Document:

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                                                                  EXHIBIT 10.11

                             EMPLOYMENT AGREEMENT

   EMPLOYMENT AGREEMENT dated January 16, 2001, by and between WebTrends
Corporation, an Oregon corporation (the "Company"), NetIQ Corporation, a
Delaware corporation (the "Buyer"), and Elijahu Shapira (the "Executive").

   WHEREAS, Executive is currently serving as Chairman and Chief Executive
Officer of the Company;

   WHEREAS, the Company, the Buyer and North Acquisition Corporation (the
"Merger Subsidiary") are simultaneously entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which the Merger Subsidiary will
merge with and into the Company (the "Merger"), with the Company constituting
the surviving corporation, and with the result that the Company will be a
wholly owned subsidiary of the Buyer;

   WHEREAS, each of the Company, the Buyer and the Merger Subsidiary considers
it essential to its best interests and the best interests of its stockholders
to foster the continued employment of Executive by the Buyer from and after
the effective time of the Merger (the "Effective Time"); and

   WHEREAS, Executive is willing so to continue his employment on the terms
hereinafter set forth in this agreement (the "Agreement");

   NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:

   1. Term of Employment. Executive shall be employed by the Buyer for a
period (the "Employment Term") commencing at the Effective Time and ending on
the date that either the Executive or the Buyer terminates such Executive's
employment. Executive shall be an "at will" employee of Buyer. Notwithstanding
the foregoing, Executive shall continue to serve until the Effective Time as
an employee of the Company in the same capacity and in accordance with the
same terms and conditions as the date immediately preceding the date hereof.

   2. Position.

     (a) Executive shall serve as Chief Strategy Officer of the Buyer. In
  such position, Executive shall have such duties and authority as shall be
  set forth on Exhibit A hereto (the "Initial Duties").

     (b) During the term of his employment hereunder, Executive will devote
  substantially all of his business time and best efforts to the performance
  of his duties hereunder and will not engage in any other business,
  profession or occupation for compensation or otherwise which would conflict
  with the rendition of such services either directly or indirectly, without
  the prior written consent of the Board; provided, however, subject to
  Section 12(b) below, nothing in this Section 2(b) shall preclude the
  Executive from serving as a member of any board of directors on which he
  serves as of the date of this Agreement and which has been disclosed to
  Buyer, or as a member of any board of directors on which he may serve
  during the term of this Agreement with the prior consent of the Chief
  Executive Officer of Buyer in accordance with Buyer's standard policies
  regarding such matters and from receiving compensation in connection
  therewith.

   3. Base Salary. The Buyer shall pay Executive an annual base salary of not
less than $200,000 (the "Base Salary") with the exact amount to be established
by the Buyer's Board of Directors that is commensurate with other similarly
situated executives of the Buyer, payable in regular installments in
accordance with the Buyer's usual payment practices. The Executive shall be
entitled to such increases in his Base Salary as may be determined from time
to time in the sole discretion of the Buyer.
<PAGE>

   4. Bonus. With respect to each fiscal year all or part of which is contained
in the Employment Term, Executive shall be eligible to receive, in addition to
his Base Salary, a bonus of not less than up to $100,000 (the "Bonus") for
services rendered during such fiscal year, which Bonus shall be determined and
shall be paid in accordance with the Buyer's past practice with respect to
other similarly situated executives of Buyer. The amount and form of such Bonus
shall be determined in the same manner used to determine the amount and form of
bonuses of similarly situated executives of Buyer.

   5. Executive Benefits.

     (a) Executive shall be provided employee benefits (including fringe
  benefits, vacation, pension and profit sharing plan participation and life,
  health, accident and disability insurance) (collectively "Executive
  Benefits") on the same basis and on the same terms as those benefits are
  generally made available to similarly situated executives of the Buyer.

     (b) Concurrent with the Effective Time, Buyer and Executive will enter
  into Buyer's standard Indemnification Agreement (the "Indemnification
  Agreement") and Change of Control Severance Agreement the "Change of
  Control Severance Agreement") that Buyer has entered into with its officers
  substantially in the forms attached hereto as Exhibit B and Exhibit C,
  respectively.

   6. Grant of Option. Immediately prior to the Effective Time, the Company
shall grant to Executive an option to purchase 312,500 shares of the Company's
Common Stock pursuant to the terms and conditions of the Company's employee
stock option plan and standard option agreement in place as of the Effective
Time (the "Option"), which option shall be assumed by Buyer pursuant to the
Merger Agreement. The Option shall be subject to vesting as follows: 25% of the
shares subject to the option shall become vested on the first anniversary of
the Effective Time, 25% of the shares subject to the option shall become vested
on the second anniversary of the Effective Time, and 50% of the Shares subject
to the option shall become vested on the third anniversary of the Effective
Time, in each case subject to the Executive's continued employment with Buyer.

   7. Business Expenses and Perquisites. Reasonable travel, entertainment and
other business expenses incurred by Executive in the performance of his duties
hereunder shall be reimbursed by the Buyer in accordance with Buyer policies
for similarly situated executives of Buyer.

   8. Termination. In the event of termination of Executive's employment with
Buyer for any reason, Executive shall be entitled to receive his Base Salary,
Bonus and Executive Benefits earned through the date of termination as well as
that portion of the Option that is vested as of such date of termination.
Except as provided in Section 13(j), all other benefits due Executive following
Executive's termination of employment shall be determined in accordance with
the plans, policies and practices of Buyer. Executive's employment hereunder
shall terminate if Executive becomes physically or mentally incapacitated and
is thereafter unable for a period of six (6) consecutive months or for an
aggregate of six (6) months in any eighteen (18) consecutive month period to
perform his duties (such incapacity is hereinafter referred to as
"Disability").

   9. Restrictions on Dispositions of Stock.

     (a) Status as Affiliate and Insider. For so long as Executive is
  employed by the Buyer in the position set forth in Section 2(a) and has the
  Initial Duties, or, if the Executive's role at the Buyer changes, then for
  so long as may be determined by Buyer's Board of Directors based upon the
  criteria generally applied by it (i) Executive will be deemed an affiliate
  of the Buyer, as that term is defined in Rule 144 under the Securities Act
  of 1933 and (ii) sales, transfers or other dispositions of shares of the
  Buyer's common stock by Executive will be subject to the restrictions on
  trading by the Buyer's executive officers set forth in the Buyer's insider
  trading policy (the "Insider Trading Policy"), a copy of which has been
  furnished to Executive. Executive may establish a written plan of
  distribution pursuant to Rule 10b5-1 of the Exchange Act of 1934 in order
  to facilitate the sale of the Quarterly Allowance, as defined in Section
  9(b) below, and to execute sales of Common Stock of Buyer in accordance
  therewith (the "10b5-1 Agreement"). The 10b5-1 Agreement shall include
  customary terms and shall provide (i) that the

                                       2
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  agent for the sale of shares shall generally seek to complete the sale of
  as much of the Quarterly Allowance (as defined below) as practicable in the
  agent's judgment within the first fifteen trading days from the opening of
  the regular quarterly window under the Insider Trading Policy (the
  "Preferred Trading Period"); (ii) that Buyer will not impose any blackouts
  on Executive that would interfere with the Preferred Trading Period; (iii)
  that no sales shall occur during the regular quarterly blackout period
  under the Insider Trading Policy; and (iv) that the agent shall observe
  other trading blackouts that may be applied by Buyer generally to its
  executive officers, subject to the Preferred Trading Period.

