Document:

EXHIBIT 10.4

              THE QUAKERTOWN NATIONAL BANK RETIREMENT SAVINGS PLAN

                            SUMMARY PLAN DESCRIPTION

                                TABLE OF CONTENTS

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<S>     <C>     <C>                                                                                       <C>
         INTRODUCTION TO YOUR PLAN

ARTICLE I
         PARTICIPATION IN THE PLAN
                  Am I eligible to participate in the Plan?...................................................39
                  When am I eligible to participate in the Plan?..............................................39
                  When is my entry date?......................................................................39
                  What happens if I'm a participant, terminate employment, and then I'm rehired?..............39

ARTICLE II
         CONTRIBUTIONS
                  What kind of plan is this?..................................................................40
                  Do I have to contribute money to the Plan in order to participate?..........................40
                  Is this a special type of 401(k) Plan?......................................................40
                  How much may I contribute to the Plan?......................................................40
                  How often can I modify the amount I contribute?.............................................42
                  Will the Employer contribute to the Plan?...................................................43
                  What is the Employer matching contribution?.................................................43
                  What compensation is used to determine my Plan benefits?....................................43
                  Is there a limit on the amount of compensation that can be considered?......................43
                  Are there limits on how much can be contributed to my account each year?....................44
                  May I roll over payments from other retirement plans or IRAs?...............................44
                  How is the money in the Plan invested?......................................................44

ARTICLE III
         RETIREMENT BENEFITS
                  What benefits will I receive at normal retirement?..........................................45
                  What happens if I leave the Employer's workforce before I retire?...........................45
                  What is my vested interest in my account?...................................................46
                  How do I determine my Years of Service for vesting purposes?................................46
                  Does all my service count for vesting purposes?.............................................47
                  As a veteran, will my military service count as service with the Employer?..................47
                  What happens to the non-vested portion of a terminated participant's account?...............47
                  What happens if I'm rehired?................................................................48
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<S>     <C>     <C>                                                                                       <C>
ARTICLE IV
         DISABILITY BENEFITS
                  How is disability defined?..................................................................49
                  What happens if I become disabled?..........................................................49

ARTICLE V
         FORM OF BENEFIT PAYMENT
                  How will my benefits be paid?...............................................................49
                  May I elect another form of benefit?........................................................50
                  May I delay the receipt of benefits?........................................................51

ARTICLE VI
         DEATH BENEFITS
                  What happens if I die while working for the Employer?.......................................51
                  Who is the beneficiary of my death benefit?.................................................51
                  How will the death benefit be paid to my beneficiary?.......................................52
                  When must the last payment be made to my beneficiary?.......................................53
                  What happens if I'm a participant, terminate employment, and die before receiving all my
                           benefits?..........................................................................53

ARTICLE VII
         IN-SERVICE DISTRIBUTIONS
                  Can I withdraw money from my account while working?.........................................53
                  Can I withdraw money from my account in the event of financial hardship?....................54
                  Do I have to waive any benefits in order to receive an in-service distribution?.............55

ARTICLE VIII
         TAX TREATMENT OF DISTRIBUTIONS
                  What are my tax consequences when I receive a distribution from the Plan?...................55
                  Can I reduce or defer tax on my distribution?...............................................56

</TABLE>

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<S>     <C>     <C>                                                                                       <C>
ARTICLE IX
         HOURS OF SERVICE
                  What is an Hour of Service?.................................................................57
                  How are Hours of Service credited?..........................................................57

ARTICLE X
         YOUR PLAN'S TOP-HEAVY RULES
                  What is a top-heavy plan?...................................................................57
                  What happens if the Plan becomes top-heavy?.................................................57

ARTICLE XI
         PROTECTED BENEFITS AND CLAIMS PROCEDURES
                  Is my benefit protected?....................................................................58
                  Are there any exceptions to the general rule?...............................................58
                  Can the Plan be amended?....................................................................59
                  What happens if the Plan is discontinued or terminated?.....................................59
                  How do I submit a claim for Plan benefits?..................................................59
                  What if my benefits are denied?.............................................................59
                  What is the Claims Review Procedure?........................................................61
                  What are my rights as a Plan participant?...................................................63
                  What can I do if I have questions or my rights are violated?................................65

ARTICLE XII
         GENERAL INFORMATION ABOUT THE PLAN
                  General Plan Information....................................................................65
                  Employer Information........................................................................66
                  Administrator Information...................................................................66
                  Trustee Information.........................................................................67

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<PAGE>

              THE QUAKERTOWN NATIONAL BANK RETIREMENT SAVINGS PLAN

                            SUMMARY PLAN DESCRIPTION

                            INTRODUCTION TO YOUR PLAN

         The Quakertown National Bank Retirement Savings Plan ("Plan") has been
adopted to provide you with the opportunity to save for retirement on a
tax-deferred basis. This Summary Plan Description ("SPD") contains valuable
information regarding when you may become eligible to participate in the Plan,
your Plan benefits, your distribution options, and many other features of the
Plan. You should take the time to read this SPD to get a better understanding of
your rights and obligations in the Plan.

         We have attempted to answer most of the questions you may have
regarding your benefits in the Plan. If this SPD does not answer all of your
questions, please contact the Administrator (or other Plan representative). The
Administrator has the complete power, in its sole discretion, to determine all
questions arising in connection with the administration, interpretation, and
application of the Plan (and any related documents and underlying policies). Any
such determination by the Administrator shall be conclusive and binding upon all
persons. The name and address of the Administrator can be found in the Article
of this SPD entitled "General Information About The Plan".

         This SPD describes the Plan's benefits and obligations as contained in
the legal Plan document, which governs the operation of the Plan. The Plan
document is written in much more technical and precise language. If the
non-technical language under this SPD and the technical, legal language of the
Plan document conflict, the Plan document always governs. If you wish to receive
a copy of the legal Plan document, please contact the Administrator.

         This SPD describes the current provisions of the Plan, which are
designed to comply with applicable legal requirements. The Plan is subject to
federal laws, such as the Employee Retirement Income Security Act ("ERISA"), the
Internal Revenue Code, and other federal and state laws that may affect your
rights. The provisions of the Plan are subject to revision due to changes in
laws or due to pronouncements by the Internal Revenue Service ("IRS") or
Department of Labor ("DOL"). We may also amend this Plan. If the provisions
under this SPD change as a result of changes to the Plan, we will notify you.

<PAGE>

                                    ARTICLE I
                            PARTICIPATION IN THE PLAN

AM I ELIGIBLE TO PARTICIPATE IN THE PLAN?

         You are eligible to participate in the Plan once you satisfy the Plan's
eligibility conditions described in the next question. Then, you may elect to
have your compensation reduced by a specific percentage or dollar amount, and
have that amount contributed to the Plan as a salary deferral. You may also be
entitled to contributions from us.

WHEN AM I ELIGIBLE TO PARTICIPATE IN THE PLAN?

         You will be eligible to participate in the Plan once you satisfy the
service requirement described below.

         The eligibility requirements for salary deferrals, safe harbor
contributions, and matching contributions are 1000 Hours.

         You will actually enter the Plan once you reach the entry date as
described in the next question.

WHEN IS MY ENTRY DATE?

         You may begin participating in the Plan once you have satisfied the
above eligibility requirements and reached your entry date. The following
describes the specific entry date that applies in the Plan.

         For salary deferrals, safe harbor contributions, and matching
contributions, your entry date is the first day of the Plan Year quarter next
following the date you meet the eligibility requirements described above.

         Special rules may apply if you terminate employment and are then
rehired. If you have questions about the timing of your Plan participation,
please contact the Administrator.

WHAT HAPPENS IF I'M A PARTICIPANT, TERMINATE EMPLOYMENT, AND THEN I'M REHIRED?

         If you are no longer a participant because you terminated employment
and you are rehired, you will continue to participate in the Plan in the same
manner as if your termination had not occurred.

<PAGE>

                                   ARTICLE II
                                  CONTRIBUTIONS

WHAT KIND OF PLAN IS THIS?

         This Plan is a type of qualified retirement plan commonly referred to
as a 401(k) plan. As a participant in the Plan, you may elect to reduce your
compensation by a specific percentage or dollar amount and have that amount
contributed to the Plan on a pre-tax basis as a salary deferral. You generally
are not taxed on your salary deferrals until you withdraw those amounts from the
Plan. In addition, we will make additional contributions to the Plan on your
behalf. This Article describes the types of contributions that may be made to
the Plan and how these monies will be allocated to your account to provide for
your retirement benefit.

DO I HAVE TO CONTRIBUTE MONEY TO THE PLAN IN ORDER TO PARTICIPATE?

         No, you are not required to contribute any money in order to
participate in our Plan. However, you will receive additional amounts if you do
contribute.

IS THIS A SPECIAL TYPE OF 401(K) PLAN?

         Yes. This Plan is referred to as a "safe harbor 401(k) plan." You will
be provided with a comprehensive notice of your rights and obligations in the
Plan at least 30 days, but not more than 90 days, before the beginning of each
Plan Year. However, if you become eligible after the 90th day before the
beginning of the Plan Year and you do not receive the notice for that reason,
the notice will be provided to you within 90 days before you become eligible.

         In order to maintain "safe harbor" status, we will contribute the total
amount of your salary deferrals each Plan Year. In addition, we will make a
special safe harbor contribution. This safe harbor contribution will be equal to
at least 5% of your compensation. This safe harbor contribution is fully vested
and is referred to as a Nonelective Contribution.

HOW MUCH MAY I CONTRIBUTE TO THE PLAN?

         You may elect to defer up to 15% of your compensation for the portion
of the Plan Year in which you are eligible to make salary deferrals instead of
receiving that amount in cash. The amount you elect to defer, and any earnings
on that amount, will not be subject to income tax until it is actually
distributed to you. However, the amount you defer is counted as compensation for
Social Security taxes.

<PAGE>

         The Administrator will allocate the amount you elect to defer to an
account maintained on your behalf. You will always be 100% vested in this
account. This means that you will always be entitled to all amounts that you
defer. This money will, however, be affected by any investment gains or losses.
If there is an investment gain, the balance in your account will increase. If
there is an investment loss, the balance in your account will decrease.

         Your total deferrals in any taxable year may not exceed a dollar limit
that is set by law. The limit is $11,000 (for 2002), $12,000 (for 2003), $13,000
(for 2004), $14,000 (for 2005), and $15,000 (for 2006). This limit may be
increased after 2006 for cost-of-living changes. The Plan Administrator will
inform you each year of the maximum amount that you may contribute as salary
deferrals.

         You should also be aware that the annual dollar limit is an aggregate
limit that applies to all deferrals you may make under this Plan or other cash
or deferred arrangements (including tax-sheltered 403(b) annuity contracts,
simplified employee pensions, or other 401(k) plans in which you may be
participating). Generally, if your total deferrals under all cash or deferred
arrangements for a calendar year exceed the annual dollar limit, the excess must
be included in your income for the year. For this reason, it is desirable to
request in writing that these excess deferrals be returned to you. If you fail
to request such a return, you may be taxed a second time when the excess
deferral is ultimately distributed from the Plan.

         You must decide which plan or arrangement you would like to have return
the excess. If you decide that the excess should be distributed from this Plan,
you must communicate this in writing to the Administrator no later than the
March 1st following the close of the calendar year in which such excess
deferrals were made. However, if the entire dollar limit is exceeded in this
Plan or any other plan we maintain, then you will be deemed to have notified the
Administrator of the excess. The Administrator will then return the excess
deferral and any earnings to you by April 15th.

         If you are age 50 or older, you may elect to defer additional amounts
(called "catch-up contributions") to the Plan. The additional amounts may be
deferred regardless of any other limitations on the amount that you may defer to
the Plan as described above. The maximum catch-up contribution that you can make
in 2002 is $1,000. The amount is increased by $1,000 in each year after 2002 up
to 2006, when the maximum is $5,000. After 2006, the maximum may increase for
cost-of-living adjustments.

         Distributions from amounts attributable to your salary deferrals before
you terminate employment are permitted in the following circumstances:

<PAGE>

         o upon your attainment of age 59 1/2. (See the question "Can I withdraw
         money from my account while working?" for more information on
         in-service withdrawals of your salary deferrals.)

         o if you incur a proven financial hardship. (See the question "Can I
         withdraw money from my account in the event of financial hardship?" for
         more information on hardship withdrawals of your salary deferrals.)

         o upon your becoming disabled under the terms of the Plan. (See the
         question "How is disability defined?" for more information on the
         Plan's definition of disability.)

         If you wish to make a withdrawal from your salary deferrals, you (and
your spouse, if you are married) must first waive the annuity form of payment.
(See the Article entitled "Form of Benefit Payment" for a further explanation of
how benefits are paid from the Plan.)

         In the event you receive a hardship distribution from your salary
deferrals to this Plan, you will not be allowed to make additional salary
deferrals for a period of six (6) months after you receive the distribution.

         In addition, if you are a highly compensated employee (generally owners
or individuals receiving wages in excess of certain amounts established by law),
a distribution from amounts attributable to your salary deferrals of certain
excess contributions may be required to comply with the law. The Administrator
will notify you when a distribution is required.

HOW OFTEN CAN I MODIFY THE AMOUNT I CONTRIBUTE?

         The amount you elect to defer will be deducted from your pay in
accordance with a procedure established by the Administrator. The procedure will
require that you enter into a written salary deferral agreement after you
satisfy the Plan's eligibility requirements. You may elect to defer a portion of
your salary as of your entry date. Such election will become effective as soon
as is administratively feasible after that date. Your election will remain in
effect until you modify or terminate it. You may modify your election as of the
date(s) indicated in the salary deferral agreement. The modification will become
effective as soon as is administratively feasible after that date. You are also
permitted to revoke your election as of the date(s) indicated in the salary
deferral agreement.

