such of the Debentures as
have an aggregate  principal  amount equal to the aggregate  stated  liquidation
amount of, with an interest  rate  identical  to the  distribution  rate of, and
bearing  accrued and unpaid  interest equal to accrued and unpaid  distributions
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 15, 2036. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, on any March 15, June 15,
September 15 or December 15 on or after June 15, 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 or in part, at any time within 90 days
following the occurrence of such Tax Event,  Investment Company Event or Capital
Treatment  Event,  as the case may be (the "Special  Redemption  Date"),  at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
Holders of the Debentures so long as such Tax Event, Investment Company Event or
Capital  Treatment  Event, as the case may be, is continuing.  In each case, the
right of the  Debenture  Issuer to  redeem  the  Debentures  is  subject  to the
Debenture  Issuer having  received prior approval from any regulatory  authority
having jurisdiction over the Debenture Issuer, if such approval is then required
under applicable capital guidelines or policies of such regulatory authority.

         "Tax Event" means the receipt by the Debenture  Issuer and the Trust of
an opinion of  counsel  experienced  in such  matters to the effect  that,  as a
result  of any  amendment  to or change  (including  any  announced  prospective
change) in the laws or any  regulations  thereunder  of the United States or any
political  subdivision or taxing authority thereof or therein, or as a result of
any official administrative  pronouncement (including any private letter ruling,
technical advice memorandum,  regulatory procedure,  notice or announcement) (an
"Administrative Action") or judicial decision interpreting or applying such laws
or  regulations,  regardless of whether such  Administrative  Action or judicial
decision is issued to or in connection with a proceeding involving the Debenture
Issuer  or the Trust and  whether  or not  subject  to review or  appeal,  which
amendment, clarification,  change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original issuance
of the Debentures,  there is more than an insubstantial risk that: (i) the Trust
is,  or will be within 90 days of the date of such  opinion,  subject  to United
States  federal  income tax with  respect to income  received  or accrued on the

                                     A-I-7
<PAGE>

Debentures;  (ii) if the Debenture  Issuer is organized  and existing  under the
laws of the United  States or any state  thereof or the  District  of  Columbia,
interest  payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such  opinion,  will  not be,  deductible  by the  Debenture
Issuer,  in whole or in part, for United States federal income tax purposes;  or
(iii) the  Trust  is,  or will be  within  90 days of the date of such  opinion,
subject to more than a de minimis amount of other taxes  (including  withholding
taxes), duties, assessments or other governmental charges.

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

         "Capital  Treatment  Event" means, if the Debenture Issuer is organized
and  existing  under the laws of the United  States or any state  thereof or the
District of Columbia,  the receipt by the  Debenture  Issuer and the Trust of an
Opinion of Counsel  experienced  in such matters to the effect that, as a result
of (a) any amendment  to, or change in, the laws,  rules or  regulations  of the
United States or any  political  subdivision  thereof or therein,  or any rules,
guidelines or policies of any applicable  regulatory authority for the Debenture
Issuer or (b) 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,  within 90 days of the  receipt of such  opinion,  the
aggregate  Liquidation  Amount of the Capital Securities will not be eligible to
be treated by the Debenture  Issuer 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 or financial
holding companies), as then in effect and applicable to the Debenture Issuer (or
if the Debenture Issuer is not a bank holding company,  such guidelines  applied
to the  Debenture  Issuer  as if the  Debenture  Issuer  were  subject  to  such
guidelines);  provided,  however,  that the inability of the Debenture Issuer to
treat all or any  portion of the  aggregate  Liquidation  Amount of the  Capital
Securities  as Tier 1  Capital  shall  not  constitute  the  basis for a Capital
Treatment  Event,  if such  inability  results from the Debenture  Issuer having
cumulative preferred stock, minority interests in consolidated subsidiaries,  or
any other class of security  or  interest  which the Federal  Reserve or OTS, as
applicable,  may now or hereafter  accord Tier 1 Capital  treatment in excess of
the amount  which may now or hereafter  qualify for  treatment as Tier 1 Capital
under applicable capital adequacy guidelines;  provided further,  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.