     (b) Additional Limitations on Dispositions. In addition to the
  restrictions set forth in paragraph (a) and applicable laws, until the
  earlier to occur of (i) the first anniversary of the Effective Time or (ii)
  a Release Date, as defined below (the "Restricted Period"), Executive may
  not (1) offer, pledge, sell, contract to sell, sell any option or contract
  to purchase, purchase any option or contract to sell, grant any option,
  right or warrant to purchase, lend, or otherwise transfer or dispose of,
  directly or indirectly, any shares of Buyer Common Stock or any securities
  convertible into or exercisable or exchangeable for Buyer Common Stock or
  (2) enter into any swap or other arrangement that transfers to another, in
  whole or in part, any of the economic consequences of ownership of Buyer
  Common Stock, whether any such transaction described in clause (1) or (2)
  above is to be settled by delivery of Buyer Common Stock or such other
  securities, in cash or otherwise (collectively, a "Restricted
  Transaction"), in any case relating to more than 250,000 shares of the
  Buyer Common Stock (as adjusted for stock splits, stock dividends, stock
  combinations and the like) in any single fiscal quarter (the "Quarterly
  Allowance"). Notwithstanding the foregoing, if the Executive does not
  utilize the full Quarterly Allowance in any fiscal quarter in which the
  Buyer has restricted Executive from trading for at least 30 days under the
  Insider Trading Policy, exclusive of Buyer's regular quarterly trading
  restrictions (such unsold amount, the "Unsold Shares"), then Executive
  shall be entitled to utilize the Unsold Shares in subsequent fiscal
  quarters in addition to the Quarterly Allowance for such periods, provided
  that in no fiscal quarter may the Executive utilize more than two times the
  Quarterly Allowance. Nothing herein shall be construed to limit the ability
  of a trust or foundation created by Executive and in existence as of the
  date hereof to sell, transfer or otherwise dispose of shares of Buyer's
  Common Stock issuable in the merger in respect of Company Common Stock held
  by such trust or foundation as of the date hereof. Notwithstanding the
  foregoing, this Section 9(b) shall not apply to (i) any bona fide gift of
  Buyer's Common Stock by Executive to any of the mother, father,
  descendants, brother(s), sister(s) or spouses of Executive or to any
  trustee(s) for the benefit of any one or more of the foregoing, (ii) any
  transfer effected pursuant to Executive's will or the laws of intestate
  succession, or (iii) any pledge of Buyer's Common Stock by Executive that
  on its terms precludes the sale of Buyer's Common Stock in the public
  market during the Restricted Period, provided that (A) in the event of any
  transfer made pursuant to Sections 9(b)(i) or 9(b)(iii) above, Executive
  shall inform Buyer of such transfer prior to effecting it and (B) in the
  event of any transfer made pursuant to 9(b)(i), the transferee shall
  furnish Buyer with a written agreement to be bound by and complied with all
  provisions of Section 9.

     (c) Conditional Lock-Up. If Executive's employment with the Buyer is
  terminated during the Restricted Period (i) by Executive, other than for
  Good Reason or by reason of death or Disability, or (ii) by the Buyer for
  Cause, then in either case Executive shall not enter into any Restricted
  Transaction with respect to any shares of the Buyer's common stock for the
  remainder of the Restricted Period and during the Extension Period, if any.
  For purposes of this paragraph, the Extension Period shall commence upon
  the expiration of the Restricted Period and continue for that number of
  months, rounded up the nearest whole number, equal to the quotient obtained
  by dividing (A) the difference of the number of shares of the Quarterly
  Allowance already sold by Executive in the fiscal quarter in which
  Executive's termination occurs minus the product of 83,334 multiplied by
  the number of complete months elapsed in such quarter prior to Executive's
  termination (but in no case shall the difference be less than zero),
  divided by (B) 83,334; provided that no Extension Period shall apply after
  a Release Date and, in no event, shall the Extension Period exceed three
  months. This paragraph shall not apply to any termination of employment or
  leave of absence that arises from Executive suffering a grave family
  emergency that in Executive's reasonable judgment requires such a
  termination or leave of absence.

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     (d) Release Date. For purposes of this Section, "Release Date" shall
  mean the earlier to occur of:

      (i) the termination of Executive's employment with the Buyer by
    Executive for Good Reason or by reason of death or Disability or by
    Buyer for reasons other than Cause, as defined in Section 9(f) below;
    and

      (ii) in the event of a Change of Control of the Buyer, then the later
    to occur of the six month anniversary of the Effective Time and the
    consummation of the Change of Control; and

      (iii) in the event of a change of Chief Executive Officer of Buyer
    after the date hereof (a "Management Change"), then the later to occur
    of the six month anniversary of the Effective Time and the date of the
    Management Change.

For purposes of this section, a "Change of Control" shall mean (i) a merger or
consolidation in which Buyer is a constituent corporation or the sale or
exchange by the stockholders of Buyer of all or substantially all of the
capital stock of Buyer where the stockholders of Buyer immediately before such
merger or consolidation or sale or exchange do not obtain or retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock or other voting equity of the surviving or acquiring corporation or
other surviving or acquiring entity; (ii) the sale or exchange of all or
substantially all of Buyer's assets (other than a sale or transfer to a
subsidiary of Buyer as defined in section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code")) where the stockholders of Buyer immediately
before such sale or exchange do not obtain or retain, directly or indirectly,
at least a majority of the beneficial interest in the voting stock or other
voting equity of the corporation or other entity acquiring Buyer's Assets; or
(iii) a transaction in which a majority of the Board of Directors of the Buyer
or a majority of the officers of the Buyer immediately prior to such
transaction do not constitute a majority of the Board of Directors or a
majority of the officers, respectively, of the surviving corporation
immediately after such transaction.

     (e) Definition of Cause. For purposes of this Agreement, "Cause" shall
  mean (i) Executive's willful and continued failure substantially to perform
  his duties hereunder (other than as a result of total or partial incapacity
  due to physical or mental illness), (ii) material dishonesty in the
  performance of Executive's duties hereunder, (iii) Executive's conviction
  of a felony under the laws of the United States or any state thereof, (iv)
  willful breach of fiduciary duty or willful breach of a material term of
  this agreement or the Standard Employment Agreement, as defined below or
  (v) any other willful act or omission which is materially injurious to the
  financial condition or business reputation of the Buyer or any of its
  subsidiaries or affiliates. If the Executive does any of the foregoing,
  Buyer shall give Executive written notice thereof and Executive shall, if
  such condition is reasonably susceptible of cure, have ten (10) days from
  receipt of such notice to cure any such Cause, which notice shall state in
  reasonable detail the facts and circumstances claimed to constitute such
  Cause and the intent of Buyer to terminate Executive's employment upon the
  failure of the Executive to effect a cure.

     (f) Definition of Good Reason. For purposes of this Agreement, "Good
  Reason" shall mean (i) reduction in Executive's annual base salary,
  incentive programs or Executive Benefits (other than, in the case of such
  programs or Executive Benefits, for changes generally affecting executives
  similarly situated to Executive), (ii) any material adverse change in
  Executive's status, title, position or material responsibilities, or (iii)
  relocation, without Executive's consent, of Executive or his office space
  at Buyer to a location more than 50 miles from Company's current facilities
  in Portland, Oregon.