         However, as a result of being a safe harbor 401(k) plan, then in
addition to any other election periods provided above, you may make or modify a
salary deferral election during the 30-day period immediately following receipt
of the notice.

<PAGE>

WILL THE EMPLOYER CONTRIBUTE TO THE PLAN?

         Each year, in addition to your salary deferrals and any safe harbor
contributions, we may contribute to the Plan the following:

         o  matching contributions.

WHAT IS THE EMPLOYER MATCHING CONTRIBUTION?

         The matching contribution is a fixed amount equal to 100% of your
 salary deferrals that do not exceed 3% of your compensation.

         The Administrator will allocate to your account the matching
contribution made to the Plan on your behalf each payroll period.

WHAT COMPENSATION IS USED TO DETERMINE MY PLAN BENEFITS?

         For purposes of the Plan, compensation has a special meaning.
Compensation is defined as your total compensation paid to you and that is
subject to income tax. That is, all of your compensation paid to you by us
during the Plan Year, including any salary deferrals you make to this Plan, to a
Section 125 cafeteria plan, or to a Section 457 plan, and for qualified
transportation fringes. However, the definition of compensation will vary as
described below.

         o For purposes of salary deferrals and matching contributions, bonuses
         will be excluded.

         Special rules apply if you are only a participant in the Plan for a
portion of the period for which contributions are made. This will happen if, for
any reason, you begin participating in the Plan as of a date other than the
first day of that period. If this happens, your compensation will be recognized
only for the period in which you are actually a participant in the Plan. This
applies to these types of contributions:

         o salary deferrals.

         o safe harbor Contributions.

         For certain purposes, your compensation will be recognized for the
entire Plan Year, even if you are not a participant for the entire Plan Year.

IS THERE A LIMIT ON THE AMOUNT OF COMPENSATION THAT CAN BE CONSIDERED?

         The Plan, by law, cannot recognize annual compensation in excess of
$200,000. This amount may be adjusted after 2002 for cost-of-living increases.

<PAGE>

ARE THERE LIMITS ON HOW MUCH CAN BE CONTRIBUTED TO MY ACCOUNT EACH YEAR?

         Generally, the law imposes a maximum limit on the amount of
contributions you may receive in the Plan. This limit applies to all
contributions we make on your behalf, all contributions you make to the Plan,
and any other amounts allocated to any of your accounts during the Plan Year
(such as forfeitures), excluding earnings. Beginning in 2002, this total cannot
exceed the lesser of $40,000 or 100% of your annual compensation. The dollar
limit may be adjusted after 2002 for cost-of-living increases.

MAY I "ROLL OVER" PAYMENTS FROM OTHER RETIREMENT PLANS OR IRAS?

         At the discretion of the Administrator, you may be permitted to deposit
into the Plan distributions you have received from other plans and certain IRAs.
Such a deposit is called a "rollover" and may result in tax savings to you. You
may ask your prior plan administrator or trustee to directly transfer (a "direct
rollover") to this Plan all or a portion of any amount that you are entitled to
receive as a distribution from a prior plan. Alternatively, if you received a
distribution from a prior plan, you may elect to deposit any amount eligible for
rollover within 60 days of your receipt of the distribution. You should consult
qualified counsel to determine if a rollover is permitted and in your best
interest.

         Your rollover will be placed in a separate account called a "rollover
account." You will always be 100% vested in your rollover account. This means
that you will always be entitled to all of your rollover contributions. Rollover
contributions will be affected by any investment gains or losses.

         You may withdraw the amounts in your "rollover account" at any time.

HOW IS THE MONEY IN THE PLAN INVESTED?

         You will be able to direct the investment of certain portions of your
interest in the Plan. We have established participant direction procedures
setting forth investment choices available to you, the frequency with which you
can change your investment choices, and instructions on how you can obtain other
important information on directed investments available from the Administrator.
You should request a copy of these procedures from the Administrator. You need
to follow these procedures when you direct investments. You should review the
information in these procedures carefully before you give investment directions.
In addition, the procedures indicate how you can obtain other important
information available from the Administrator on directed investments.

         The Plan is intended to comply with Section 404(c) of ERISA. If the
Plan complies with this Section, then the fiduciaries of the Plan, including the
Employer, the Trustee, and the Administrator, will be relieved of any legal

<PAGE>

liability for any losses that are the direct and necessary result of the
investment directions that you give. The procedures discussed above must be
followed in giving investment directions. If you fail to do so, then your
investment directions need not be followed. You are not required to direct
investments. If you choose not to direct investments, then the is responsible
for investing your accounts in a prudent manner.

         When you direct investments, your accounts are segregated for purposes
of determining the earnings or losses on these investments. Your account does
not share in the investment performance for other participants who have directed
their own investments.

         You should remember that the amount of your benefits in the Plan will
depend in part upon your choice of investments. Gains as well as losses can
occur. There are no guarantees of performance. The Employer, the Administrator,
and the Trustee will not provide investment advice or guarantee the performance
of any investment you choose.

                                   ARTICLE III
                               RETIREMENT BENEFITS

WHAT BENEFITS WILL I RECEIVE AT NORMAL RETIREMENT?

         You will be entitled to all of your account balances at your Normal
Retirement Age. However, the actual payment of your benefits may generally not
begin until your actual retirement. In such event, a distribution will be made,
at your election, as soon as is administratively feasible. If you continue
working after your Normal Retirement Age, you may generally defer receipt of
your benefits until your Late Retirement Date.

         You will attain your Normal Retirement Age when you attain age 65. Your
Late Retirement Date is the date you choose to retire after first having reached
your Normal Retirement Age.

WHAT HAPPENS IF I LEAVE THE EMPLOYER'S WORKFORCE BEFORE I RETIRE?

         This Plan is designed to encourage you to stay with us until
retirement. However, if you terminate your employment with us before your
retirement date and the value of your vested benefit (excluding, for
distributions amounts attributable to rollovers) is $5,000 or less, a
distribution will be made to you in a lump sum within a reasonable time after
you terminate employment. (See the question in Article V "How will my benefits
be paid?" for a further explanation of how benefits are paid from the Plan.)

         If you terminate your employment with us before your retirement date
and the value of your vested benefit (excluding, for distributions amounts
attributable to rollovers) is more than $5,000, a distribution will be made to

<PAGE>

you within a reasonable time after you terminate employment. In this case,
however, you and your spouse, if married, must consent to the distribution.

         If your employment terminates for reasons other than death, disability,
or retirement, you will be entitled to receive only your "vested percentage" of
your account balance. (See the next question "What is my vested interest in my
account?" for more information.)

WHAT IS MY VESTED INTEREST IN MY ACCOUNT?

         You are always 100% vested in (meaning you are entitled to all of the
amounts in) your account attributable to your salary deferrals, as well as in
the following:

         o    your own rollover contributions.

         o    safe harbor Nonelective Contributions.

         Your "vested percentage" in your account attributable to your matching
contributions is determined under the following schedule and is based on vesting
Years of Service. This means your account balance at the time you stop working
that is attributable to those contributions is multiplied by your vested
percentage. The result is your vested benefit, which, when added to the amounts
that are always 100% vested as shown above, is what you will actually receive
from the Plan. You will always, however, be 100% vested if you are employed on
or after your Normal Retirement Age.

                                 Vesting Schedule
                             Matching Contributions
        Years of Service                                      Percentage

               1                                                  20%
               2                                                  40%
               3                                                  60%
               4                                                  80%
               5                                                 100%
               6                                                 100%
               7                                                 100%

 HOW DO I DETERMINE MY YEARS OF SERVICE FOR VESTING PURPOSES?

         To earn a Year of Service, you must be credited with at least 1000
 Hour(s) of Service during any Plan Year. (See the Article entitled "Hours of
 Service" for more information on receiving credit for Hours of Service.) The
 Plan contains specific rules for crediting Hours of Service for vesting
 purposes. The Administrator will track your service and will credit you with a
 Year of Service for each Plan Year in which you are credited with the required
 Hours of Service, in accordance with the terms of the Plan. If you have any
 questions regarding your vesting service, you should contact the Administrator.

<PAGE>

DOES ALL MY SERVICE COUNT FOR VESTING PURPOSES?

         In calculating your vested percentage, all service you perform for us
will generally be counted. However, there are some exceptions to this general
rule.

         BREAK IN SERVICE RULES. If you terminate employment and are rehired,
you may "lose" credit for prior service under the Plan's Break in Service rules.

         For vesting purposes, you will have a Break in Service if you complete
less than 501 Hours of Service during the Plan Year. However, if you are absent
from work for certain leaves of absence such as a maternity or paternity leave,
you may be credited with 501 Hours of Service to prevent a Break in Service.

         The Administrator monitors the Break in Service rules and can provide
you with additional information on the effect of these rules.

         FIVE-YEAR BREAK IN SERVICE RULE. The five-year Break in Service rule
applies only to totally nonvested (0% vested) participants. If you are totally
nonvested in your account and you have five consecutive Breaks in Service (as
defined above), all the service you earned before the five-year period no longer
counts for vesting purposes. Thus, if you return to employment after incurring
five consecutive Breaks in Service, you will be treated as a new employee (with
no prior service) for purposes of determining your vested percentage in the
Plan. However, if you have benefits in the Plan that are vested, you do not lose
any rights to those amounts under these rules.

AS A VETERAN, WILL MY MILITARY SERVICE COUNT AS SERVICE WITH THE EMPLOYER?

         If you are a veteran and are reemployed under the Uniformed Services
Employment and Reemployment Rights Act of 1994, your qualified military service
may be considered service with us. If you may be affected by this law, ask your
Administrator for further details.

WHAT HAPPENS TO THE NON-VESTED PORTION OF A TERMINATED PARTICIPANT'S ACCOUNT?

         If you are not vested or are partially vested in your account balance
when you leave, the non-vested portion of your account balance will be forfeited
on the earlier of:

         (a) the distribution of your entire vested account balance, or

<PAGE>

         (b) your incurring five consecutive one-year Breaks in Service.

         Forfeitures may be used by the Plan for several purposes, such as the
payment of Plan expenses.

         Forfeitures of matching contributions are used to reduce the matching
contribution.

WHAT HAPPENS IF I'M REHIRED?

         If you are not vested at all when you terminate your employment with us
and return to us after incurring five consecutive Breaks in Service, your prior
service will not be counted. Thus, your vesting service will include only
service that you complete after your reemployment. If you return before
incurring five consecutive Breaks in Service, your prior service will continue
to be counted for vesting service.

         If you are partially or fully vested when you terminate your employment
and you return to service with us, your service before you left will count as
vesting service with respect to future contributions made to the Plan. In
addition, your Years of Service that you complete after your reemployment may
count as vesting service with respect to contributions made prior to your
termination.

         If you received a distribution of your vested account balance and are
reemployed, you may have the right to repay this distribution. If you repay the
entire amount of the distribution, we will restore your account balance with
your forfeited amount. You must repay this distribution within five years from
your date of reemployment, or, if earlier, before you incur five consecutive
Breaks in Service. If you were fully vested when you left, you do not have the
opportunity to repay your distribution.

         NOTE that if you received a "deemed" distribution because you were
totally nonvested when you terminated your employment, your nonvested benefit
will automatically be restored within a reasonable time following your
reemployment, provided you have not incurred five consecutive Breaks in Service.

<PAGE>

                                   ARTICLE IV
                               DISABILITY BENEFITS

HOW IS DISABILITY DEFINED?

         In the Plan, disability is defined as your inability to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment that can be expected to result in death or that has lasted (or
can be expected to last) for a continuous period of not less than 12 months.
Your disability will be determined by a licensed physician chosen by the
Administrator.

WHAT HAPPENS IF I BECOME DISABLED?

         If you become disabled while a participant, you will be entitled to
100% of your account balance. Payment of your disability benefits will be made
to you as soon as is administratively feasible after you retire due to a
disability.
(See the question entitled "How will my benefits be paid?" for more
information.)

                                    ARTICLE V
                             FORM OF BENEFIT PAYMENT

HOW WILL MY BENEFITS BE PAID?

         There are various methods by which benefits may be distributed to you
from the Plan. The method depends on your marital status, as well as the
elections you and your spouse make. All methods of distribution, however, have
equivalent values. The rules under this Section apply to all distributions you
will receive from the Plan, whether by reason of retirement or any other event
that may permit a distribution of benefits.

         If you are married on the date your benefits are to begin, you will
automatically receive a joint and 50% survivor annuity, unless you elect an
alternative form of payment. This means that you will receive payments for your
life, and upon your death, your surviving spouse will receive a monthly benefit
for the remainder of his or her life equal to 50% of the benefit you were
receiving at the time of your death.

         If you are not married on the date your benefits are to begin, you will
automatically receive a life annuity, which means you will receive payments for
as long as you live.

         However, regardless of the preceding, if your vested benefit in the
Plan (excluding, for distributions amounts attributable to rollovers) does not
exceed $5,000, then your benefit will be distributed to you in a single lump-sum
payment as soon as is administratively feasible following the event that
entitles you to a distribution.

<PAGE>

         If your vested benefit in the Plan (excluding, for distributions
amounts attributable to rollovers) exceeds $5,000, you (and your spouse, if you
are married) must consent to the distribution before it may be made. Also, if
you want the distribution to be in a form other than an annuity payment, you
(and your spouse, if you are married) must first waive the annuity form of
payment. See the question "May I elect another form of benefit?" for more
information on the benefit payment options available to you if your vested
benefit (excluding, for distributions amounts attributable to rollovers) exceeds
$5,000.