                                     A-I-8
<PAGE>

         "Special Redemption Price" means, with respect to the redemption of any
Debentures following a Special Event, an amount in cash equal to 103.525% of the
principal  amount  of  Debentures  to be  redeemed  prior to June  15,  2007 and
thereafter  equal to the  percentage of the principal  amount of the  Debentures
that is  specified  below for the Special  Redemption  Date plus,  in each case,
unpaid interest accrued thereon to the Special Redemption Date:

             Special Redemption During the
           12-Month Period Beginning June 15      Percentage of Principal Amount
           ---------------------------------      ------------------------------

                          2007                               103.140%
                          2008                               102.355%
                          2009                               101.570%
                          2010                               100.785%
                  2011 and thereafter                        100.000%

         "Redemption  Date" means the date fixed for the  redemption  of Capital
Securities, which shall be any March 15, June 15, September 15 or December 15 on
or after June 15, 2011.

         "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.

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

         (c) If fewer than all the outstanding Securities are to be so redeemed,
the Common  Securities and the Capital  Securities will be redeemed Pro Rata and
the Capital  Securities to be redeemed will be as described in Section  4(e)(ii)
below.

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

         (e) Redemption or Distribution Procedures.

                  (i) Notice of any redemption of, or notice of  distribution of
         the     Debentures    in    exchange    for,    the    Securities    (a
         "Redemption/Distribution Notice") will be given by the Trust by mail to
         each Holder of Securities to be redeemed or exchanged not fewer than 30
         nor more than 60 days before the date fixed for  redemption or exchange
         thereof which, in the case of a redemption,  will be the date fixed for
         redemption of the  Debentures.  For purposes of the  calculation of the
         date of redemption or exchange and the dates on which notices are given
         pursuant to this  Section  4(e)(i),  a  Redemption/Distribution  Notice

                                     A-I-9
<PAGE>

         shall be deemed to be given on the day such  notice is first  mailed by
         first-class mail, postage prepaid, to Holders of such Securities.  Each
         Redemption/Distribution  Notice  shall be  addressed  to the Holders of
         such  Securities  at the address of each such Holder  appearing  on the
         books   and   records   of   the   Registrar.    No   defect   in   the
         Redemption/Distribution  Notice or in the mailing  thereof with respect
         to any Holder shall affect the validity of the  redemption  or exchange
         proceedings with respect to any other Holder.

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

                  (iii) If the Securities are to be redeemed and the Trust gives
         a  Redemption/Distribution  Notice,  which notice may only be issued if
         the  Debentures are redeemed as set out in this Section 4 (which notice
         will be irrevocable),  then, provided,  that the Institutional  Trustee
         has a  sufficient  amount  of  cash  in  connection  with  the  related
         redemption or maturity of the  Debentures,  the  Institutional  Trustee
         will, with respect to Book-Entry Capital Securities,  on the Redemption
         Date,  irrevocably  deposit  with the  Depositary  for such  Book-Entry
         Capital Securities, to the extent available therefore, funds sufficient
         to pay the  relevant  Redemption  Price and will  give such  Depositary
         irrevocable  instructions  and authority to pay the Redemption Price to
         the  Owners  of  the  Capital  Securities.   With  respect  to  Capital
         Securities   that   are  not   Book-Entry   Capital   Securities,   the
         Institutional Trustee will pay, to the extent available therefore,  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).  If any  date  fixed  for  redemption  of
         Securities is not a Business  Day, then payment of any such  Redemption
         Price payable on such date will be made on the next succeeding day that
         is a Business Day except that,  if such  Business Day falls in the next
         calendar year, such payment will be made on the  immediately  preceding
         Business Day, in each case with the same force and effect as if made on
         such date fixed for redemption.  If payment of the Redemption  Price in
         respect of any  Securities  is  improperly  withheld or refused and not
         paid  either  by the  Trust or by the  Debenture  Issuer  as  guarantor
         pursuant  to the  Guarantee,  Distributions  on  such  Securities  will
         continue  to  accrue  at the then  applicable  rate  from the  original
         redemption date to the actual date of payment, in which case the actual
         payment  date will be  considered  the date  fixed for  redemption  for
         purposes  of  calculating  the  Redemption  Price.  In the event of any
         redemption of the Capital  Securities  issued by the Trust in part, the
         Trust shall not be required to (i) issue,  register  the transfer of or
         exchange  any  Security  during a period  beginning  at the  opening of

                                     A-I-10
<PAGE>

         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
         Trust (A) in respect of the Capital Securities, to the Holders thereof,
         and (B) in respect of the Common Securities, to the Holder thereof.