   10. Proprietary Information, Invention Assignment and Arbitration
Agreement. At the Effective Time, Executive shall execute a copy of the
Buyer's standard form of Employment, Confidential Information and Invention
Assignment Agreement (the "Standard Employment Agreement") in the form
attached hereto as Exhibit D.

   11. Conflicting Obligations. Executive represents that Executive has no
outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement, or that would preclude Executive from complying
with the provisions hereof, and further agrees that Executive will not enter
into any such conflicting agreement during the term of this Agreement.

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   12. Covenants Not to Compete or Solicit.

     (a) Definitions. As used in this Agreement, "Restricted Company" shall
  mean a company that competes, or that has been formed to pursue a business
  that would compete, with the business of Buyer immediately after the
  Effective Time.

     (b) Non-Compete. In consideration of: (i) the payment by the Buyer to
  Executive of the Merger Consideration, (ii) the Buyer's willingness to
  enter into the Merger Agreement, and (iii) the consideration payable to
  Executive hereunder, Executive agrees that: (A) for the period beginning at
  the Effective Time and ending on the second anniversary of the Effective
  Time or (B) in the event that the period set forth in clause (A) is
  determined to be unenforceable by a court of competent jurisdiction, the
  maximum lesser period allowable, Executive will not, directly or
  indirectly, be employed by (whether as an officer, employee, director
  proprietor, partner, consultant or otherwise), or have any ownership
  interest in, or participate in the financing, operation, management or
  control of, any Restricted Company. It is agreed that ownership of no more
  than five percent (5%) of the outstanding voting stock of a publicly-traded
  company or ownership of an interest in an investment fund with respect to
  which Executive does not make investment decisions shall not in and of
  itself, constitute a violation of this Section. It is further agreed that
  the foregoing consideration is not intended to constitute liquidated
  damages for a violation of this section.

     (c) Non-Solicit. Executive agrees that until the expiration of the non-
  compete obligations specified above in subsection 12(b), Executive shall
  not:

      (i) knowingly take any action to, or do anything reasonably intended
    to, divert business from the Buyer or any of its subsidiaries, or
    influence or attempt to influence any retailer, dealer, vendor,
    supplier, customer or potential customer of the Buyer or any of its
    subsidiaries, in each case as existing on the date of Executive's
    termination, to cease doing business with or compete with the Buyer or
    any of its subsidiaries, as the case may be, existing on the date of
    Executive's termination; or

      (ii) knowingly recruit, solicit or assist others in recruiting, or
    soliciting, any person who is an employee of the Buyer or any of its
    respective subsidiaries, in each case as of the date of Executive's
    termination, or knowingly induce or influence or attempt to induce or
    influence any such employee to terminate his or her employment with the
    Buyer or any of its respective affiliates, unless such employee is no
    longer employed by the Buyer (or its subsidiaries) and has not been
    employed by Buyer for a period of at least six months prior to being
    solicited or recruited; provided however, that a general employment or
    hiring advertisement in a publication of general circulation will not
    be deemed to be a solicitation.

     (d) REMEDIES. THE EXECUTIVE HEREBY RECOGNIZES AND ACKNOWLEDGES THAT A
  MATERIAL VIOLATION OF THE TERMS AND PROVISIONS OF THIS SECTION 12 WOULD
  CAUSE IRREPARABLE INJURY TO THE BUYER FOR WHICH THE BUYER WOULD HAVE NO
  ADEQUATE REMEDY AT LAW. ACCORDINGLY, IN THE EVENT THAT EXECUTIVE SHALL FAIL
  TO MATERIALLY COMPLY WITH THE TERMS AND PROVISIONS OF THIS SECTION 12 IN
  ANY RESPECT, THE BUYER SHALL BE ENTITLED TO PRELIMINARY AND OTHER
  INJUNCTIVE RELIEF AND TO SPECIFIC PERFORMANCE OF THE TERMS AND PROVISIONS
  HEREOF. IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING, THE
  EXECUTIVE HEREBY WAIVES ANY CLAIM OR DEFENSE THAT DAMAGES WOULD BE ADEQUATE
  RELATING TO ANY VIOLATION OR BREACH BY THE EXECUTIVE OF THE TERMS AND
  PROVISIONS OF THIS SECTION 12, THAT THE BUYER OR ANY OF ITS RESPECTIVE
  AFFILIATES HAVE AN ADEQUATE REMEDY AT LAW OR THAT MONEY DAMAGES WOULD
  PROVIDE AN ADEQUATE REMEDY FOR SUCH VIOLATION OR BREACH.

     (e) EFFECT OF STANDARD EMPLOYMENT AGREEMENT. Until the expiration of the
  covenants contained in this Section 12, such covenants shall supersede any
  covenants relating to non-competition and non-solicitation contained in the
  Standard Employment Agreement.

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     (f) Severability. The parties intend that the covenants contained in the
  preceding paragraphs shall be construed as a series of separate covenants,
  one for each county, city, state and other political subdivision of each
  country in which a Restricted Company is located. Except for geographic
  coverage, each separate covenant shall be deemed identical in terms to the
  covenant contained in the preceding paragraphs. If, in any arbitration or
  judicial proceeding, a court or arbitrator shall refuse to enforce any of
  the separate covenants (or any part thereof) deemed included in said
  paragraphs, then such unenforceable covenant (or such part) shall be deemed
  eliminated from this Agreement for the purpose of those proceedings to the
  extent necessary to permit the remaining separate covenants (or portions
  thereof) to be enforced. It is the intent of the parties that the covenants
  set forth herein be enforced to the maximum degree permitted by applicable
  law.

   13. Miscellaneous.

     (a) Governing Law; No Liability of Executive. This Agreement shall be
  governed by and construed in accordance with the laws of the State of
  Oregon. Notwithstanding any term of the Standard Employment Agreement to
  the contrary, the parties to this Agreement irrevocably agree that any
  disputes under this Agreement or the Standard Employment Agreement, whether
  related to construction, enforcement or otherwise, shall be resolved by
  binding arbitration under the rules and auspices of the American
  Arbitration Association to be conducted in Multnomah County, Oregon, and
  the parties hereby irrevocably waive any and all objections thereto.
  Executive shall not be subject to liability for breach of this Agreement by
  reason of his termination of his employment hereunder.

     (b) Entire Agreement/Amendments. This Agreement, the Indemnification
  Agreement, the Change of Control Severance Agreement, the Option and the
  Standard Employment Agreement contain the entire understanding of the
  parties with respect to the employment of Executive by the Buyer. In case
  of any direct conflicts between this Agreement and any such other
  agreements, the provisions of this Agreement shall govern. There are no
  restrictions, agreements, promises, warranties, covenants or undertakings
  between the parties with respect to the subject matter herein and therein
  other than those expressly set forth herein and therein. This Agreement may
  not be altered, modified, or amended except by written instrument signed by
  the parties hereto.

     (c) No Waiver. The failure of a party to insist upon strict adherence to
  any term of this Agreement on any occasion shall not be considered a waiver
  of such party's rights or deprive such party of the right thereafter to
  insist upon strict adherence to that term or any other term of this
  Agreement.

     (d) Severability. In the event that any one or more of the provisions of
  this Agreement shall be or become invalid, illegal or unenforceable in any
  respect, the validity, legality and enforceability of the remaining
  provisions of this Agreement shall not be affected thereby.

     (e) Assignment. This Agreement shall not be assignable by Executive or
  by the Company and shall be assignable by the Buyer only with the consent
  of Executive.