MAY I ELECT ANOTHER FORM OF BENEFIT?

         When you are about to receive any distribution, the Administrator will
explain the joint and survivor annuity or the life annuity to you in greater
detail. You will be given the option of waiving the joint and survivor annuity
or the life annuity form of payment during the 90-day period before the annuity
is to begin. IF YOU ARE MARRIED, YOUR SPOUSE MUST IRREVOCABLY CONSENT IN WRITING
TO THE WAIVER IN THE PRESENCE OF A NOTARY OR A PLAN REPRESENTATIVE. You may
revoke any waiver. The Administrator will provide you with forms to make these
elections. Since your spouse participates in these elections, you must
immediately inform the Administrator of any change in your marital status.

         If you and your spouse elect not to take a joint and survivor annuity,
or if you are not married when your benefits are scheduled to begin and have
elected not to take a life annuity, you may elect an alternative form of
payment. This payment may be made in one of the following method(s):

         o a single lump-sum payment of your entire account balance.

         o a single-sum payment of a portion of your account balance.

         o monthly, quarterly, semi-annual, or annual installments over a period
         of not more than your assumed life expectancy (or your and your
         beneficiary's assumed life expectancies).

         o annuity payments.

<PAGE>

MAY I DELAY THE RECEIPT OF BENEFITS?

         Yes, you may delay the receipt of benefits , unless a distribution is
required to be made, as explained earlier, because your vested benefit in the
Plan (excluding, for distributions amounts attributable to rollovers) does not
exceed $5,000. However, in addition to the benefit payment mentioned above,
there are rules that require that certain minimum distributions be made from the
Plan. If you are a 5% owner, distributions are required to begin not later than
the April 1st following the end of the year in which you reach age 70 1/2. If
you are not a 5% owner, distributions are required to begin not later than the
April 1st following the later of the end of the year in which you reach age 70
1/2 or retire. You should see the Administrator if you feel you may be affected
by these rules.

                                   ARTICLE VI
                                 DEATH BENEFITS

WHAT HAPPENS IF I DIE WHILE WORKING FOR THE EMPLOYER?

         If you die while you are still employed by us, your entire account
balance will be used to provide your beneficiary with a death benefit.

WHO IS THE BENEFICIARY OF MY DEATH BENEFIT?

         If you are married at the time of your death, your spouse will be the
beneficiary of 50% of the death benefit unless an election is made to change the
beneficiary. IF YOU WISH TO DESIGNATE A BENEFICIARY OTHER THAN YOUR SPOUSE, YOUR
SPOUSE MUST IRREVOCABLY CONSENT TO WAIVE ANY RIGHT TO THE PORTION OF THE DEATH
BENEFIT PAYABLE TO YOUR SPOUSE. YOUR SPOUSE'S CONSENT MUST BE IN WRITING, BE
WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE, AND ACKNOWLEDGE THE SPECIFIC
NON-SPOUSE BENEFICIARY.

         If you are married, you have named someone other than your spouse to be
your beneficiary as described in the preceding paragraph, and you wish to again
change your beneficiary designation, your spouse must again consent to the
change, unless you are changing your designation to name your spouse as your
beneficiary. Also, since your death benefit is your entire account balance, you
may, at any time, designate the beneficiary for amounts in excess of the portion
of the death benefit payable to your spouse without your spouse's consent. In
addition, you may elect a beneficiary other than your spouse without your
spouse's consent if your spouse cannot be located.

         If you are not married, you may designate your beneficiary on a form to
be supplied to you by the Administrator.

<PAGE>

         In the event no valid designation of beneficiary exists, or if the
beneficiary is not alive at the time of your death, the death benefit will be
paid in the following order of priority to:

         (a) Your surviving spouse;

         (b) Your surviving children, in equal shares; or

         (c) Your estate.

HOW WILL THE DEATH BENEFIT BE PAID TO MY BENEFICIARY?

         The death benefit payable to your spouse will be in the form of an
annuity, that is, periodic payments over the life of your spouse. Your spouse
may direct that payments begin within a reasonable period of time after your
death. The size of the monthly payments will depend on the value of your account
at the time of your death.

         You may waive this form of distribution. Generally, the period during
which you and your spouse may waive this annuity begins as of the first day of
the Plan Year in which you reach age 35 and ends when you die. The Administrator
must provide you with a detailed explanation of the annuity. This explanation
must be given to you during the period of time beginning on the first day of the
Plan Year in which you will reach age 32 and ending on the first day of the Plan
Year in which you reach age 35.

         Under a special rule, you and your spouse may waive the survivor
annuity form of payment any time before you turn age 35. However, any waiver
will become invalid at the beginning of the Plan Year in which you turn age 35,
and you and your spouse will be required to make another waiver.

         It is important that you inform the Administrator when you reach age 32
so that you may receive this information.

         You may elect an alternative form of payment (1) if you are married
and, with your spouse's consent, you waive the annuity form of distribution, (2)
if you are not married, or (3) for amounts in excess of the minimum spouse's
death benefit. This payment may be made in the following manner:

         o a single lump-sum payment of your entire account balance.

         o a single-sum payment of a portion of your account balance.

         o monthly, quarterly, semi-annual, or annual installments over a period
         of not more than your beneficiary's assumed life expectancy.

         o annuity payments.

<PAGE>

WHEN MUST THE LAST PAYMENT BE MADE TO MY BENEFICIARY?

         If your designated beneficiary is a person (rather than your estate or
most trusts) then minimum distributions of your death benefit must generally
begin within one year of your death and must be paid over a period not extending
beyond your beneficiary's life expectancy. If your spouse is the beneficiary,
the start of payments may be delayed until the year in which you would have
attained age 70 1/2. Generally, if your beneficiary is not a person, then your
entire death benefit must be paid within five years after your death.

         Since your spouse has certain rights in the death benefit, you should
immediately report any change in your marital status to the Administrator.

WHAT HAPPENS IF I'M A PARTICIPANT, TERMINATE EMPLOYMENT, AND DIE BEFORE
RECEIVING ALL MY BENEFITS?

         If you terminate employment with us and subsequently die, your
beneficiary will be entitled to the vested percentage of your remaining account
balance at the time of your death.

                                   ARTICLE VII
                            IN-SERVICE DISTRIBUTIONS

CAN I WITHDRAW MONEY FROM MY ACCOUNT WHILE WORKING?

         Generally, you may receive a distribution from the Plan prior to your
termination of employment if you satisfy certain conditions. These conditions
are described below. However, this distribution is not in addition to your other
benefits and will therefore reduce the value of the benefits you will receive
when you retire. Any in-service distribution is made at your election and will
be made in accordance with the forms of distribution in the Plan.

         Also, the law restricts any pre-retirement distribution from certain
accounts maintained for you in the Plan before you reach age 59 1/2. These
accounts are generally the ones set up to receive your salary deferrals and
other Employer contributions used to satisfy special Plan rules.

         You may request an in-service distribution as follows:

         o With respect to your salary deferrals and safe harbor contributions,
           if any, in the following instances:

         o once you attain age 59 1/2.

         o once you have become disabled under the terms of the Plan.

<PAGE>

         o With respect to your matching contributions, in the following
           instance(s):

             o once you have become disabled under the terms of the Plan.

         o With respect to rollovers from other plans, at any time and for any
           reason.

         o With respect to certain amounts that were transferred to this Plan
           from another plan of the Employer, at any time and for any reason.

CAN I WITHDRAW MONEY FROM MY ACCOUNT IN THE EVENT OF FINANCIAL HARDSHIP?

         Yes, if you satisfy certain conditions. This hardship distribution is
not in addition to your other benefits and will therefore reduce the value of
the benefits you will receive at retirement.

         You may request a hardship withdrawal from the following amounts:

         o Your salary deferrals.

         o Your rollovers from other plans.

         o Certain amounts that were transferred to this Plan from another plan
           of the Employer.

         A hardship withdrawal may be made to satisfy certain immediate and
heavy financial needs that you have. A hardship distribution may only be made
for payment of the following:

         o Expenses for medical care (described in Section 213(d) of the
           Internal Revenue Code) previously incurred by you or your dependent
           or necessary for you or your dependent to obtain medical care.

         o Costs directly related to the purchase of your principal residence
           (excluding mortgage payments).

         o Tuition, related educational fees, and room and board expenses for
           the next twelve (12) months of post-secondary education for yourself,
           your spouse or dependent.

         o Amounts necessary to prevent your eviction from your principal
           residence or foreclosure on the mortgage of your principal residence.

<PAGE>

         If you have any of the above expenses, a hardship distribution can only
be made if you certify and agree that all of the following conditions are
satisfied:

         o The distribution is not in excess of the amount of your immediate and
           heavy financial need. The amount of your immediate and heavy
           financial need may include any amounts necessary to pay any federal,
           state, or local income taxes or penalties reasonably anticipated to
           result from the distribution.

         o You have obtained all distributions, other than hardship
           distributions, and all nontaxable (at the time of the loan) loans
           currently available under all plans maintained by your Employer.

         o That your salary deferrals will be suspended for at least six (6)
           months after your receipt of the hardship distribution.

         In addition to these rules, there are restrictions placed on hardship
distributions that are made from your salary deferrals. Any hardship
distribution from these amounts will be limited, as of the date of distribution,
to the balance of your salary deferral account as of the end of the last Plan
Year ending before July 1, 1989, plus your total salary deferrals after such
date, reduced by the amount of any previous distributions made to you from your
salary deferral account. Ask the Administrator if you need further details.

DO I HAVE TO WAIVE ANY BENEFITS IN ORDER TO RECEIVE AN IN-SERVICE DISTRIBUTION?

         If you wish to receive an in-service distribution from the Plan in a
single payment from your account, you (and your spouse, if you are married) must
first waive the annuity form of payment. (See the Article entitled "Form of
Benefit Payment" for a further explanation of how benefits are paid from the
Plan.)

                                  ARTICLE VIII
                         TAX TREATMENT OF DISTRIBUTIONS

WHAT ARE MY TAX CONSEQUENCES WHEN I RECEIVE A DISTRIBUTION FROM THE PLAN?

         Generally, you must include any Plan distribution in your taxable
income in the year in which you receive the distribution. The tax treatment may
also depend on your age when you receive the distribution. Certain distributions
made to you when you are under age 59 1/2 could be subject to an additional 10%
tax.

<PAGE>

CAN I REDUCE OR DEFER TAX ON MY DISTRIBUTION?

         You may reduce, or defer entirely, the tax due on your distribution
through use of one of the following methods:

         (a) The rollover of all or a portion of the distribution to an
         Individual Retirement Account or Annuity (IRA) or another qualified
         employer plan. This will result in no tax being due until you begin
         withdrawing funds from the IRA or other qualified employer plan. The
         rollover of the distribution, however, MUST be made within strict time
         frames (normally, within 60 days after you receive your distribution).
         Under certain circumstances all or a portion of a distribution (such as
         a hardship distribution) may not qualify for this rollover treatment.
         In addition, most distributions will be subject to mandatory federal
         income tax withholding at a rate of 20%. This will reduce the amount
         you actually receive. For this reason, if you wish to roll over all or
         a portion of your distribution amount, the direct transfer option
         described in paragraph (b) below would be the better choice.

         (b) For most distributions, you may request that a direct transfer
         (sometimes referred to as a direct rollover) of all or a portion of a
         distribution be made to either an Individual Retirement Account or
         Annuity (IRA) or another qualified employer plan willing to accept the
         transfer. A direct transfer will result in no tax being due until you
         withdraw funds from the IRA or other qualified employer plan. Like the
         rollover, under certain circumstances all or a portion of the amount to
         be distributed may not qualify for this direct transfer. If you elect
         to actually receive the distribution rather than request a direct
         transfer, then in most cases 20% of the distribution amount will be
         withheld for federal income tax purposes. If you decide to directly
         transfer all or a portion of your distribution amount, you (and your
         spouse, if you are married) must first waive the annuity form of
         payment. (See the Section in this Article entitled "Benefit Payment
         Options" for a further explanation of this waiver requirement.)

         WHENEVER YOU RECEIVE A DISTRIBUTION, THE ADMINISTRATOR WILL DELIVER TO
YOU A MORE DETAILED EXPLANATION OF THESE OPTIONS. HOWEVER, THE RULES THAT
DETERMINE WHETHER YOU QUALIFY FOR FAVORABLE TAX TREATMENT ARE VERY COMPLEX. YOU
SHOULD CONSULT WITH QUALIFIED TAX COUNSEL BEFORE MAKING A CHOICE.

<PAGE>

                                   ARTICLE IX
                                HOURS OF SERVICE

WHAT IS AN HOUR OF SERVICE?

         You will be credited with an Hour of Service for:

         (a) each hour for which you are directly or indirectly compensated by
         your Employer for the performance of duties during the Plan Year;

         (b) each hour for which you are directly or indirectly compensated by
         us for reasons other than the performance of duties (such as vacation,
         holidays, sickness, disability, lay-off, military duty, jury duty, or
         leave of absence during the Plan Year); and

         (c) each hour for back pay awarded or agreed to by the Employer.

         You will not be credited for the same Hours of Service both under (a)
or (b), as the case may be, and under (c).

HOW ARE HOURS OF SERVICE CREDITED?

         You will be credited with your actual Hours of Service.

                                    ARTICLE X
                           YOUR PLAN'S TOP-HEAVY RULES

WHAT IS A "TOP-HEAVY" PLAN?

         A retirement plan that primarily benefits "key employees" is called a
"top-heavy plan". Key employees are certain owners or officers of our
organization. A plan is generally a "top-heavy plan" when more than 60% of the
plan assets are in the accounts of key employees.