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

         5. Voting Rights - Capital Securities.

         (a)  Except as  provided  under  Sections  5(b) and 7 and as  otherwise
required by law and the Declaration,  the Holders of the Capital Securities will
have no voting rights.  The Administrators are required to call a meeting of the
Holders of the  Capital  Securities  if directed to do so by Holders of not less
than 10% in liquidation amount of the Capital Securities.

         (b)  Subject to the  requirements  of  obtaining  a tax  opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph,  the Holders of a Majority in liquidation  amount of the Capital
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

                                     A-I-11
<PAGE>

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 such  interest,
premium,  if any, on 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,
modification  or  termination of the Indenture,  the  Institutional  Trustee may
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

                                     A-I-12
<PAGE>

Capital  Securities or to  distribute  the  Debentures  in  accordance  with the
Declaration and the terms of the Securities.

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

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

         6. Voting Rights - Common Securities.

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

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

         (c) Subject to Section 6.7 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

                                     A-I-13
<PAGE>

institute  a legal  proceeding  directly  against  any  Person  to  enforce  the
Institutional Trustee's rights under the Declaration,  without first instituting
a legal proceeding against the Institutional Trustee or any other Person.

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

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

         7. Amendments to Declaration and Indenture.

         (a)  In  addition  to  any  requirements  under  Section  11.1  of  the
Declaration,  if any proposed amendment to the Declaration  provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers,  preferences or special rights of the Securities,  whether by way of
amendment to the Declaration or otherwise, or (ii) the Liquidation of the Trust,
other than as described in Section 7.1 of the  Declaration,  then the Holders of
outstanding  Securities,  voting together as a single class, will be entitled to
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.

                                     A-I-14
<PAGE>

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

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

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

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

         10.  Acceptance of Guarantee and Indenture.  Each Holder of the Capital
Securities  and the Common  Securities,  by the  acceptance of such  Securities,
agrees  to  the  provisions  of  the  Guarantee,   including  the  subordination
provisions therein and to the provisions of the Indenture.

                                     A-I-15
<PAGE>

         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-16
<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) TO A "NON
U.S.  PERSON" IN AN "OFFSHORE  TRANSACTION"  PURSUANT TO  REGULATION S UNDER THE
SECURITIES ACT, (D) 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 (E)  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 (D) OR (E) 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 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 THE  CERTIFICATE  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 [P-001]                 Number of Capital Securities:  3,000

                    Certificate Evidencing Capital Securities

                                       of

                           Regional Statutory Trust I

                                  TP Securities

                (liquidation amount $1,000 per Capital Security)

         Regional Statutory Trust I, a statutory trust created under the laws of
the State of  Connecticut  (the "Trust"),  hereby  certifies that Merrill Lynch,
Pierce,  Fenner & Smith Incorporated (the "Holder"),  is the registered owner of
3,000  capital  securities  of  the  Trust  representing   undivided  beneficial
interests in the assets of the Trust,  designated the TP Securities (liquidation
amount $1,000 per Capital Security) (the "Capital  Securities").  Subject to the
Declaration (as defined below),  the Capital  Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
Capital   Securities   represented  hereby  are  issued  pursuant  to,  and  the
designation, rights, privileges,  restrictions,  preferences and other terms and
provisions  of the Capital  Securities  shall in all respects be subject to, the
provisions of the Amended and Restated  Declaration of Trust of the Trust, dated
as of April 20, 2006,  among Curtis A. Tyner,  Sr. and Shannon R.  Morrison,  as
Administrators,  U.S.  Bank  National  Association,  as  Institutional  Trustee,
Regional  Bankshares,  Inc.,  as Sponsor,  and the holders  from time to time of
undivided  beneficial  interests  in the  assets  of the  Trust,  including  the
designation  of the terms of the Capital  Securities  as set forth in Annex I to
the   Declaration,   as  the  same  may  be  amended  from  time  to  time  (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 Security,  the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