     (f) Successors; Binding Agreement. This Agreement shall inure to the
  benefit of and be binding upon personal or legal representatives,
  executors, administrators, successors, heirs, distributees, devisees and
  legatees.

     (g) Notice. For the purpose of this Agreement, notices and all other
  communications provided for in the Agreement shall be in writing and shall
  be deemed to have been duly given when delivered or mailed by United States
  registered mail, return receipt requested, postage prepaid, addressed to
  the respective addresses set forth on the execution page of this Agreement,
  provided that all notices to the Buyer shall be directed to the attention
  of the Board with a copy to the Secretary of the Buyer, or to such other
  address as any party may have furnished to the other in writing in
  accordance herewith, except that notice of change of address shall be
  effective only upon receipt.

     (h) Withholding Taxes. The Buyer may withhold from any amounts payable
  under this Agreement such Federal, state and local taxes as may be required
  to be withheld pursuant to any applicable law or regulation.

                                       6
<PAGE>

     (i) Counterparts. This Agreement may be signed in counterparts, each of
  which shall be an original, with the same effect as if the signatures
  thereto and hereto were upon the same instrument.

     (j) Term of Agreement; Separation Benefits Upon Termination. This
  Agreement shall become effective as of the date of the Merger Agreement and
  shall remain in force until the termination of Executive's employment with
  the Buyer, provided that if the Merger Agreement is terminated prior to the
  Effective Time then this Agreement shall terminate on the date the Merger
  Agreement is terminated, and provided further that Sections 7, 8, 9, 12 and
  13 shall survive the termination of this Agreement (other than termination
  in accordance with the foregoing proviso). In the event of the termination
  of Executive's employment with the Buyer prior to the first anniversary of
  the Effective Time (i) by the Buyer other than for Cause or (ii) by
  Executive for Good Reason, Executive shall be entitled to receive, in
  addition to the amounts provided for in Section 8, an amount equal to
  Executive's Base Salary on the date of termination, prorated for the period
  from the day after employment terminates until the first anniversary of the
  Effective Time, and continuation during such period at no cost to Executive
  of all of the Executive Benefits on the same terms as those benefits were
  available to Executive (and Executive's family) immediately prior to the
  termination of Executive's employment with the Buyer.

                                       7
<PAGE>

   IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                          Elijahu Shapira

                                            /s/ Elijahu Shapira
                                          _____________________________________
                                         2434 N.W. Pinnacle Drive
                                          Portland, OR 97229

                                          WEBTRENDS CORPORATION

                                          By:  /s/ James T. Richardson
                                              _________________________________
                                            Title:
                                           851 SW Sixth Avenue, Suite 1200
                                           Portland, Oregon 97204

                                          NETIQ CORPORATION

                                          By:  /s/ Ching-Fa Hwang
                                              _________________________________
                                             Title
                                           3553 North First Street
                                          San Jose, California 95134

                                       8
<PAGE>

                                   Exhibit A

<TABLE>
   <C>             <S>
   Initial Duties: Overall Strategy, Mergers & Acquisitions and Integration
</TABLE>

                                       9
<PAGE>

                                   Exhibit B

                           Indemnification Agreement

                                       10
<PAGE>

                                   Exhibit C

                     Change of Control Severance Agreement

                                       11
<PAGE>

                                   Exhibit D

                         Standard Employment Agreement

                                       12<PAGE>

                                                                   Exhibit 4.28

                ===============================================

                SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT

                              GREATER BAY BANCORP

                         Dated as of November 20,2000

                ===============================================
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                                  Page
                                                                                                                  ----
<S>                                                                                                               <C>
Article I         DEFINITIONS AND INTERPRETATION.................................................................    2

     SECTION 1.1  Definitions and Interpretation.................................................................    2

Article II        TRUST INDENTURE ACT............................................................................    6

     SECTION 2.1  Trust Indenture Act; Application...............................................................    6

     SECTION 2.2  Lists of Holders of Securities.................................................................    6

     SECTION 2.3  Reports by the Capital Securities Guarantee Trustee............................................    6

     SECTION 2.4  Periodic Reports...............................................................................    6

     SECTION 2.5  Evidence of Compliance with Conditions Precedent...............................................    7

     SECTION 2.6  Waiver of Events of Default....................................................................    7

     SECTION 2.7  Notice of Events of Default....................................................................    7

     SECTION 2.8  Conflicting Interests..........................................................................    8

Article III       POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE..............................    8

     SECTION 3.1  Powers and Duties of the Capital Securities Guarantee Trustee..................................    8

     SECTION 3.2  Certain Rights of Capital Securities Guarantee Trustee.........................................   10

     SECTION 3.3  Not Responsible for Recitals or Issuance of Series B Capital Securities Guarantee..............   12

Article IV        CAPITAL SECURITIES GUARANTEE TRUSTEE...........................................................   12

     SECTION 4.1  Capital Securities Guarantee Trustee; Eligibility..............................................   12

     SECTION 4.2  Appointment, Removal and Resignation of Capital Securities Guarantee Trustee...................   12

Article V         GUARANTEE......................................................................................   13

     SECTION 5.1  Guarantee......................................................................................   13

     SECTION 5.2  Waiver of Notice and Demand....................................................................   14

     SECTION 5.3  Obligations Not Affected.......................................................................   14

     SECTION 5.4  Rights of Holders..............................................................................   15

     SECTION 5.5  Guarantee of Payment...........................................................................   15

     SECTION 5.6  Subrogation....................................................................................   15

     SECTION 5.7  Independent Obligations........................................................................   15

Article VI        LIMITATION OF TRANSACTIONS; SUBORDINATION......................................................   16

     SECTION 6.1  Limitation of Transactions.....................................................................   16
</TABLE>

                                       i
<PAGE>

                         TABLE OF CONTENTS (continued)
                         -----------------

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                              <C>
     SECTION 6.2  Ranking.......................................................................................   16

Article VII       TERMINATION...................................................................................   17

     SECTION 7.1  Termination...................................................................................   17

Article VIII      INDEMNIFICATION...............................................................................   17

     SECTION 8.1  Exculpation...................................................................................   17

     SECTION 8.2  Compensation and Indemnification..............................................................   17

Article IX        MISCELLANEOUS.................................................................................   18

     SECTION 9.1  Successors and Assigns........................................................................   18

     SECTION 9.2  Amendments....................................................................................   18

     SECTION 9.3  Notices.......................................................................................   18

     SECTION 9.4  Benefit.......................................................................................   20

     SECTION 9.5  Governing Law.................................................................................   20
</TABLE>

                                      ii
<PAGE>

                             CROSS REFERENCE TABLE

<TABLE>
<CAPTION>
  Section of Trust                                                             Section of Guarantee
  Indenture Act of                                                                  Agreement
  1939, as amended                                                                  ---------
  ----------------
  <S>                                                                         <C>
       310(a)   .............................................................         4.1(a)
       310(b)   .............................................................    2.8, 4.1(c)
       310(c)   .............................................................           N/A
       311(a)   .............................................................         2.2(b)
       311(b)   .............................................................         2.2(b)
       311(c)   .............................................................           N/A
       312(a)   .............................................................         2.2(a)
       312(b)   .............................................................         2.2(b)
       312(c)   .............................................................           N/A
       313      .............................................................           2.3
       314(a)   .............................................................           2.4
       314(b)   .............................................................           N/A
       314(c)   .............................................................           2.5
       314(d)   .............................................................           N/A
       314(e)   .............................................................      1.1, 2.5, 3.2
       314(f)   .............................................................        2.1, 3.2
       315(a)   .............................................................     3.1(d), 3.2(a)
       315(b)   .............................................................           2.7
       315(c)   .............................................................         3.1(c)
       315(d)   .............................................................   3.1(d), 3.2(a), 8.1
       315(e)   .............................................................           N/A
       316(a)   .............................................................      1.1, 2.6, 5.4
       316(b)   .............................................................        5.3, 5.4
       316(c)   .............................................................           9.2
       317(a)   .............................................................           N/A
       317(b)   .............................................................           N/A
       318(a)   .............................................................         2.1(a)
       318(b)   .............................................................         2.1(b)
       318(c)   .............................................................         2.1(b)
</TABLE>

_________________________

*    This Cross-Reference Table does not constitute part of this Guarantee
     Agreement and shall not affect the interpretation of any of its terms or
     provisions.