         Each year, the Administrator is responsible for determining whether
this Plan is a "top-heavy plan".

WHAT HAPPENS IF THE PLAN BECOMES TOP-HEAVY?

         If the Plan becomes top-heavy in any Plan Year, then non-key employees
will be entitled to certain "top-heavy minimum benefits", and other special
rules will apply. Among these top-heavy rules are the following:

         o We may be required to make a contribution to your account in order to
         provide you with at least "top-heavy minimum benefits".

<PAGE>

         o Your nonforfeitable right to benefits or contributions derived from
           matching contributions will be determined according to the following
           schedule:

                                Vesting Schedule
                             Matching Contributions
       Years of Service                                      Percentage

               1                                                 20%
               2                                                 40%
               3                                                 60%
               4                                                 80%
               5                                                100%
               6                                                100%

         o If you are a participant in more than one plan, you may not be
           entitled to "top-heavy minimum benefits" under both plans.

                                   ARTICLE XI
                    PROTECTED BENEFITS AND CLAIMS PROCEDURES

IS MY BENEFIT PROTECTED?

         As a general rule, your interest in your account, including your
"vested interest," may not be alienated. This means that your interest may not
be sold, used as collateral for a loan, given away, or otherwise transferred. In
addition, your creditors may not attach, garnish, or otherwise interfere with
your account.

ARE THERE ANY EXCEPTIONS TO THE GENERAL RULE?

         There are two exceptions to this general rule. The Administrator must
honor a "qualified domestic relations order". A "qualified domestic relations
order" is defined as a decree or order issued by a court that obligates you to
pay child support or alimony, or otherwise allocates a portion of your assets in
the Plan to your spouse, former spouse, child, or other dependent. If a
qualified domestic relations order is received by the Administrator, all or a
portion of your benefits may be used to satisfy the obligation. The
Administrator will determine the validity of any domestic relations order
received.

         The second exception applies if you are involved with the Plan's
administration. If you are found liable for any action that adversely affects
the Plan, the Administrator can offset your benefits by the amount that you are
ordered or required by a court to pay the Plan. All or a portion of your
benefits may be used to satisfy any such obligation to the Plan.

<PAGE>

CAN THE PLAN BE AMENDED?

         Yes. We have the right to amend the Plan at any time. In no event,
however, will any amendment authorize or permit any part of the Plan assets to
be used for purposes other than the exclusive benefit of participants or their
beneficiaries. Additionally, no amendment will cause any reduction in the amount
credited to your account.

WHAT HAPPENS IF THE PLAN IS DISCONTINUED OR TERMINATED?

         Although we intend to maintain the Plan indefinitely, we reserve the
right to terminate the Plan at any time. Upon termination, no further
contributions will be made to the Plan and all amounts credited to your accounts
will become 100% vested, if not already 100% vested. We will direct the
distribution of your accounts in a manner permitted by the Plan as soon as
practical. (See the question entitled "How will my benefits be paid?" for more
information.) You will be notified if the Plan is terminated.

HOW DO I SUBMIT A CLAIM FOR PLAN BENEFITS?

         Benefits will be paid to you and your beneficiaries without the
necessity of formal claims. However, if you think an error has been made in
determining your benefits, then you or your beneficiaries may make a request for
any Plan benefits to which you believe you are entitled. Any such request should
be in writing and should be made to the Administrator.

         If the Administrator determines the claim is valid, then you will
receive a statement describing the amount of benefit, the method or methods of
payment, the timing of distributions, and other information relevant to the
payment of the benefit.

WHAT IF MY BENEFITS ARE DENIED?

         Your request for Plan benefits will be considered a claim for Plan
benefits, and it will be subject to a full and fair review. If your claim is
wholly or partially denied, the Administrator will provide you with a written or
electronic notification of the Plan's adverse determination. This written or
electronic notification must be provided to you within a reasonable period of
time, but not later than 90 days after the receipt of your claim by the
Administrator, unless the Administrator determines that special circumstances
require an extension of time for processing your claim. If the Administrator
determines that an extension of time for processing is required, written notice
of the extension will be furnished to you prior to the termination of the
initial 90-day period. In no event will such extension exceed a period of 90
days from the end of such initial period. The extension notice will indicate the
special circumstances requiring an extension of time and the date by which the
Plan expects to render the benefit determination.

<PAGE>

In the case of a claim for disability benefits, if disability is determined by a
physician chosen by the Administrator (rather than relying upon a determination
of disability for Social Security purposes), then instead of the above, the
Administrator will provide you with written or electronic notification of the
Plan's adverse benefit determination within a reasonable period of time, but not
later than 45 days after receipt of the claim by the Plan. This period may be
extended by the Plan for up to 30 days, provided that the Administrator both
determines that such an extension is necessary due to matters beyond the control
of the Plan and notifies you, prior to the expiration of the initial 45-day
period, of the circumstances requiring the extension of time and the date by
which the Plan expects to render a decision. If, prior to the end of the first
30-day extension period the Administrator determines that, due to matters beyond
the control of the Plan, a decision cannot be rendered within that extension
period, the period for making the determination may be extended for up to an
additional 30 days, provided that the Administrator notifies you, prior to the
expiration of the first 30-day extension period, of the circumstances requiring
the extension and the date as of which the Plan expects to render a decision. In
the case of any such extension, the notice of extension will specifically
explain the standards on which entitlement to a benefit is based, the unresolved
issues that prevent a decision on the claim, and the additional information
needed to resolve those issues, and you will be afforded at least 45 days within
which to provide the specified

         The Administrator's written or electronic notification of any adverse
benefit determination must contain the following information:

         (a) The specific reason or reasons for the adverse determination;

         (b) Reference to specific Plan provisions on which the determination is
         based.

         (c) A description of any additional material or information necessary
         for you to perfect the claim and an explanation of why such material or
         information is necessary.

         (d) Appropriate information as to the steps to be taken if you or your
         beneficiary want to submit your claim for review.

         (e) In the case of disability benefits where the disability is
         determined by a physician chosen by the Administrator:

                  (i) If an internal rule, guideline, protocol, or other similar
                  criterion was relied upon in making the adverse determination,
                  either the specific rule, guideline, protocol, or other
                  similar criterion; or a statement that such rule, guideline,
                  protocol, or other similar criterion was relied upon in making
                  the adverse determination and that a copy of the rule,
                  guideline, protocol, or other similar criterion will be
                  provided to you free of charge upon request.

<PAGE>

                  (ii) If the adverse benefit determination is based on a
                  medical necessity or experimental treatment or similar
                  exclusion or limit, either an explanation of the specific or
                  clinical judgment for the determination, applying the terms of
                  the Plan to your medical circumstances, or a statement that
                  such explanation will be provided to you free of charge upon
                  request.

         If your claim has been denied or deemed denied, and you want to submit
your claim for review, you must follow the Claims Review Procedure below.

WHAT IS THE CLAIMS REVIEW PROCEDURE?

         Upon the denial of your claim for benefits, you may file your claim for
review, in writing, with the Administrator.

         (a) YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 60 DAYS AFTER YOU
         HAVE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF YOUR CLAIM FOR
         BENEFITS, OR IF NO WRITTEN DENIAL OF YOUR CLAIM WAS PROVIDED, NO LATER
         THAN 60 DAYS AFTER THE DEEMED DENIAL OF YOUR CLAIM.

                  HOWEVER, IF YOUR CLAIM IS FOR DISABILITY BENEFITS AND
         DISABILITY IS DETERMINED BY A PHYSICIAN CHOSEN BY THE ADMINISTRATOR,
         THEN INSTEAD OF THE ABOVE, YOU MUST FILE THE CLAIM FOR REVIEW NO LATER
         THAN 180 DAYS FOLLOWING RECEIPT OF NOTIFICATION OF AN ADVERSE BENEFIT
         DETERMINATION.

         (b) You may submit written comments, documents, records, and other
         information relating to your claim for benefits.

         (c) You may review all pertinent documents relating to the denial of
         your claim and submit any issues and comments, in writing, to the
         Administrator.

         (d) You will be provided, upon request and free of charge, reasonable
         access to, and copies of, all documents, records, and other information
         relevant to your claim for benefits.

         (e) Your claim for review must be given a full and fair review. This
         review will take into account all comments, documents, records, and
         other information submitted by you relating to your claim, without
         regard to whether such information was submitted or considered in the
         initial benefit determination.

<PAGE>

         In addition to the Claims Review Procedure above, if your claim is for
disability benefits and disability is determined by a physician chosen by the
Administrator, then the Claims Review Procedure provides that:

         (a)      Your claim will be reviewed without deference to the initial
                  adverse benefit determination and the review will be conducted
                  by an appropriate named fiduciary of the Plan who is neither
                  the individual who made the adverse benefit determination that
                  is the subject of the appeal, nor the subordinate of such
                  individual.

         (b)      In deciding an appeal of any adverse benefit determination
                  that is based in whole or part on medical judgment, the
                  appropriate named fiduciary will consult with a health care
                  professional who has appropriate training and experience in
                  the field of medicine involved in the medical judgment.

         (c)      Any medical or vocational experts whose advice was obtained on
                  behalf of the Plan in connection with your adverse benefit
                  determination will be identified, without regard to whether
                  the advice was relied upon in making the benefit
                  determination.

         (d)      The health care professional engaged for purposes of a
                  consultation under (b) above will be an individual who is
                  neither an individual who was consulted in connection with the
                  adverse benefit determination that is the subject of the
                  appeal, nor the subordinate of any such individual.

         The Administrator will provide you with written or electronic
notification of the Plan's benefit determination on review. The Administrator
must provide you with notification of this denial within 60 days after the
Administrator's receipt of your written claim for review, unless the
Administrator determines that special circumstances require an extension of time
for processing your claim. If the Administrator determines that an extension of
time for processing is required, written notice of the extension will be
furnished to you prior to the termination of the initial 60-day period. In no
event will such extension exceed a period of 60 days from the end of the initial
period. The extension notice will indicate the special circumstances requiring
an extension of time and the date by which the Plan expects to render the
determination on review. However, if the claim relates to disability benefits
and disability is determined by a physician chosen by the Administrator, then 45
days will apply instead of 60 days in the preceding sentences. In the case of an
adverse benefit determination, the notification will set forth:

         (a)      The specific reason or reasons for the adverse determination.

<PAGE>

         (b)      Reference to the specific Plan provisions on which the benefit
                  determination is based.

         (c)      A statement that you are entitled to receive, upon request and
                  free of charge, reasonable access to, and copies of, all
                  documents, records, and other information relevant to your
                  claim for benefits.

         (d)      In the case of disability benefits where disability is
                  determined by a physician chosen by the Administrator:

                  (i)      If an internal rule, guideline, protocol, or other
                           similar criterion was relied upon in making
                           the adverse determination, either the specific rule,
                           guideline, protocol, or other similar criterion; or a
                           statement that such rule, guideline, protocol, or
                           other similar criterion was relied upon in making the
                           adverse determination and that a copy of the rule,
                           guideline, protocol, or other similar criterion will
                           be provided to you free of charge upon request.

                  (ii)     If the adverse benefit determination is based on a
                           medical necessity or experimental treatment or
                           similar exclusion or limit, either an explanation of
                           the specific or clinical judgment for the
                           determination, applying the terms of the Plan to your
                           medical circumstances, or a statement that such
                           explanation will be provided to you free of charge
                           upon request.

         If you have a claim for benefits that is denied or ignored, in whole or
in part, you may file suit in a state or federal court. However, in order to do
so, you must file the suit no later than 180 days after the Administrator makes
a final determination to deny your claim.

WHAT ARE MY RIGHTS AS A PLAN PARTICIPANT?

         As a participant in the Plan you are entitled to certain rights and
protections under the ERISA. ERISA provides that all Plan participants are
entitled to:

         (a)      Examine, without charge, at the Administrator's office and at
                  other specified locations, all documents governing the Plan,
                  including insurance contracts and collective bargaining
                  agreements; and a copy of the latest annual report (Form 5500
                  Series) filed by the Plan with the U.S. Department of Labor
                  and available at the Public Disclosure Room of the Pension and
                  Welfare Benefit Administration.

         (b)      Obtain, upon written request to the Administrator, copies of
                  documents governing the operation of the Plan, including
                  insurance contracts and collective bargaining agreements, and

<PAGE>

                  copies of the latest annual report (Form 5500 Series) and an
                  updated SPD. The Administrator may make a reasonable charge
                  for copies.

         (c)      Receive a summary of the Plan's annual financial report. The
                  Administrator is required by law to furnish each participant
                  with a copy of this summary annual report.

         (d)      Obtain a statement telling you whether you have a right to
                  receive a pension at Normal Retirement Age and, if so, what
                  your benefits would be at Normal Retirement Age if you stop
                  working under the Plan now. If you do not have a right to a
                  pension benefit, the statement will tell you how many years
                  you have to work to earn a right to a pension. THIS STATEMENT
                  MUST BE REQUESTED IN WRITING AND IS NOT REQUIRED TO BE GIVEN
                  MORE THAN ONCE EVERY TWELVE (12) MONTHS. The Plan must provide
                  this statement free of charge.

         In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including your Employer or any other person, may fire you
or otherwise discriminate against you in any way to prevent you from obtaining a
pension benefit or exercising your rights under ERISA.

         If your claim for a pension benefit is denied or ignored, in whole or
in part, you have a right to know why this was done, to obtain copies of
documents relating to the decision without charge, and to appeal any denial, all
within certain time schedules.

         Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request a copy of Plan documents or the latest annual
report from the Plan and do not receive them within 30 days, you may file suit
in a federal court. In such a case, the court may require the Administrator to
provide the materials and pay you up to $110.00 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the Administrator.