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

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

                                     A-1-3
<PAGE>

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

                                      Regional Statutory Trust I

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

                                      Dated:
                                            ------------------------------------

                          CERTIFICATE OF AUTHENTICATION

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

                                       U.S.   BANK   NATIONAL ASSOCIATION, not
                                       in its individual capacity but solely as
                                       Institutional Trustee

                                       By:
                                          --------------------------------------
                                       Authorized Signatory

                                       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, reset quarterly, equal to LIBOR (as defined
in the  Declaration)  plus 1.77% (the "Coupon  Rate") of the stated  liquidation
amount of $1,000 per Capital Security (provided,  however,  that the Coupon Rate
for any Distribution Payment Period may not exceed the highest rate permitted by
New York law,  as the same may be  modified  by  United  States  law of  general
applicability),  such  Coupon  Rate  being the rate of  interest  payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one quarterly period will bear interest thereon  compounded  quarterly
at the then applicable Coupon Rate for each such quarterly period (to the extent
permitted by applicable law). The term  "Distributions"  as used herein includes
cash  distributions,  any  such  compounded  distributions  and  any  Additional
Interest payable on the Debentures  unless  otherwise  stated. A Distribution is
payable only to the extent that  payments are made in respect of the  Debentures
held by the Institutional  Trustee and to the extent the  Institutional  Trustee
has funds  legally  available in the Property  Account  therefor.  The amount of
Distributions  payable for any period will be  computed  for any full  quarterly
Distribution period on the basis of a 360-day year and the actual number of days
elapsed in the relevant Distribution Payment Period.

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year,  commencing  on June 15, 2006 (each,  a  "Distribution
Payment Date").  Upon  submission of Notice,  and so long as no Event of Default
pursuant to  paragraphs  (c),  (e) or (f) of Section 5.01 of the  Indenture  has
occurred  and is  continuing  the  Debenture  Issuer  has the  right  under  the
Indenture  to defer  payments of interest on the  Debentures  by  extending  the
interest  distribution period for up to 20 consecutive  quarterly periods (each,
an  "Extension  Period")  at any time and from  time to time on the  Debentures,
subject to the conditions  described  below,  during which  Extension  Period no
interest shall be due and payable  (except any  Additional  Interest that may be
due and payable).  During any Extension Period, interest will continue to accrue
on the Debentures,  and interest on such accrued interest (such accrued interest
and interest thereon  referred to herein as "Deferred  Interest") will accrue at
an  annual  rate  equal to the  Coupon  Rate in effect  for each such  Extension
Period,  compounded  quarterly  from the date such Deferred  Interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law. No  Extension  Period may end on a date other than a  Distribution  Payment
Date. At the end of any such Extension  Period,  the Debenture  Issuer shall pay
all  Deferred  Interest  then  accrued and unpaid on the  Debentures;  provided,
however,  that  no  Extension  Period  may  extend  beyond  the  Maturity  Date,
Redemption Date (to the extent  redeemed) 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 (to the extent
redeemed) 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 Amounts that may be due and
payable) shall be due and payable during an Extension Period,  except at the end
thereof,  but Deferred  Interest shall accrue upon each  installment of interest
that would  otherwise  have been due and payable  during such  Extension  Period
until such installment is paid. If Distributions are deferred, the Distributions

                                     A-1-5
<PAGE>

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-1-6
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

(Insert address and zip code of assignee),

and irrevocably  appoints ------------------------------------------------------
as agent to  transfer  this  Capital  Security  Certificate  on the books of the
Trust. The agent may substitute another to act for it, him or her.