                                      iii
<PAGE>

                SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT

     This SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Series B Capital
Securities Guarantee"), dated as of November 20, 2000 is executed and delivered
by GREATER BAY BANCORP, a California corporation (the "Guarantor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the
"Capital Securities Guarantee Trustee" or "Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Series B Capital Securities
(as defined herein) of GBB CAPITAL IV, a Delaware statutory business trust (the
"Issuer").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of May 19, 2000, by and among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
(i) issued on May 19, 2000 41,000 capital securities, having an aggregate
liquidation amount of $41,000,000, such capital securities being designated the
10.75% Capital Securities, Series A (collectively the "Series A Capital
Securities") and (ii) in connection with an Exchange Offer (as defined in the
Declaration), hereby executes and delivers the Series B Capital Securities
Guarantee (as defined in the Declaration) for the benefit of Holders of the
Series B Capital Securities (as defined in the Declaration).

     WHEREAS, the Series A Capital Securities issued by the Issuer and proceeds
thereof, together with proceeds from the issuance of the Issuers Common
Securities (as defined herein) were used to purchase the Junior Subordinated
Debentures due June 1, 2030 (the "Series A Junior Subordinated Debentures") of
the Guarantor which were deposited with the Trustee as Property Trustee under
the Declaration, as trust assets;

     WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor irrevocably and unconditionally agreed, to the extent
set forth in the Series A Capital Securities Guarantee dated as of May 19, 2000,
to pay the Holders of the Series A Capital Securities the Guarantee Payments (as
defined therein) and to make certain other payments on the terms and conditions
set forth therein.

     WHEREAS, in connection with the offer of the Series A Capital Securities,
the Guarantor, the Issuer and Sandler O'Neill & Partners, L.P., as
representative of the initial purchasers named therein, executed the
Registration Rights Agreement dated May 16, 2000 (the "Registration Rights
Agreement");

     WHEREAS, the Issuer, in order to satisfy its obligations under the
Registration Rights Agreement, has offered up to $41,000,000 aggregate
Liquidation Amount of its 10.75% Capital Securities, Series B, which have been
registered under the Securities Act of 1933, as amended, pursuant to a
registration statement in exchange for a like Liquidation Amount of Series A
Capital Securities;

     WHEREAS, pursuant to the Exchange Offer, the Guarantor is also exchanging
up to $41,000,000 aggregate principal amount of the Series A Junior Subordinated
Debentures for up to $41,000,000 aggregate principal of the Series B Junior
Subordinated Debentures due June 1, 2030 (the "Series B Junior Subordinated
Debentures") of the Guarantor;

                                       1
<PAGE>

     WHEREAS, pursuant to the Exchange Offer, the Guarantor is required to
execute this Series B Capital Securities Guarantee and exchange the Series A
Capital Securities Guarantee for this Series B Capital Securities Guarantee
Agreement; and

     WHEREAS, the Guarantor also executed and delivered the Common Securities
Guarantee Agreement, dated as of May 19, 2000 (the "Common Securities
Guarantee"), for the benefit of the holders of the Common Securities (as defined
herein), the terms of which provide that if an Event of Default (as defined in
the Declaration) has occurred and is continuing, the rights of holders of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Securities Guarantee, to the rights of Holders of Series A Capital
Securities and the Series B Capital Securities to receive Guarantee Payments
under the Series A Capital Securities Guarantee and this Series B Capital
Securities Guarantee, as the case may be.

     NOW, THEREFORE, in consideration of the exchange by each Holder of the
Series A Capital Securities for the Series B Capital Securities, which exchange
the Guarantor hereby acknowledges shall benefit the Guarantor, (or in the event
certain Holders do not exchange their Series A Capital Securities, in order to
fulfill its obligations to such Holders under the Series A Capital Securities
Guarantee) and intending to be legally bound hereby, the Guarantor executes and
delivers this Series B Capital Securities Guarantee Agreement for the benefit of
the Holders from time to time of the Trust Securities (as defined herein).

                                   ARTICLE I

                        DEFINITIONS AND INTERPRETATION

     SECTION 1.1    Definitions and Interpretation
                    ------------------------------

     In this Series B Capital Securities Guarantee, unless the context otherwise
requires:

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

     (b) terms defined in the Declaration as in effect at the date of execution
of this Series B Capital Securities Guarantee have the same meaning when used in
this Series B Capital Securities Guarantee unless otherwise defined in this
Series B Capital Securities Guarantee;

     (c) a term defined anywhere in this Series B Capital Securities Guarantee
has the same meaning throughout;

     (d) all references to "the Series B Capital Securities Guarantee" or "this
Series B Capital Securities Guarantee" are references to this Series B Capital
Securities Guarantee as modified, supplemented or amended from time to time;

     (e) all references in this Series B Capital Securities Guarantee to
Articles and Sections are references to Articles and Sections of this Series B
Capital Securities Guarantee, unless otherwise specified;

                                       2
<PAGE>

     (f) a term defined in the Trust Indenture Act has the same meaning when
used in this Series B Capital Securities Guarantee, unless otherwise defined in
this Series B Capital Securities Guarantee or unless the context otherwise
requires; and

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

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

     "Business Day" shall mean any day other than a Saturday, a Sunday, or a day
      ------------
on which banking institutions in Wilmington, Delaware, San Francisco, California
or New York, New York are authorized or required by law or executive order to
remain closed.

     "Capital Securities Guarantee Trustee" shall mean Wilmington Trust Company,
      ------------------------------------
as Trustee under the Series B Capital Securities Guarantee, until a Successor
Capital Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Series B Capital Securities Guarantee
and thereafter means each such Successor Capital Securities Guarantee Trustee.

     "Common Securities" shall mean the securities representing common undivided
      -----------------
beneficial interests in the assets of the Issuer.

     "Corporate Trust Office" shall mean the office of the Capital Securities
      ----------------------
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, Attention: Corporate Trust Administration.

     "Covered Person" shall mean any Holder or beneficial owner of Series B
      --------------
Capital Securities.

     "Debentures" shall mean the series of subordinated debt securities of the
      ----------
Guarantor designated the 10.75% Junior Subordinated Deferrable Interest
Debentures due June 1, 2030, Series B, held by the Property Trustee (as defined
in the Declaration) of the Issuer.

     "Event of Default" shall mean a default by the Guarantor on any of its
      ----------------
payment or other obligations under this Series B Capital Securities Guarantee;
provided, however, that, except with respect to default in respect of any
--------  -------
Guarantee Payment, no default by the Guarantor hereunder shall constitute an
Event of Default unless the Guarantor shall have received written notice of the
default and shall not have cured such default within 60 days after receipt
thereof.