         If you have a claim for benefits that is denied or ignored, in whole or
in part, you may file suit in a state or federal court. In addition, if you
disagree with the Plan's decision or lack thereof concerning the qualified
status of a domestic relations order or a medical child support order, you may
file suit in federal court. You and your beneficiaries can obtain, without
charge, a copy of the qualified domestic relations order procedures from the
Administrator.

         If it should happen that the Plan's fiduciaries misuse the Plan's
money, or if you are discriminated against for asserting your rights, you may
seek assistance from the U.S. Department of Labor, or you may file suit in a

<PAGE>

federal court. The court will decide who should pay court costs and legal fees.
If you are successful, the court may order the person you have sued to pay these
costs and fees. If you lose, the court may order you to pay these costs and fees
if, for example, it finds your claim is frivolous.

WHAT CAN I DO IF I HAVE QUESTIONS OR MY RIGHTS ARE VIOLATED?

         If you have any questions about the Plan, you should contact the
Administrator. If you have any questions about this statement, or about your
rights under ERISA, or if you need assistance in obtaining documents from the
Administrator, you should contact the nearest office of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, listed in the telephone
directory or the Division of Technical Assistance and Inquiries, Pension and
Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution
Avenue, N.W., Washington, D.C. 20210. You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Pension and Welfare Benefits Administration.

                                   ARTICLE XII
                       GENERAL INFORMATION ABOUT THE PLAN

         There is certain general information which you may need to know about
the Plan. This information has been summarized for you in this Article.

GENERAL PLAN INFORMATION

         The full name of the Plan is The Quakertown National Bank Retirement
Savings Plan.

         We have assigned Plan Number 002 to your Plan.

         This Plan was originally effective on August 1, 1984. The amended and
restated provisions of the Plan become effective on January 1, 2003. However,
this restatement was made to conform the Plan to new tax laws and some
provisions may be retroactively effective.

         Valuations of the Plan are generally made every business day. Certain
distributions, such as required minimum distributions, are based on the
Anniversary Date of the Plan. This date is the last day of the Plan Year.

         The Plan's records are maintained on a twelve-month period of time.
This is known as the Plan Year. The Plan Year begins on January 1 and ends on
December 31.

         The Plan and Trust will be governed by the laws of Pennsylvania to the
extent not governed by federal law.

<PAGE>

         Benefits provided by the Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under Title IV of the Employee Retirement Income
Security Act of 1974 because the insurance provisions under ERISA are not
applicable to this type of plan.

EMPLOYER INFORMATION

         The Plan Sponsor's name, address, telephone number, and identification
number are:

         QNB Corp.
         10 North Third Street
         Quakertown, Pennsylvania 18951
         215-538-5600
         23-2318082

         Service of legal process may be made upon the Plan Sponsor or your
 Employer, if your Employer is not the Plan Sponsor. Service of legal process
 may also be made upon the Trustee or Administrator.

         The Plan allows other employers to adopt its provisions. You or your
beneficiaries may examine or obtain a complete list of employers, if any, who
have adopted the Plan by making a written request to the Administrator.

         Other employers who have adopted the provisions of the Plan are:

         The Quakertown National Bank
         EIN: 23-0995065

ADMINISTRATOR INFORMATION

         The Plan's Administrator is responsible for the day-to-day
administration and operation of the Plan. For example, the Administrator
maintains the Plan records, including your account information, provides you
with the forms you need to complete for Plan participation and directs the
payment of your account at the appropriate time. The Administrator will also
allow you to review the formal Plan document and certain other materials related
to the Plan. If you have any questions about the Plan and your participation,
you should contact the Administrator. The Administrator may designate other
parties to perform some duties of the Administrator.

         The name, address and telephone number of the Plan's Administrator is:

<PAGE>

         QNB Corp.
         320 West Broad Street
         Quakertown, Pennsylvania 18951
         215-538-5600

TRUSTEE INFORMATION

         All money that is contributed to the Plan is held in a trust fund. The
Trustee is responsible for the safekeeping of the trust fund. The trust fund
established by the Plan's Trustee will be the funding medium used for the
accumulation of assets from which benefits will be distributed.

         The name, address, and telephone number of the Plan's Trustee is:

         Capital Bank and Trust Company

         135 S. State College Blvd.
         Brea, California 92821-5823
         1-800-421-0180================================================================================

                                 EXHIBIT 10 (DD)

                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  BY AND AMONG

                         U.S. BANK NATIONAL ASSOCIATION,
                            AS INSTITUTIONAL TRUSTEE,

                               DONEGAL GROUP INC.,
                                   AS SPONSOR,

                                       AND
                       JEFFREY D. MILLER, RALPH G. SPONTAK
                             AND DANIEL J. WAGNER,
                               AS ADMINISTRATORS,

                            DATED AS OF MAY 15, 2003

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

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                             Page
<S>      <C>               <C>                                                                              <C>
ARTICLE I.  INTERPRETATION AND DEFINITIONS.......................................................................1
         Section 1.1.      Definitions...........................................................................1

ARTICLE II. ORGANIZATION.........................................................................................8
         Section 2.1.      Name..................................................................................8
         Section 2.2.      Office................................................................................8
         Section 2.3.      Purpose...............................................................................8
         Section 2.4.      Authority.............................................................................8
         Section 2.5.      Title to Property of the Trust........................................................9
         Section 2.6.      Powers and Duties of the Institutional Trustee and the Administrators.................9
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee....................13
         Section 2.8.      Powers and Duties of the Institutional Trustee.......................................14
         Section 2.9.      Certain Duties and Responsibilities of the Institutional Trustee and Administrators..15
         Section 2.10.     Certain Rights of Institutional Trustee..............................................17
         Section 2.11.     Execution of Documents...............................................................19
         Section 2.12.     Not Responsible for Recitals or Issuance of Securities...............................19
         Section 2.13.     Duration of Trust....................................................................19
         Section 2.14.     Mergers..............................................................................19

ARTICLE III. SPONSOR............................................................................................21
         Section 3.1.      Sponsor's Purchase of Common Securities..............................................21
         Section 3.2.      Responsibilities of the Sponsor......................................................21
         Section 3.3.      Expenses.............................................................................21
         Section 3.4.      Right to Proceed.....................................................................22

ARTICLE IV.  INSTITUTIONAL TRUSTEE AND ADMINISTRATORS...........................................................22
         Section 4.1.      Institutional Trustee; Eligibility...................................................22
         Section 4.2.      Administrators.......................................................................23
         Section 4.3.      Appointment, Removal and Resignation of Institutional Trustee and Administrators.....23
         Section 4.4.      Institutional Trustee Vacancies......................................................24
         Section 4.5.      Effect of Vacancies..................................................................25
         Section 4.6.      Meetings of the Institutional Trustee and the Administrators.........................25
         Section 4.7.      Delegation of Power..................................................................25
         Section 4.8.      Conversion, Consolidation or Succession to Business..................................25

ARTICLE V.  DISTRIBUTIONS.......................................................................................26
         Section 5.1.      Distributions........................................................................26
</TABLE>

<PAGE>

<TABLE>
<S>      <C>               <C>                                                                              <C>
ARTICLE VI. ISSUANCE OF SECURITIES..............................................................................26
         Section 6.1.      General Provisions Regarding Securities..............................................26
         Section 6.2.      Paying Agent, Transfer Agent and Registrar...........................................27
         Section 6.3.      Form and Dating......................................................................27
         Section 6.4.      Mutilated, Destroyed, Lost or Stolen Certificates....................................28
         Section 6.5.      Temporary Securities.................................................................28
         Section 6.6.      Cancellation.........................................................................28
         Section 6.7.      Rights of Holders; Waivers of Past Defaults..........................................29

ARTICLE VII.  DISSOLUTION AND TERMINATION OF TRUST..............................................................30
         Section 7.1.      Dissolution and Termination of Trust.................................................30

ARTICLE VIII. TRANSFER OF INTERESTS.............................................................................31
         Section 8.1.      General..............................................................................31
         Section 8.2.      Transfer Procedures and Restrictions.................................................32
         Section 8.3.      Deemed Security Holders..............................................................35

ARTICLE IX.   LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.................35
         Section 9.1.      Liability............................................................................35
         Section 9.2.      Exculpation..........................................................................35
         Section 9.3.      Fiduciary Duty.......................................................................36
         Section 9.4.      Indemnification......................................................................36
         Section 9.5.      Outside Businesses...................................................................39
         Section 9.6.      Compensation; Fee....................................................................39

ARTICLE X.    TAX AND ACCOUNTING................................................................................39
         Section 10.1.     Fiscal Year..........................................................................39
         Section 10.2.     Certain Accounting Matters...........................................................40
         Section 10.3.     Banking..............................................................................40
         Section 10.4.     Withholding..........................................................................40
         Section 10.5.     Intention of the Parties.............................................................41

ARTICLE XI.   AMENDMENTS AND MEETINGS...........................................................................41
         Section 11.1.     Amendments...........................................................................41
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent.....................42

ARTICLE XII.  REPRESENTATIONS OF INSTITUTIONAL TRUSTEE..........................................................44
         Section 12.1.     Representations and Warranties of Institutional Trustee..............................44

ARTICLE XIII. MISCELLANEOUS.....................................................................................44
         Section 13.1.     Notices..............................................................................44
         Section 13.2.     Governing Law........................................................................45
         Section 13.3.     Intention of the Parties.............................................................46
         Section 13.4.     Headings.............................................................................46
         Section 13.5.     Successors and Assigns...............................................................46
         Section 13.6.     Partial Enforceability...............................................................46
         Section 13.7.     Counterparts.........................................................................46
</TABLE>

                                       ii
<PAGE>

Annex I....................Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement

                                      iii

<PAGE>

                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                                       OF

                              DGI STATUTORY TRUST I

                                  May 15, 2003

         AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of May 15, 2003, by the Institutional Trustee (as defined herein),
the Administrators (as defined herein), the Sponsor (as defined herein) and by
the holders, from time to time, of undivided beneficial interests in the Trust
(as defined herein) to be issued pursuant to this Declaration;

         WHEREAS, the Institutional Trustee, the Administrators and the Sponsor
established DGI Statutory Trust I (the "Trust"), a statutory trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of April 22, 2003 (the "Original Declaration"), and a Certificate of Trust
filed with the Secretary of the State of the State of Connecticut on April 22,
2003, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain debentures of the Debenture Issuer (as
defined herein);

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

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

         NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
the Institutional Trustee declares that all assets contributed to the Trust will
be held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration. The
parties hereto hereby agree as follows:

                                   ARTICLE I.

                         INTERPRETATION AND DEFINITIONS

         SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:

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

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

<PAGE>

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

         (d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified; and

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

         "Additional Interest" has the meaning set forth in the Indenture.

         "Additional Sums" has the meaning set forth in the Indenture.

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

         "Administrators" means each of Jeffrey D. Miller, Ralph G. Spontak and
Daniel J. Wagner, solely in such Person's capacity as Administrator of the Trust
created and continued hereunder and not in such Person's individual capacity, or
such Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.

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

         "Authorized Officer" of a Person means any Person that is authorized to
bind such Person.

         "Bankruptcy Event" means, with respect to any Person:

         (a) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or

         (b) such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.

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

         "Capital Securities" has the meaning set forth in paragraph 1(a) of
Annex I.

                                       2
<PAGE>

         "Capital Security Certificate" means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibit A-1.

         "Certificate" means any certificate evidencing Securities.

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

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

         "Common Securities" has the meaning set forth in paragraph 1(b) of
Annex I.

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

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

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

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

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

         "Creditor" has the meaning set forth in Section 3.3.

         "Debenture Issuer" means Donegal Group Inc., a Delaware corporation, in
its capacity as issuer of the Debentures under the Indenture.

         "Debenture Trustee" means U.S. Bank National Association, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.

         "Debentures" means the Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2033 to be issued by the Debenture Issuer under the
Indenture.

         "Defaulted Interest" has the meaning set forth in the Indenture.

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

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

                                       3
<PAGE>

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

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

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

         "Distribution Rate" means, for the period beginning on (and including)
the date of original issuance and ending on (but excluding) August 15, 2003, the
rate per annum of 5.41125%, and for the period beginning on (and including)
August 15, 2003, and thereafter, the Coupon Rate.

         "Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

         (a) the occurrence of an Indenture Event of Default; or

         (b) default by the Trust in the payment of any Optional Redemption
Price of any Security when it becomes due and payable; or

         (c) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Institutional Trustee in this Declaration (other
than those specified in clause (a) or (b) above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail to the Institutional Trustee and to the Sponsor by
the Holders of at least 25% in aggregate liquidation amount of the outstanding
Capital Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or

         (d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.

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

         "Fiduciary Indemnified Person" shall mean the Institutional Trustee,
any Affiliate of the Institutional Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee.

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

         "Guarantee" means the guarantee agreement, to be dated as of the
Closing Date, of the Sponsor in respect of the Capital Securities.

         "Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.

                                       4
<PAGE>

         "Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

         "Indenture" means the Indenture dated as of the Closing Date, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.

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

         "Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.1.

         "Interest" means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.

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

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

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

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

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

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

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

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

         "Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person, and, with respect
to the Administrators, a certificate signed by at least two Administrators. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant providing for it in this Declaration shall include:

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

                                       5
<PAGE>

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

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

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

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

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

         "Paying Agent" has the meaning specified in Section 6.2.

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

         "Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.

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

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

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

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

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

         "Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.

         "Restricted Securities Legend" has the meaning set forth in Section
8.2(b).

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

                                       6
<PAGE>

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

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

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

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

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

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

         "Sponsor" means Donegal Group Inc., a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.