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

                           Signature:
                                     ----------------------------------

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

                           Signature Guarantee:(1)
                                                  ------------------------------

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

                                     A-1-7
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

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

                                     A-2-1
<PAGE>

Certificate Number [C-001]                      Number of Common Securities:  93

                    Certificate Evidencing Common Securities
                                       of
                           Regional Statutory Trust I

         Regional Statutory Trust I, a statutory trust created under the laws of
the  State  of  Connecticut  (the  "Trust"),   hereby  certifies  that  Regional
Bankshares,  Inc. (the "Holder") is the registered owner of 93 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 April 20, 2006,  among Curtis A. Tyner,  Sr. and Shannon R.  Morrison,  as
Administrators,  U.S. Bank National Association,  as Institutional  Trustee, the
Holder,  as Sponsor,  and the holders from time to time of undivided  beneficial
interests in the assets of the Trust,  including the designation of the terms of
the Common  Securities as set forth in Annex I to the  Declaration,  as the same
may be amended  from time to time (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  Common  Security  is  governed  by,  and  shall be  construed  in
accordance  with,  the  laws of the  State of  Connecticut,  without  regard  to
principles of conflict of laws.

                                     A-2-2
<PAGE>

         IN WITNESS WHEREOF,  the Trust has executed this certificate as of this
____ day of ______________, 2006.

                                     Regional Statutory 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, reset quarterly, equal to LIBOR (as defined
in the  Declaration)  plus 1.77% (the "Coupon  Rate") of the stated  liquidation
amount of $1,000 per Capital Security (provided,  however,  that the Coupon Rate
for any Distribution Payment Period may not exceed the highest rate permitted by
New York law,  as the same may be  modified  by  United  States  law of  general
applicability),  such  Coupon  Rate  being the rate of  interest  payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one quarterly period will bear interest thereon  compounded  quarterly
at the then applicable Coupon Rate for each such quarterly period (to the extent
permitted by applicable law). The term  "Distributions"  as used herein includes
cash  distributions,  any  such  compounded  distributions  and  any  Additional
Interest payable on the Debentures  unless  otherwise  stated. A Distribution is
payable only to the extent that  payments are made in respect of the  Debentures
held by the Institutional  Trustee and to the extent the  Institutional  Trustee
has funds  legally  available in the Property  Account  therefor.  The amount of
Distributions  payable for any period will be  computed  for any full  quarterly
Distribution period on the basis of a 360-day year and the actual number of days
elapsed in the relevant Distribution Payment Period.

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year,  commencing  on June 15, 2006 (each,  a  "Distribution
Payment Date").  Upon  submission of Notice,  and so long as no Event of Default
pursuant to  paragraphs  (c),  (e) or (f) of Section 5.01 of the  Indenture  has
occurred  and is  continuing,  the  Debenture  Issuer  has the  right  under the
Indenture  to defer  payments of interest on the  Debentures  by  extending  the
interest  distribution period for up to 20 consecutive  quarterly periods (each,
an  "Extension  Period")  at any time and from  time to time on the  Debentures,
subject to the conditions  described  below,  during which  Extension  Period no
interest shall be due and payable  (except any  Additional  Interest that may be
due and payable).  During any Extension Period, interest will continue to accrue
on the Debentures,  and interest on such accrued interest (such accrued interest
and interest thereon  referred to herein as "Deferred  Interest") will accrue at
an  annual  rate  equal to the  Coupon  Rate in effect  for each such  Extension
Period,  compounded  quarterly  from the date such Deferred  Interest would have
been payable were it not for the Extension  Period,  to the extent  permitted by
law. No  Extension  Period may end on a date other than a  Distribution  Payment
Date. At the end of any such Extension  Period,  the Debenture  Issuer shall pay
all  Deferred  Interest  then  accrued and unpaid on the  Debentures;  provided,
however,  that  no  Extension  Period  may  extend  beyond  the  Maturity  Date,
Redemption Date (to the extent  redeemed) 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 (to the extent
redeemed) 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

                                     A-2-4
<PAGE>

end  thereof,  but  Deferred  Interest  shall  accrue upon each  installment  of
interest that would  otherwise  have been due and payable  during such Extension
Period until such  installment  is paid.  If  Distributions  are  deferred,  the
Distributions  due shall be paid on the date that the related  Extension  Period
terminates to Holders of the  Securities as they appear on the books and records
of the Trust on the record date immediately preceding such date.

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

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

                                     A-2-5
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

(Insert address and zip code of assignee),

and  irrevocably  appoints  ________ as agent to transfer  this Common  Security
Certificate on the books of the Trust.  The agent may substitute  another to act
for him or her.

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

                  Signature:
                            ----------------------------------

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

                  Signature Guarantee:(2) _________________

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

                                     A-2-6

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