     "Guarantee Payments" shall mean the following payments or distributions,
      ------------------
without duplication, with respect to the Series B Capital Securities, to the
extent not paid or made by or on behalf of the Issuer: (i) any accumulated and
unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series B Capital Securities, to the extent the Issuer has funds
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds legally available
therefor at such time, with respect to any Series B

                                       3
<PAGE>

Capital Securities called for redemption, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Series B Capital Securities or in connection with the redemption of the Series B
Capital Securities, in each case as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series B Capital Securities to the date of payment, to the
extent the Issuer has funds legally available therefor at such time, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
after satisfaction of liabilities to creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution"). If an Event of
Default has occurred and is continuing, no Guarantee Payments under the Common
Securities Guarantee with respect to the Common Securities or any guarantee
payment under the Common Securities Guarantee or any Other Common Securities
Guarantee shall be made until the Holders of the Series B Capital Securities
shall be paid in full the Guarantee Payments to which they are entitled under
this Series B Capital Securities Guarantee.

     "Holder" shall mean any holder, as registered on the books and records of
      ------
the Issuer, of any Series B Capital Securities; provided, however, that, in
                                                --------  -------
determining whether the holders of the requisite percentage of Series B Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Person actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee to be an Affiliate of the
Guarantor.

     "Indemnified Person" shall mean the Capital Securities Guarantee Trustee
      ------------------
(including in its individual capacity), any Affiliate of the Capital Securities
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Capital
Securities Guarantee Trustee.

     "Indenture" shall mean the Indenture, dated as of May 19, 2000, between
      ---------
Greater Bay Bancorp, as issuer of Debentures (the "Debenture Issuer"), and
Wilmington Trust Company, as trustee, pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.

     "Majority in Liquidation Amount of the Series B Capital Securities" shall
      -----------------------------------------------------------------
mean, except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Series B Capital Securities, voting separately as a class, of more than 50% of
the aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to but excluding the date upon which the voting percentages are determined) of
all outstanding Series B Capital Securities, excluding Series B Capital
Securities held by the Guarantor, the Issuer or any Affiliate thereof.

     "Officers' Certificate" shall mean, with respect to any Person, a
      ---------------------
certificate signed by the Chairman, the Chief Executive Officer, the President,
an Executive or Senior Vice President, a Vice President, the Chief Financial
Officer and the Secretary or an Assistant Secretary. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Series B Capital Securities Guarantee shall include:

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

                                       4
<PAGE>

     (b) 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

     (c) a statement as to whether or not, in the opinion of each such officer,
such condition or covenant has been complied with.

     "Other Common Securities Guarantees" shall have the same meaning as "Other
      ----------------------------------
Guarantees" in the Common Securities Guarantee.

     "Other Debentures" shall mean all junior subordinated debentures, other
      ----------------
than the Debentures and the Series B Debentures (as defined in the Indenture),
issued by the Guarantor, from time to time and sold to trusts other than the
Issuer to be established by the Guarantor (if any), in each case similar to the
Issuer.

     "Other Guarantees" shall mean all guarantees, other than this Series B
      ----------------
Capital Securities Guarantee and the Series B Capital Securities Guarantee, to
be issued by the Guarantor with respect to capital securities (if any) similar
to the Series B Capital Securities, issued by trusts other than the Issuer to be
established by the Guarantor (if any), in each case similar to the Issuer.

     "Person" shall mean 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.

     "Registration Rights Agreement" shall mean the Registration Rights
      -----------------------------
Agreement, dated as of May 16, 2000, by and among the Guarantor, the Issuer and
the Initial Purchasers named therein, as such agreement may be amended, modified
or supplemented from time to time.

     "Responsible Officer" shall mean, with respect to a Person, any officer
      -------------------
with direct responsibility for the administration of any matters relating to
this Series B Capital Securities Guarantee.

     "Successor Capital Securities Guarantee Trustee" shall mean a successor
      ----------------------------------------------
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.

     "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
      -------------------
amended.

     "Trust Securities" shall mean the Common Securities and the Series A
      ----------------
Capital Securities and Series B Capital Securities, collectively.

                                       5
<PAGE>

                                  ARTICLE II

                              TRUST INDENTURE ACT

     SECTION 2.1    Trust Indenture Act; Application
                    --------------------------------

     (a) This Series B Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Series B Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.

     (b) If and to the extent that any provision of this Series B Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.  If any provision of this Series B Capital Securities Guarantee
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the modified or excluded provision of the Trust Indenture
Act shall be deemed to apply to this Series B Capital Securities Guarantee as so
modified or excluded, as the case may be.

     SECTION 2.2    Lists of Holders of Securities
                    ------------------------------

     (a) The Guarantor shall provide the Capital Securities Guarantee Trustee
(unless the Capital Securities Guarantee Trustee is otherwise the registrar of
the Series B Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Series B Capital Securities ("List of Holders") as of such
date, (i) within fourteen (14) days after each record date for payment of
Distributions (as defined in the Declaration), and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee; provided, however, that the Guarantor
                                      --------  -------
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it upon
receipt of a new List of Holders.

     (b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 31l(a), 31l(b) and Section 312(b) of the Trust
Indenture Act.

     SECTION 2.3    Reports by the Capital Securities Guarantee Trustee
                    ---------------------------------------------------

     By July 31 of each year, commencing July 31, 2001, the Capital Securities
Guarantee Trustee shall provide to the Holders of the Series B Capital
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.

     SECTION 2.4    Periodic Reports
                    ----------------

     The Guarantor shall provide to the Capital Securities Guarantee Trustee
such documents, reports and information as are required by Section 314 (if any)
and the compliance certificate

                                       6
<PAGE>

required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act. Delivery of
such reports, information and documents to the Capital Securities Guarantee
Trustee is for informational purposes only and the Capital Securities Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Capital Securities Guarantee Trustee is entitled to
rely exclusively on Officers' Certificates).

     SECTION 2.5    Evidence of Compliance with Conditions Precedent
                    ------------------------------------------------

     The Guarantor shall provide to the Capital Securities Guarantee Trustee
such evidence of compliance with the conditions precedent, if any, provided for
in this Series B Capital Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.

     SECTION 2.6    Waiver of Events of Default
                    ---------------------------

     The Holders of a Majority in Liquidation Amount of the Series B Capital
Securities may, by vote, on behalf of the Holders of all of the Series B Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Series B Capital Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

     SECTION 2.7    Notice of Events of Default
                    ---------------------------

     (a) The Capital Securities Guarantee Trustee shall, within 10 Business Days
after the occurrence of an Event of Default with respect to this Series B
Capital Securities Guarantee actually known to a Responsible Officer of the
Capital Securities Guarantee Trustee, transmit by mail, first class postage
prepaid, to all Holders of the Series B Capital Securities, notices of all such
Events of Default, unless such Events of Default have been cured before the
giving of such notice; provided, however, that, except in the case of an Event
                       --------  -------
of Default arising from the non-payment of any Guarantee Payment, the Capital
Securities Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Capital Securities Guarantee Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders of the Series B Capital Securities.

     (b) The Capital Securities Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Capital Securities Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.