         "Statutory Trust Act" means Chapter 615 of Title 34 of the Connecticut
General Statutes, Sections 500, et seq. as may be amended from time to time.

         "Subsidiary" means with respect to any Person, (a) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (b) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries, and (c) any limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such
Person, other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.

         "Successor Entity" has the meaning set forth in Section 2.14(b).

         "Successor Institutional Trustee" has the meaning set forth in Section
4.3(a).

         "Successor Securities" has the meaning set forth in Section 2.14(b).

         "Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.

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

         "10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that

                                       7
<PAGE>

would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.

         "3-Month LIBOR" has the meaning set forth in paragraph 2(a) of Annex I.

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

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

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

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

                                  ARTICLE II.

                                  ORGANIZATION

         SECTION 2.1. NAME. The Trust is named "DGI Statutory Trust I," as such
name may be modified from time to time by the Administrators following written
notice to the Holders of the Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrators.

         SECTION 2.2. OFFICE. The address of the principal office of the Trust
is c/o U.S. Bank National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103. On at least 10 Business Days written notice to the
Holders of the Securities, the Administrators may designate another principal
office, which shall be in a state of the United States or in the District of
Columbia.

         SECTION 2.3. PURPOSE. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures, (c) to facilitate direct investment in the
assets of the Trust through issuance of the Common Securities and the Capital
Securities, and (d) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.

         SECTION 2.4. AUTHORITY. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of

                                       8
<PAGE>

and serve to bind the Trust. In dealing with the Institutional Trustee acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Institutional Trustee to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Institutional Trustee as set forth in this Declaration. The Administrators shall
have only those ministerial duties set forth herein with respect to
accomplishing the purposes of the Trust and are not intended to be trustees or
fiduciaries with respect to the Trust or the Holders. The Institutional Trustee
shall have the right, but shall not be obligated except as provided in Section
2.6, to perform those duties assigned to the Administrators.

         SECTION 2.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.

         SECTION 2.6. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE AND THE
ADMINISTRATORS.

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

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

               (A) the issuance and sale of the Securities;

               (B) to cause the Trust to enter into, and to execute and deliver
         on behalf of the Trust, such agreements as may be necessary or
         desirable in connection with the purposes and function of the Trust,
         including agreements with the Paying Agent;

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

               (D) the sending of notices (other than notices of default), and
         other information regarding the Securities and the Debentures to the
         Holders in accordance with this Declaration;

               (E) the consent to the appointment of a Paying Agent, Transfer
         Agent and Registrar in accordance with this Declaration, which consent
         shall not be unreasonably withheld or delayed;

                                       9
<PAGE>

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

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

               (H) unless otherwise determined by the Holders of a Majority in
         liquidation amount of the Securities or as otherwise required by the
         Statutory Trust Act, to execute on behalf of the Trust (either acting
         alone or together with any or all of the Administrators) any documents
         that the Administrators have the power to execute pursuant to this
         Declaration;

               (I) the taking of any action incidental to the foregoing as the
         Institutional Trustee may from time to time determine is necessary or
         advisable to give effect to the terms of this Declaration for the
         benefit of the Holders (without consideration of the effect of any such
         action on any particular Holder);

               (J) to establish a record date with respect to all actions to be
         taken hereunder that require a record date be established, including
         Distributions, voting rights, redemptions and exchanges, and to issue
         relevant notices to the Holders of Capital Securities and Holders of
         Common Securities as to such actions and applicable record dates; and

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

            (ii) As among the Institutional Trustee and the Administrators, the
      Institutional Trustee shall have the power, duty and authority to act on
      behalf of the Trust with respect to the following matters:

               (A) the establishment of the Property Account;

               (B) the receipt of the Debentures;

               (C) the collection of interest, principal and any other payments
         made in respect of the Debentures in the Property Account;

               (D) the distribution through the Paying Agent of amounts owed to
         the Holders in respect of the Securities;

               (E) the exercise of all of the rights, powers and privileges of a
         holder of the Debentures;

               (F) the sending of notices of default and other information
         regarding the Securities and the Debentures to the Holders in
         accordance with this Declaration;

                                       10
<PAGE>

               (G) the distribution of the Trust Property in accordance with the
         terms of this Declaration;

               (H) to the extent provided in this Declaration, the winding up of
         the affairs of and liquidation of the Trust and the preparation,
         execution and filing of the certificate of cancellation with the
         Secretary of the State of the State of Connecticut;

               (I) after any Event of Default (provided that such Event of
         Default is not by or with respect to the Institutional Trustee) the
         taking of any action incidental to the foregoing as the Institutional
         Trustee may from time to time determine is necessary or advisable to
         give effect to the terms of this Declaration and protect and conserve
         the Trust Property for the benefit of the Holders (without
         consideration of the effect of any such action on any particular
         Holder); and

               (J) to take all action that may be necessary for the preservation
         and the continuation of the Trust's valid existence, rights, franchises
         and privileges as a statutory trust under the laws of the State of
         Connecticut and of each other jurisdiction in which such existence is
         necessary to protect the limited liability of the Holders of the
         Capital Securities or to enable the Trust to effect the purposes for
         which the Trust was created.

            (iii) The Institutional Trustee shall have the power and authority
      to act on behalf of the Trust with respect to any of the duties,
      liabilities, powers or the authority of the Administrators set forth in
      Section 2.6(a)(i)(D), (E) and (F) herein but shall not have a duty to do
      any such act unless specifically requested to do so in writing by the
      Sponsor, and shall then be fully protected in acting pursuant to such
      written request; and in the event of a conflict between the action of the
      Administrators and the action of the Institutional Trustee, the action of
      the Institutional Trustee shall prevail.

         (b) So long as this Declaration remains in effect, the Trust (or the
Institutional Trustee or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, neither the Institutional Trustee
nor the Administrators may cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Declaration, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected (A) to
cause the Trust to fail or cease to qualify as a "grantor trust" for United
States federal income tax purposes or (B) to require the trust to register as an
Investment Company under the Investment Company Act, (iv) incur any indebtedness
for borrowed money or issue any other debt, or (v) take or consent to any action
that would result in the placement of a lien on any of the Trust Property. The
Institutional Trustee shall, at the sole cost and expense of the Trust, defend
all claims and demands of all Persons at any time claiming any lien on any of
the Trust Property adverse to the interest of the Trust or the Holders in their
capacity as Holders.

                                       11
<PAGE>

         (c) In connection with the issuance and sale of the Capital Securities,
the Sponsor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):

            (i) the taking of any action necessary to obtain an exemption from
      the Securities Act;

            (ii) the determination of the States in which to take appropriate
      action to qualify or register for sale all or part of the Capital
      Securities and the determination of any and all such acts, other than
      actions which must be taken by or on behalf of the Trust, and the advice
      to the Administrators of actions they must take on behalf of the Trust,
      and the preparation for execution and filing of any documents to be
      executed and filed by the Trust or on behalf of the Trust, as the Sponsor
      deems necessary or advisable in order to comply with the applicable laws
      of any such States in connection with the sale of the Capital Securities;

            (iii) the negotiation of the terms of, and the execution and
      delivery of, the Placement Agreement providing for the sale of the Capital
      Securities; and

            (iv) the taking of any other actions necessary or desirable to carry
      out any of the foregoing activities.

         (d) Notwithstanding anything herein to the contrary, the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust will not (i) be deemed to be an Investment Company
required to be registered under the Investment Company Act, and (ii) fail to be
classified as a "grantor trust" for United States federal income tax purposes.
The Administrators and the Holders of a Majority in liquidation amount of the
Common Securities shall not take any action inconsistent with the treatment of
the Debentures as indebtedness of the Debenture Issuer for United States federal
income tax purposes. In this connection, the Administrators and the Holders of a
Majority in liquidation amount of the Common Securities are authorized to take
any action, not inconsistent with applicable laws, the Certificate of Trust or
this Declaration, as amended from time to time, that each of the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities
determines in their discretion to be necessary or desirable for such purposes.

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

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

         (g) Legal title to all Trust Property shall be vested at all times in
the Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee and the Administrators for the benefit
of the Trust in accordance with this Declaration.

                                       12
<PAGE>

         (h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor, the Institutional Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Institutional Trustee and the Holders shall continue as though
no such proceeding had been instituted.

         SECTION 2.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL
TRUSTEE.

         (a) The Trust shall not, and the Institutional Trustee shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:

            (i) invest any proceeds received by the Trust from holding the
      Debentures, but shall distribute all such proceeds to Holders of the
      Securities pursuant to the terms of this Declaration and of the
      Securities;

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

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

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

            (v) possess any power or otherwise act in such a way as to vary the
      Trust assets or the terms of the Securities in any way whatsoever other
      than as expressly provided herein;

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

            (vii) carry on any "trade or business" as that phrase is used in the
      Code; or

            (viii) other than as provided in this Declaration (including Annex
      I), (A) direct the time, method and place of exercising any trust or power
      conferred upon the Debenture Trustee with respect to the Debentures, (B)
      waive any past default that is waivable under the Indenture, (C) exercise
      any right to rescind or annul any declaration that the principal of all
      the Debentures shall be due and payable, or (D) consent to any amendment,
      modification or termination of the Indenture or the Debentures where such
      consent shall be required unless the Trust shall have received a written
      opinion of counsel to the effect that such modification will not cause the
      Trust to cease to be classified as a "grantor trust" for United States
      federal income tax purposes.

                                       13
<PAGE>

         SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

         (a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.3. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.

         (b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators.

         (c) The Institutional Trustee shall:

            (i) establish and maintain a segregated non-interest bearing trust
      account (the "Property Account") in the name of and under the exclusive
      control of the Institutional Trustee, maintained in the Institutional
      Trustee's trust department, on behalf of the Holders of the Securities
      and, upon the receipt of payments of funds made in respect of the
      Debentures held by the Institutional Trustee, deposit such funds into the
      Property Account and make payments, or cause the Paying Agent to make
      payments, to the Holders of the Capital Securities and Holders of the
      Common Securities from the Property Account in accordance with Section
      5.1. Funds in the Property Account shall be held uninvested until
      disbursed in accordance with this Declaration;

            (ii) engage in such ministerial activities as shall be necessary or
      appropriate to effect the redemption of the Capital Securities and the
      Common Securities to the extent the Debentures are redeemed or mature; and

            (iii) upon written notice of distribution issued by the
      Administrators in accordance with the terms of the Securities, engage in
      such ministerial activities as shall be necessary or appropriate to effect
      the distribution of the Debentures to Holders of Securities upon the
      occurrence of certain circumstances pursuant to the terms of the
      Securities.

         (d) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust that arise out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of the
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital

                                       14
<PAGE>

Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of the Capital Securities to the extent of any payment made by
the Debenture Issuer to such Holder of the Capital Securities in such Direct
Action; provided, however, that no Holder of the Common Securities may exercise
such right of subrogation so long as an Event of Default with respect to the
Capital Securities has occurred and is continuing.

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

            (i) the Trust has been completely liquidated and the proceeds of the
      liquidation distributed to the Holders of the Securities pursuant to the
      terms of the Securities and this Declaration; or

            (ii) a Successor Institutional Trustee has been appointed and has
      accepted that appointment in accordance with Section 4.3.

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

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

         SECTION 2.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.7), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

         (b) The duties and responsibilities of the Institutional Trustee and
the Administrators shall be as provided by this Declaration. Notwithstanding the
foregoing, no provision of this Declaration shall require the Institutional
Trustee or Administrators to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers if the Institutional Trustee or
such Administrator shall have reasonable grounds to believe that repayment of
such funds or adequate protection against such risk of liability is not
reasonably assured to the Institutional Trustee or such Administrator. Whether
or not therein expressly so provided, every provision of this Declaration
relating to the conduct or affecting the liability of or affording protection to
the Institutional Trustee or Administrators shall be subject to the provisions
of this Article. Nothing in this Declaration shall be construed to relieve an
Administrator or the Institutional Trustee from liability for the Institutional
Trustee's or such Administrator's own negligent act, the Institutional Trustee's

                                       15
<PAGE>

or such Administrator's own negligent failure to act, or the Institutional
Trustee's or such Administrator's own willful misconduct. To the extent that, at
law or in equity, the Institutional Trustee or an Administrator has duties and
liabilities relating to the Trust or to the Holders, the Institutional Trustee
or such Administrator shall not be liable to the Trust or to any Holder for the
Institutional Trustee's or such Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
the Institutional Trustee otherwise existing at law or in equity, are agreed by
the Sponsor and the Holders to replace such other duties and liabilities of the
Administrators or the Institutional Trustee.

         (c) All payments made by the Institutional Trustee or a Paying Agent in
respect of the Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Institutional Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Institutional Trustee and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This Section 2.9(c) does not limit the liability of the Institutional Trustee
expressly set forth elsewhere in this Declaration.

         (d) The Institutional Trustee shall not be liable for its own acts or
omissions hereunder except as a result of its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

            (i) the Institutional Trustee shall not be liable for any error of
      judgment made in good faith by an Authorized Officer of the Institutional
      Trustee, unless it shall be proved that the Institutional Trustee was
      negligent in ascertaining the pertinent facts;

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

            (iii) the Institutional Trustee's sole duty with respect to the
      custody, safekeeping and physical preservation of the Debentures and the
      Property Account shall be to deal with such property in a similar manner
      as the Institutional Trustee deals with similar property for its fiduciary
      accounts generally, subject to the protections and limitations on
      liability afforded to the Institutional Trustee under this Declaration;

            (iv) the Institutional Trustee shall not be liable for any interest
      on any money received by it except as it may otherwise agree in writing
      with the Sponsor; and money held by the Institutional Trustee need not be

                                       16
<PAGE>

      segregated from other funds held by it except in relation to the Property
      Account maintained by the Institutional Trustee pursuant to Section
      2.8(c)(i) and except to the extent otherwise required by law; and

            (v) the Institutional Trustee shall not be responsible for
      monitoring the compliance by the Administrators or the Sponsor with their
      respective duties under this Declaration, nor shall the Institutional
      Trustee be liable for any default or misconduct of the Administrators or
      the Sponsor.

         SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject to the
provisions of Section 2.9:

         (a) the Institutional Trustee may conclusively rely and shall fully be
protected in acting, or refraining from acting, in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;

         (b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the Institutional Trustee shall take such action, or refrain
from taking such action, as the Institutional Trustee shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;

         (c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;

         (d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may request and conclusively rely upon an Officers' Certificate as to factual
matters which, upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;

         (e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;

         (f) the Institutional Trustee may consult with counsel of its selection
(which counsel may be counsel to the Sponsor or any of its Affiliates) and the
advice of such counsel shall be full and complete authorization and protection

                                       17
<PAGE>

in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice; the
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;

         (g) the Institutional Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any of the Holders pursuant to this Declaration, unless such
Holders shall have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; provided,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 6.7), to
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs;

         (h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;

         (i) the Institutional Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Institutional Trustee shall not be responsible for
any misconduct or negligence on the part of or for the supervision of, any such
agent or attorney appointed with due care by it hereunder;

         (j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;

         (k) except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;

         (l) when the Institutional Trustee incurs expenses or renders services
in connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;

                                       18
<PAGE>

         (m) the Institutional Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder, the Sponsor or the Debenture
Trustee;

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

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

         SECTION 2.11. EXECUTION OF DOCUMENTS. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute on behalf of the
Trust any documents that the Institutional Trustee or the Administrators, as the
case may be, have the power and authority to execute pursuant to Section 2.6.

         SECTION 2.12. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Institutional Trustee does not assume any
responsibility for their correctness. The Institutional Trustee makes no
representations as to the value or condition of the property of the Trust or any
part thereof. The Institutional Trustee makes no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.

         SECTION 2.13. DURATION OF TRUST. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.

         SECTION 2.14. MERGERS.

         (a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Sections 2.14(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of
Annex I.

         (b) The Trust may, with the consent of the Institutional Trustee and
without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided that:

                                       19
<PAGE>

            (i) if the Trust is not the surviving entity, such successor entity
      (the "Successor Entity") either:

               (A) expressly assumes all of the obligations of the Trust under
         the Securities; or

               (B) substitutes for the Securities other securities having
         substantially the same terms as the Securities (the "Successor
         Securities") so that the Successor Securities rank the same as the
         Securities rank with respect to Distributions and payments upon
         Liquidation, redemption and otherwise;

            (ii) the Sponsor expressly appoints a trustee of the Successor
      Entity that possesses substantially the same powers and duties as the
      Institutional Trustee as the Holder of the Debentures;

            (iii) such merger, consolidation, amalgamation or replacement does
      not adversely affect the rights, preferences and privileges of the Holders
      of the Securities (including any Successor Securities) in any material
      respect;

            (iv) the Institutional Trustee receives written confirmation from a
      nationally recognized statistical rating organization that rates
      securities issued by the initial purchaser of the Capital Securities that
      it will not reduce or withdraw the rating of any such securities because
      of such merger, conversion, consolidation, amalgamation or replacement;

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

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

               (A) such merger, consolidation, amalgamation or replacement does
         not adversely affect the rights, preferences and privileges of the
         Holders of the Securities (including any Successor Securities) in any
         material respect;

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

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

            (vii) the Sponsor guarantees the obligations of such Successor
      Entity under the Successor Securities at least to the extent provided by
      the Guarantee;

                                       20
<PAGE>

            (viii) the Sponsor owns 100% of the common securities of any
      Successor Entity; and

            (ix) prior to such merger, consolidation, amalgamation or
      replacement, the Institutional Trustee shall have received an Officers'
      Certificate of the Administrators and an opinion of counsel, each to the
      effect that all conditions precedent under this Section 2.14(b) to such
      transaction have been satisfied.

         (c) Notwithstanding Section 2.14(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.

                                  ARTICLE III.

                                     SPONSOR

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

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

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

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

         SECTION 3.3. EXPENSES. In connection with the offering, sale and
issuance of the Debentures to the Trust and in connection with the sale of the
Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer,
shall:

         (a) pay all reasonable costs and expenses incurred by it relating to
the offering, sale and issuance of the Debentures, including compensation of the
Debenture Trustee under the Indenture in accordance with the provisions of the
Indenture;

         (b) be responsible for and shall pay all debts and obligations (other
than with respect to the Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust), the offering, sale and issuance of
the Securities (including fees to the placement agents in connection therewith),
the fees and expenses (including reasonable counsel fees and expenses) of the

                                       21
<PAGE>

Institutional Trustee and the Administrators, the costs and expenses relating to
the operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, Paying Agents,
Registrars, Transfer Agents, duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders; and

         (c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.

         The Sponsor's obligations under this Section 3.3 shall be for the
benefit of, and shall be enforceable by, any Person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 3.3 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 3.3.

         SECTION 3.4. RIGHT TO PROCEED. The Sponsor acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

                                  ARTICLE IV.

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

         SECTION 4.1. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

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

            (i) not be an Affiliate of the Sponsor;

            (ii) not offer or provide credit or credit enhancement to the Trust;
      and

            (iii) be a banking corporation or trust company organized and doing
      business under the laws of the United States of America or any state
      thereof or the District of Columbia, authorized under such laws to
      exercise corporate trust powers, having a combined capital and surplus of
      at least 50 million U.S. dollars ($50,000,000.00), and subject to
      supervision or examination by Federal, state, or District of Columbia
      authority. If such corporation publishes reports of condition at least
      annually, pursuant to law or to the requirements of the supervising or
      examining authority referred to above, then for the purposes of this
      Section 4.1(a)(iii), 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.

                                       22
<PAGE>

         (b) If at any time the Institutional Trustee shall cease to be eligible
to so act under Section 4.1(a), the Institutional Trustee shall immediately
resign in the manner and with the effect set forth in Section 4.3(a).

         (c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act of
1939, as amended, the Institutional Trustee shall either eliminate such interest
or resign, to the extent and in the manner provided by, and subject to this
Declaration.

         (d) The initial Institutional Trustee shall be U.S. Bank National
Association.

         SECTION 4.2. ADMINISTRATORS. Each Administrator shall be a U.S. Person,
21 years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be Jeffrey D. Miller, Ralph G. Spontak and Daniel J.
Wagner. There shall at all times be at least one Administrator. Except where a
requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power of
the Administrators may be exercised by, or with the consent of, any one such
Administrator.

         SECTION 4.3. APPOINTMENT, REMOVAL AND RESIGNATION OF INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a) Notwithstanding anything to the contrary in this Declaration, no
resignation or removal of the Institutional Trustee and no appointment of a
Successor Institutional Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Institutional Trustee in
accordance with the applicable requirements of this Section 4.3.

         Subject to the immediately preceding paragraph, the Institutional
Trustee may resign at any time by giving written notice thereof to the Holders
of the Securities and by appointing a Successor Institutional Trustee. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements its expenses and charges to serve as the successor
Institutional Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expense and charges (the "Successor
Institutional Trustee"). If the instrument of acceptance by the Successor
Institutional Trustee required by this Section 4.3 shall not have been delivered
to the Institutional Trustee within 60 days after the giving of such notice of
resignation or delivery of the instrument of removal, the Institutional Trustee
may petition, at the expense of the Trust, any Federal, state or District of
Columbia court of competent jurisdiction for the appointment of a Successor
Institutional Trustee. Such court may thereupon, after prescribing such notice,
if any, as it may deem proper, appoint a Successor Institutional Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.3.

         The Institutional Trustee may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Institutional Trustee (in its individual capacity and on behalf of the Trust) if

                                       23
<PAGE>

an Event of Default shall have occurred and be continuing. If the Institutional
Trustee shall be so removed, the Holders of Capital Securities, by act of the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding delivered to the Institutional Trustee, shall promptly appoint a
Successor Institutional Trustee, and such Successor Institutional Trustee shall
comply with the applicable requirements of this Section 4.3. If no Successor
Institutional Trustee shall have been so appointed by the Holders of a Majority
in liquidation amount of the Capital Securities and accepted appointment in the
manner required by this Section 4.3, within 30 days after delivery of an
instrument of removal, any Holder who has been a Holder of the Securities for at
least 6 months may, on behalf of himself and all others similarly situated,
petition any Federal, state or District of Columbia court of competent
jurisdiction for the appointment of the Successor Institutional Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Institutional Trustee.

         The Institutional Trustee shall give notice of its resignation and
removal and each appointment of a Successor Institutional Trustee to all Holders
in the manner provided in Section 13.1(d) and shall give notice to the Sponsor.
Each notice shall include the name of the Successor Institutional Trustee and
the address of its Corporate Trust Office.

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

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

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

         SECTION 4.4. INSTITUTIONAL TRUSTEE VACANCIES. If the Institutional
Trustee ceases to hold office for any reason a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Institutional Trustee shall be

                                       24
<PAGE>

conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a trustee appointed in accordance with Section 4.3.

         SECTION 4.5. EFFECT OF VACANCIES. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of the Institutional Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration.

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

         SECTION 4.7. DELEGATION OF POWER.

         (a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 that is
a U.S. Person his or her power for the purpose of executing any documents
contemplated in Section 2.6; and

         (b) the Administrators shall have power to delegate from time to time
to such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.

         SECTION 4.8. CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
Person into which the Institutional Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Institutional Trustee shall be a party,

                                       25
<PAGE>

or any Person succeeding to all or substantially all the corporate trust
business of the Institutional Trustee shall be the successor of the
Institutional Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.

                                   ARTICLE V.

                                  DISTRIBUTIONS

         SECTION 5.1. DISTRIBUTIONS. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee shall and is directed to, to the extent funds are available for that
purpose, make a distribution (a "Distribution") of such amounts to Holders.

                                  ARTICLE VI.

                             ISSUANCE OF SECURITIES

         SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.

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

         (b) The Certificates shall be signed on behalf of the Trust by one or
more Administrators. Such signature shall be the facsimile or manual signature
of any Administrator. In case any Administrator of the Trust who shall have
signed any of the Securities shall cease to be such Administrator before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator, and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
facsimile or manual signature of an Authorized Officer of the Institutional
Trustee. Such signature shall be conclusive evidence that the Capital Security

                                       26
<PAGE>

has been authenticated under this Declaration. Upon written order of the Trust
signed by one Administrator, the Institutional Trustee shall authenticate the
Capital Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated.

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

         (d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and,
except as provided in Section 9.1(b) with respect to the Common Securities,
non-assessable.

         (e) Every Person, by virtue of having become a Holder in accordance
with the terms of this Declaration, shall be deemed to have expressly assented
and agreed to the terms of, and shall be bound by, this Declaration and the
Guarantee.

         SECTION 6.2. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. The Trust
shall maintain in Hartford, Connecticut, an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
agency where Securities may be presented for registration of transfer or
exchange (the "Transfer Agent"). The Trust shall keep or cause to be kept at
such office or agency a register for the purpose of registering Securities,
transfers and exchanges of Securities, such register to be held by a registrar
(the "Registrar"). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co-Transfer Agents in such
other locations as they shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Registrar" includes any additional registrar
or co-Registrar and the term "Transfer Agent" includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.

         SECTION 6.3. FORM AND DATING. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Sponsor). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Institutional

                                       27
<PAGE>

Trustee in writing. Each Capital Security shall be dated on or before the date
of its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Institutional
Trustee, the Administrators and the Sponsor, by their execution and delivery of
this Declaration, expressly agree to such terms and provisions and to be bound
thereby. Capital Securities will be issued only in blocks having a stated
liquidation amount of not less than $100,000.00 and any multiple of $1,000.00 in
excess thereof.

         The Capital Securities are being offered and sold by the Trust pursuant
to the Placement Agreement in definitive, registered form without coupons and
with the Restricted Securities Legend.

         SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If:

         (a) any mutilated Certificates should be surrendered to the Registrar,
or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and

         (b) there shall be delivered to the Registrar, the Administrators and
the Institutional Trustee such security or indemnity as may be required by them
to keep each of them harmless;

then, in the absence of notice that such Certificate shall have been acquired by
a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

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

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

                                       28
<PAGE>

         SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.

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

         (b) For so long as any Capital Securities remain outstanding, if upon
an Indenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Institutional Trustee, the Sponsor and the Debenture Trustee.

         At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of a Majority
in liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:

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

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

               (B) any accrued Additional Interest on all of the Debentures,

               (C) the principal of (and premium, if any, on) any Debentures
         that have become due otherwise than by such declaration of acceleration
         and interest and Additional Interest thereon at the rate borne by the
         Debentures, and

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

            (ii) all Events of Default with respect to the Debentures, other
      than the non-payment of the principal of the Debentures that has become
      due solely by such acceleration, have been cured or waived as provided in
      Section 5.7 of the Indenture.

         The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest
(unless such default or Indenture Event of Default has been cured and a sum
sufficient to pay all matured installments of interest and principal due

                                       29
<PAGE>

otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default under the Indenture or an Indenture Event of Default in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.

         Upon receipt by the Institutional Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of any
part of the Capital Securities, a record date shall be established for
determining Holders of outstanding Capital Securities entitled to join in such
notice, which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.7.

         (c) Except as otherwise provided in paragraphs (a) and (b) of this
Section 6.7, the Holders of at least a Majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon.