                                       7
<PAGE>

     SECTION 2.8    Conflicting Interests
                    ---------------------

     The Declaration shall be deemed to be specifically described in this Series
B Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

                                  ARTICLE III

                         POWERS, DUTIES AND RIGHTS OF
                     CAPITAL SECURITIES GUARANTEE TRUSTEE

     SECTION 3.1    Powers and Duties of the Capital Securities Guarantee
                    -----------------------------------------------------
Trustee
-------

     (a) This Series B Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders of the Series B
Capital Securities, and the Capital Securities Guarantee Trustee shall not
transfer this Series B Capital Securities Guarantee to any Person except a
Holder of the Series B Capital Securities exercising his or her rights pursuant
to Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee on
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The right,
title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.

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

     (c) The Capital Securities Guarantee Trustee, before the occurrence of any
Event of Default (of which, other than a default in respect of any Guarantee
Payment, a Responsible Officer of the Property Trustee has actual knowledge) and
after the curing of all such Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Series B Capital Securities Guarantee, and no implied covenants or obligations
shall be read into this Series B Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Series B Capital Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

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

                                       8
<PAGE>

          (i)   prior to the occurrence of any Event of Default (of which, other
     than a default in respect of any Guarantee Payment, a Responsible Officer
     of the Property Trustee has actual knowledge) and after the curing or
     waiving of all such Events of Default that may have occurred:

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

          (B)   in the absence of bad faith on the part of the Capital
     Securities Guarantee Trustee, the Capital Securities Guarantee Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon any certificates or opinions furnished
     to the Capital Securities Guarantee Trustee and conforming to the
     requirements of this Series b Capital Securities Guarantee; provided,
                                                                 --------
     however, that in the case of any such certificates or opinions that by any
     -------
     provision hereof are specifically required to be furnished to the Capital
     Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
     shall be under a duty to examine the same to determine whether or not on
     their face they conform to the requirements of this Series B Capital
     Securities Guarantee;

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

          (iii) the Capital Securities Guarantee Trustee shall not be liable
     with respect to any actions taken or omitted to be taken by it in good
     faith in accordance with the direction of the Holders of a Majority in
     Liquidation Amount of the Series B Capital Securities relating to the time,
     method and place of conducting any proceeding for any remedy available to
     the Capital Securities Guarantee Trustee, or exercising any trust or power
     conferred upon the Capital Securities Guarantee Trustee under this Series B
     Capital Securities Guarantee; and

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

                                       9
<PAGE>

     SECTION 3.2    Certain Rights of Capital Securities Guarantee Trustee
                    ------------------------------------------------------

     (a)  Subject to the provisions of Section 3.1:

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

          (ii)  any direction or act of the Guarantor contemplated by this
     Series B Capital Securities Guarantee may be sufficiently evidenced by an
     Officers' Certificate;

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

          (iv)  the Capital Securities Guarantee Trustee shall have no duty to
     see to any recording, filing or registration of any instrument or other
     document (or any rerecording, refiling or registration thereof);

          (v)   the Capital Securities Guarantee Trustee may consult with
     counsel of its selection, and the advice or opinion of such counsel with
     respect to legal matters shall be full and complete authorization and
     protection in respect of any action taken, suffered or omitted by it
     hereunder in good faith and in accordance with such advice or opinion; and
     such counsel may be counsel to the Guarantor or any of its Affiliates and
     may include any of its employees; and the Capital Securities Guarantee
     Trustee shall have the right at any time to seek instructions concerning
     the administration of this Series B Capital Securities Guarantee from any
     court of competent jurisdiction;

          (vi)  the Capital Securities Guarantee Trustee shall be under no
     obligation to exercise any of the rights or powers vested in it by this
     Series B Capital Securities Guarantee at the request or direction of any
     Holder, unless such Holder shall have provided to the Capital Securities
     Guarantee Trustee such security and indemnity, reasonably satisfactory to
     the Capital Securities Guarantee Trustee, against the costs, expenses
     (including attorneys' fees and expenses and the expenses of the Capital
     Securities Guarantee Trustee's agents, nominees or custodians) and
     liabilities that might be incurred by it in complying with such request or
     direction, including such reasonable advances as may be requested by the
     Capital Securities Guarantee Trustee, provided, however, that nothing
                                           --------  -------
     contained in this Section 3.2(a)(vi) shall be taken to relieve the Capital
     Securities Guarantee Trustee, upon the occurrence of an Event of Default,
     of its obligation to exercise the rights and powers vested in it by this
     Series B Capital Securities Guarantee;

                                       10
<PAGE>

          (vii)   the Capital Securities Guarantee Trustee shall have no
     obligation to make any investigation into the facts or matters stated in
     any resolution, certificate, statement, instrument, opinion, report,
     notice, request, direction, consent, order, bond, debenture, note, other
     evidence of indebtedness or other paper or document, but the Capital
     Securities Guarantee Trustee, in its discretion, may make such further
     inquiry or investigation into such facts or matters as it may see fit;

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

          (ix)    any action taken by the Capital Securities Guarantee Trustee
     or its agents hereunder shall bind the Holders of the Series B Capital
     Securities, and the signature of the Capital Securities Guarantee 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 Capital Securities Guarantee Trustee to so act or as to its
     compliance with any of the terms and provisions of this Series B Capital
     Securities Guarantee, both of which shall be conclusively evidenced by the
     Capital Securities Guarantee Trustee's or its agent's taking such action;

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

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

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

                                       11
<PAGE>

     SECTION 3.3    Not Responsible for Recitals or Issuance of Series B Capital
                    ------------------------------------------------------------
                    Securities Guarantee
                    --------------------

     The recitals contained in this Series B Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Series B Capital Securities Guarantee.

                                  ARTICLE IV

                     CAPITAL SECURITIES GUARANTEE TRUSTEE

     SECTION 4.1    Capital Securities Guarantee Trustee; Eligibility
                    -------------------------------------------------

     (a)  There shall at all times be a Capital Securities Guarantee Trustee
that shall

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

          (ii) be a corporation or other Person organized and doing business
     under the laws of the United States of America or any state or territory
     thereof or of the District of Columbia, or a corporation or other Person
     permitted by the Securities and Exchange Commission to act as an indenture
     trustee under the Trust Indenture Act, 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, territorial or District of
     Columbia authority; it being understood that if such corporation or other
     Person publishes reports of condition at least annually, pursuant to law or
     to the requirements of the supervising or examining authority referred to
     above, then, for the purposes of this Section 4.1(a)(ii) and to the extent
     permitted by the Trust Indenture Act, the combined capital and surplus of
     such corporation shall be deemed to be its combined capital and surplus as
     set forth in its most recent report of condition so published.

     (b)  If at any time the Capital Securities Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Capital Securities Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).

     (c)  If the Capital Securities Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

     SECTION 4.2    Appointment, Removal and Resignation of Capital Securities
                    ----------------------------------------------------------
                    Guarantee Trustee
                    -----------------

     (a)  Subject to Section 4.2(b), the Capital Securities Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor except
during an Event of Default.

                                       12
<PAGE>

     (b)  The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.

     (c)  The Capital Securities Guarantee Trustee shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed,
subject to Section 4.1, or until its removal or resignation. The Capital
Securities Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Capital
Securities Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Capital Securities Guarantee Trustee has
been appointed, subject to Section 4.1, and has accepted such appointment by
instrument in writing executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor and the resigning Capital Securities
Guarantee Trustee.

     (d)  If no Successor Capital Securities Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.

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

     (f)  Upon termination of this Series B Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.

                                   ARTICLE V

                                   GUARANTEE
                                   ---------

     SECTION 5.1    Guarantee
                    ---------

     The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor fully, knowingly
and unconditionally waives any right the Guarantor may have to revoke this
Guarantee under Section 2815 of the California Civil Code or otherwise. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

                                       13
<PAGE>

     SECTION 5.2    Waiver of Notice and Demand
                    ---------------------------

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

     SECTION 5.3    Obligations Not Affected
                    ------------------------

     The obligations, covenants, agreements and duties of the Guarantor under
this Series B Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

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

     (b)  the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B Capital Securities;

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

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

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

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

     (g)  any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 5.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.

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

                                       14
<PAGE>

     SECTION 5.4    Rights of Holders
                    -----------------

     (a)  The Holders of a Majority in Liquidation Amount of the Series B
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.

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

     SECTION 5.5    Guarantee of Payment
                    --------------------

     This Series B Capital Securities Guarantee creates a guarantee of payment
and not of collection.

     SECTION 5.6    Subrogation
                    -----------

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

     SECTION 5.7    Independent Obligations
                    -----------------------

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Series b Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Series B
Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.

                                       15
<PAGE>

                                  ARTICLE VI

                   LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 6.1    Limitation of Transactions
                    --------------------------

     So long as any Capital Securities remain outstanding, the Guarantor shall
not (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor's
capital stock, (ii) make any payment of principal of, or interest, if any, on or
repay, repurchase or redeem any debt securities of the Guarantor (including
Other Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under this Series B
Capital Securities Guarantee and the Series A Capital Securities Guarantee, (d)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
or compensation plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans) if at such time (l) there shall have
occurred any event of which the Guarantor has actual knowledge that (A) is a
Default or Event of Default (each as defined in the Indenture) and (B) in
respect of which the Guarantor shall not have taken reasonable steps to cure,
(2) if the Debentures are held by the Property Trustee, the Guarantor shall be
in default with respect to its payment of any obligations under this Series B
Capital Securities Guarantee or (3) the Guarantor shall have given notice of its
election of the exercise of its right to commence an Extended Interest Payment
Period as provided in the Indenture and shall not have rescinded such notice,
and such Extended Interest Payment Period, or an extension thereof, shall have
commenced and be continuing.

     SECTION 6.2    Ranking
                    -------

     This Series B Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all Allocable Amounts (as defined in the Indenture) in respect of
Senior Indebtedness (as defined in the Indenture), to the same extent and in the
same manner that the Debentures are subordinated to Senior Indebtedness pursuant
to the Indenture, it being understood that the terms of Article XV of the
Indenture shall apply to the obligations of the Guarantor under this Series B
Capital Securities Guarantee as if such Article XV were set forth herein in
full, (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with the Series B Capital Securities
Guarantee, any Other Guarantee and, except to the extent set forth therein, the
Common Securities Guarantee, any Other Common Securities Guarantee, and any
guarantee

                                       16
<PAGE>

now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.

                                  ARTICLE VII

                                  TERMINATION

     SECTION 7.1    Termination
                    -----------

     This Series B Capital Securities Guarantee shall terminate and be of no
further force and effect upon (i) full payment of the Redemption Price of all
Series B Capital Securities, (ii) dissolution, winding up or liquidation of the
Issuer, immediately following the full payment of the amounts payable in
accordance with the Declaration, or (iii) the distribution of all of the
Debentures to the Holders of the Trust Securities. Notwithstanding the
foregoing, this Series B Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of the Series B Capital Securities must restore payment of any sums paid under
the Series B Capital Securities or under this Series B Capital Securities
Guarantee.

                                 ARTICLE VIII

                                INDEMNIFICATION

     SECTION 8.1    Exculpation
                    -----------

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

     (b)  An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, 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 Series B Capital Securities might properly be
paid.

     SECTION 8.2    Compensation and Indemnification
                    --------------------------------

     The Guarantor agrees to pay to the Capital Securities Guarantee Trustee
such compensation for its services as shall be mutually agreed upon by the
Guarantor and the Capital Securities Guarantee Trustee. The Guarantor shall
reimburse the Capital Securities Guarantee

                                       17
<PAGE>

Trustee upon request for all reasonable out-of-pocket expenses incurred by it,
including the reasonable compensation and expenses of the Capital Securities
Guarantee Trustee's agents and counsel, except any expense as may be
attributable to the negligence or bad faith of the Capital Securities Guarantee
Trustee.

     The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
action, suit, claim or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The provisions of this
Section 8.2 shall survive the termination of this Series B Capital Securities
Guarantee and shall survive the resignation or removal of the Capital Securities
Guarantee Trustee.

                                  ARTICLE IX

                                 MISCELLANEOUS

     SECTION 9.1    Successors and Assigns
                    ----------------------

     All guarantees and agreements contained in this Series B Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Series B Capital Securities then outstanding.  Except in connection with
any merger or consolidation of the Guarantor with or into another entity
permitted by Section 10.01 of the Indenture or any sale, transfer, conveyance or
other disposition of the property of the Guarantor permitted by Section 10.01 of
the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Capital Securities Guarantee.

     SECTION 9.2    Amendments
                    ----------

     Except with respect to any changes that do not materially adversely affect
the rights of Holders of the Series B Capital Securities (in which case no
consent of such Holders will be required), this Series B Capital Securities
Guarantee may only be amended with the prior approval of the Holders of a
Majority in Liquidation Amount of the Series B Capital Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Trust Securities apply to the giving of such approval. This
Series B Capital Securities Guarantee may not be amended, and no amendment
hereof that affects the Capital Securities Guarantee Trustee's rights, duties or
immunities hereunder or otherwise, shall be effective, unless such amendment is
executed by the Capital Securities Guarantee Trustee (which shall have no
obligation to execute any such amendment, but may do so in its sole discretion).

     SECTION 9.3    Notices
                    -------

     All notices provided for in this Series B Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:

                                       18
<PAGE>

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

               GBB CAPITAL IV
               2860 West Bayshore Road
               Palo Alto, California 94303
               Attention: Steven C. Smith
               Telephone:  (650) 813-8200
               Telecopier: (650) 494-9193

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

               WILMINGTON TRUST COMPANY
               Rodney Square North
               1100 North Market Street
               Wilmington, Delaware 19890-0001
               Attention:  Corporate Trust Administration
               Telephone:  (302) 651-1000
               Telecopier: (302) 651-8882

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

               GREATER BAY BANCORP
               2860 West Bayshore Road
               Palo Alto, California 94303
               Attention: Steven C. Smith
               Telephone:  (650) 813-8200
               Telecopier: (650) 494-9193

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

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

                                       19
<PAGE>

     SECTION 9.4    Benefit
                    -------

     This Series B Capital Securities Guarantee is solely for the benefit of the
Holders of the Series B Capital Securities and, subject to Section 3.1(a), is
not separately transferable from the Series B Capital Securities.

     SECTION 9.5    Governing Law
                    -------------

     THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

                                       20
<PAGE>

     This Series B Capital Securities Guarantee is executed as of  the day and
year first above written.

                                   GREATER BAY BANCORP
                                   as Guarantor

                                   By: /s/ Shawn E. Saunders
                                       ---------------------
                                       Name:   Shawn E. Saunders
                                       Title:  Senior Vice President,
                                               Finance and Accounting

                                   WILMINGTON TRUST COMPANY,
                                   as Capital Securities Guarantee Trustee

                                   By: /s/ Bruce L. Bisson
                                       --------------------
                                       Name:  Bruce L. Bisson
                                       Title: Vice President

                                       21

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