                                  ARTICLE VII.

                      DISSOLUTION AND TERMINATION OF TRUST

         SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.

         (a) The Trust shall dissolve on the first to occur of:

            (i) unless earlier dissolved, on May 15, 2038, the expiration of the
      term of the Trust;

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

            (iii) (other than in connection with a merger, consolidation or
      similar transaction not prohibited by the Indenture, this Declaration or
      the Guarantee, as the case may be) upon (A) the filing of a certificate of
      dissolution or its equivalent with respect to the Sponsor, and (B)(I) upon

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<PAGE>

      the consent of Holders of a Majority in liquidation amount of the
      Securities voting together as a single class to file a certificate of
      cancellation with respect to the Trust or (II) upon the revocation of the
      charter of the Sponsor and the expiration of 90 days after the date of
      revocation without a reinstatement thereof;

            (iv) upon the distribution of the Debentures to the Holders of the
      Securities, upon exercise of the right of the Holder of all of the
      outstanding Common Securities to dissolve the Trust as provided in Annex I
      hereto;

            (v) upon the entry of a decree of judicial dissolution of the Holder
      of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;

            (vi) when all of the Securities shall have been called for
      redemption and the amounts necessary for redemption thereof shall have
      been paid to the Holders in accordance with the terms of the Securities;
      or

            (vii) before the issuance of any Securities, with the consent of the
      Institutional Trustee and the Sponsor.

         (b) As soon as is practicable after the occurrence of an event referred
to in Section 7.1(a), and after satisfaction of liabilities to creditors of the
Trust as required by applicable law, including of the Statutory Trust Act, and
subject to the terms set forth in Annex I, the Institutional Trustee shall
terminate the Trust by filing a certificate of cancellation with the Secretary
of the State of the State of Connecticut.

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

                                 ARTICLE VIII.

                              TRANSFER OF INTERESTS

         SECTION 8.1. GENERAL.

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

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

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<PAGE>

         (c) Capital Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by applicable law,
any transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void and will be deemed to be of no legal
effect whatsoever and any such transferee shall be deemed not to be the holder
of such Capital Securities for any purpose, including but not limited to the
receipt of Distributions on such Capital Securities, and such transferee shall
be deemed to have no interest whatsoever in such Capital Securities.

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

         (e) The Trust shall not be required (i) to issue, register the transfer
of, or exchange any Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

         SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

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

         (b) Except as permitted by Section 8.2(a), each Capital Security shall
bear a legend (the "Restricted Securities Legend") in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:

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<PAGE>

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS
         OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
         INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
         TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
         ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
         OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
         AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY
         BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
         THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A
         REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
         SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
         A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
         REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR
         RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A
         NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
         OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
         (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
         SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
         THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
         AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
         WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
         DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY
         OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO
         ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
         OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
         OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH
         MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
         INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
         THE SECURITIES ACT.

                  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
         AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
         INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
         TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
         AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
         1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE

                                       33
<PAGE>

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

                  THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
         BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
         SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
         TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS
         THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
         WHATSOEVER.

                  THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH
         THE FOREGOING RESTRICTIONS.

                  THIS  SECURITY  IS IN  REGISTERED  FORM  WITHIN  THE  MEANING
         OF  TREASURY  REGULATIONS  SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL
         INCOME AND WITHHOLDING TAX PURPOSES.

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

(c) To permit registrations of transfers and exchanges, the Trust shall execute
and the Institutional Trustee shall authenticate Capital Securities at the
Registrar's request.

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<PAGE>

         (d) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Registrar or the
Sponsor may require) in respect of any tax or other governmental charge that may
be imposed in relation to it.

         (e) All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Capital Securities surrendered upon such registration of transfer or
exchange.

         SECTION 8.3. DEEMED SECURITY HOLDERS. The Trust, the Administrators,
the Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar
may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Institutional
Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have actual
or other notice thereof

                                  ARTICLE IX.

                           LIMITATION OF LIABILITY OF
             HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

         SECTION 9.1. LIABILITY.

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

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

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

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

         (c) Pursuant to the Statutory Trust Act, the Holders of the Capital
Securities shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Connecticut.

         SECTION 9.2. EXCULPATION.

         (a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such

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<PAGE>

Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person 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 Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts pertinent
to the existence and amount of assets from which Distributions to Holders of
Securities might properly be paid.

         SECTION 9.3. FIDUCIARY DUTY.

         (a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of the Indemnified
Person.

         (b) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:

            (i) in its "discretion" or under a grant of similar authority, the
      Indemnified Person shall be entitled to consider such interests and
      factors as it desires, including its own interests, and shall have no duty
      or obligation to give any consideration to any interest of or factors
      affecting the Trust or any other Person; or

            (ii) in its "good faith" or under another express standard, the
      Indemnified Person shall act under such express standard and shall not be
      subject to any other or different standard imposed by this Declaration or
      by applicable law.

         SECTION 9.4. INDEMNIFICATION.

         (a) The Sponsor shall indemnify, to the full extent permitted by law,
any Indemnified Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Trust) arising out of or in connection with the acceptance or
administration of this Declaration by reason of the fact that he is or was an
Indemnified Person against expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was

                                       36
<PAGE>

unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the Indemnified Person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.

         (b) The Sponsor shall indemnify, to the full extent permitted by law,
any Indemnified Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor arising out of or in connection with
the acceptance or administration of this Declaration by reason of the fact that
he is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; provided, however, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

         (c) To the extent that an Indemnified Person shall be successful on the
merits or otherwise (including dismissal of an action without prejudice or the
settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4, or in defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection therewith.

         (d) Any indemnification of an Administrator under paragraphs (a) and
(b) of this Section 9.4 (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Indemnified Person is proper in the circumstances because
he has met the applicable standard of conduct set forth in paragraphs (a) and
(b). Such determination shall be made (i) by the Administrators by a majority
vote of a Quorum consisting of such Administrators who were not parties to such
action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (iii) by the Common Security
Holder of the Trust.

         (e) To the fullest extent permitted by law, expenses (including
reasonable attorneys' fees and expenses) incurred by an Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (a) and (b) of this Section 9.4 shall be
paid by the Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Indemnified
Person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrators by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum
is not obtainable, or, even if obtainable, if a quorum of disinterested
Administrators so directs, by independent legal counsel in a written opinion, or

                                       37
<PAGE>

(iii) by the Common Security Holder of the Trust, that, based upon the facts
known to the Administrators, counsel or the Common Security Holder at the time
such determination is made, such Indemnified Person acted in bad faith or in a
manner that such Indemnified Person did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such Indemnified
Person believed or had reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the Administrators,
independent legal counsel or the Common Security Holder reasonably determine
that such Indemnified Person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.

         (f) The Institutional Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its own choosing,
which counsel shall be approved by the Sponsor, approval of which may not be
unreasonably withheld, in any action, suit or any other proceeding for which it
is indemnified under paragraphs (a) and (b) of this Section 9.4, without
affecting its right to indemnification hereunder or waiving any rights afforded
to it under this Declaration or applicable law.

         (g) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.

         (h) The Sponsor or the Trust may purchase and maintain insurance on
behalf of any Person who is or was an Indemnified Person against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Sponsor would have the power to indemnify
him against such liability under the provisions of this Section 9.4.

         (i) For purposes of this Section 9.4, references to "the Trust" shall
include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.

         (j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, (i) continue as to a Person who has ceased to be an

                                       38
<PAGE>

Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person, and (ii) survive the termination or expiration
of this Declaration or the earlier removal or resignation of an Indemnified
Person.

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

         SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:

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

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

         The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
the Institutional Trustee.

         No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.

                                   ARTICLE X.

                               TAX AND ACCOUNTING

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

                                       39
<PAGE>

         SECTION 10.2. CERTAIN ACCOUNTING MATTERS.

         (a) At all times during the existence of the Trust, the Administrators
shall keep, or cause to be kept at the principal office of the Trust in the
United States, as defined for purposes of Treasury Regulations section
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be maintained, at the Sponsor's expense, in accordance with generally
accepted accounting principles, consistently applied. The books of account and
the records of the Trust shall be examined by and reported upon (either
separately or as part of the Sponsor's regularly prepared consolidated financial
report) as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Administrators.

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

         (c) The Administrators, at the Sponsor's expense, shall cause to be
duly prepared at the principal office of the Sponsor in the United States, as
`United States' is defined in Section 7701(a)(9) of the Code (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
if any, and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.

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

         SECTION 10.4. WITHHOLDING. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld

                                       40
<PAGE>

with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.

         SECTION 10.5. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.

                                  ARTICLE XI.

                             AMENDMENTS AND MEETINGS

         SECTION 11.1. AMENDMENTS.

         (a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Institutional Trustee.

         (b) Notwithstanding any other provision of this Article XI, an
amendment may be made, and any such purported amendment shall be valid and
effective only if:

            (i) the Institutional Trustee shall have first received:

               (A) an Officers' Certificate from each of the Trust and the
         Sponsor that such amendment is permitted by, and conforms to, the terms
         of this Declaration (including the terms of the Securities); and

               (B) an opinion of counsel (who may be counsel to the Sponsor or
         the Trust) that such amendment is permitted by, and conforms to, the
         terms of this Declaration (including the terms of the Securities); and

            (ii) the result of such amendment would not be to

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

               (B) cause the Trust to be deemed to be an Investment Company
         required to be registered under the Investment Company Act.

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

                                       41
<PAGE>

         (d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or change any
conversion or exchange provisions, or (ii) restrict the right of a Holder to
institute suit for the enforcement of any such payment on or after such date.

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

         (f) Article III shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities.

         (g) The rights of the Holders of the Capital Securities under Article
IV to appoint and remove the Institutional Trustee shall not be amended without
the consent of the Holders of a Majority in liquidation amount of the Capital
Securities.

         (h) This Declaration may be amended by the Institutional Trustee and
the Holders of a Majority in liquidation amount of the Common Securities without
the consent of the Holders of the Capital Securities to:

            (i) cure any ambiguity;

            (ii) correct or supplement any provision in this Declaration that
      may be defective or inconsistent with any other provision of this
      Declaration;

            (iii) add to the covenants, restrictions or obligations of the
      Sponsor; or

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

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

         SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.

         (a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrators (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration or the terms of the
Securities. The Administrators shall call a meeting of the Holders of such class
if directed to do so by the Holders of at least 10% in liquidation amount of
such class of Securities. Such direction shall be given by delivering to the
Administrators one or more calls in a writing stating that the signing Holders

                                       42
<PAGE>

of the Securities wish to call a meeting and indicating the general or specific
purpose for which the meeting is to be called. Any Holders of the Securities
calling a meeting shall specify in writing the Certificates held by the Holders
of the Securities exercising the right to call a meeting and only those
Securities represented by such Certificates shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.

         (b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:

            (i) notice of any such meeting shall be given to all the Holders of
      the Securities having a right to vote thereat at least 7 days and not more
      than 60 days before the date of such meeting. Whenever a vote, consent or
      approval of the Holders of the Securities is permitted or required under
      this Declaration, such vote, consent or approval may be given at a meeting
      of the Holders of the Securities. Any action that may be taken at a
      meeting of the Holders of the Securities may be taken without a meeting if
      a consent in writing setting forth the action so taken is signed by the
      Holders of the Securities owning not less than the minimum amount of
      Securities in liquidation amount that would be necessary to authorize or
      take such action at a meeting at which all Holders of the Securities
      having a right to vote thereon were present and voting. Prompt notice of
      the taking of action without a meeting shall be given to the Holders of
      the Securities entitled to vote who have not consented in writing. The
      Administrators may specify that any written ballot submitted to the
      Holders of the Securities for the purpose of taking any action without a
      meeting shall be returned to the Trust within the time specified by the
      Administrators;

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

            (iii) unless the Statutory Trust Act, this Declaration, or the terms
      of the Securities otherwise provides, the Administrators, in their sole
      discretion, shall establish all other provisions relating to meetings of
      Holders of Securities, including notice of the time, place or purpose of
      any meeting at which any matter is to be voted on by any Holders of the

                                       43
<PAGE>

      Securities, waiver of any such notice, action by consent without a
      meeting, the establishment of a record date, quorum requirements, voting
      in person or by proxy or any other matter with respect to the exercise of
      any such right to vote; provided, however, that each meeting shall be
      conducted in the United States (as that term is defined in Treasury
      Regulations section 301.7701-7).

                                  ARTICLE XII.

                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

         SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The initial Institutional Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:

         (a) the Institutional Trustee is a national banking association with
trust powers, duly organized and validly existing under the laws of the United
States of America with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;

         (b) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);

         (c) the execution, delivery and performance of this Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and

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

                                 ARTICLE XIII.

                                  MISCELLANEOUS

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

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

                                       44
<PAGE>

                  DGI Statutory Trust I
                  c/o Donegal Group Inc.
                  1195 River Road
                  Marietta, Pennsylvania  17547
                  Attention:  Donald H. Nikolaus
                  Telecopier:  717-426-7009

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

                  U.S. Bank National Association
                  225 Asylum Street, Goodwin Square
                  Hartford, Connecticut  06103
                  Attention:  Vice President, Corporate Trust Services
                  Telecopy:  860-244-1889

                  With a copy to:

                  U.S. Bank National Association
                  1 Federal Street
                  Boston, Massachusetts  02110
                  Attention:  Paul D. Allen, Corporate Trust Services
                  Telecopy:  617-603-6665

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

                  Donegal Group Inc.
                  1195 River Road
                  Marietta, Pennsylvania  17547
                  Attention:  Donald H. Nikolaus
                  Telecopier:  717-426-7009

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

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

         SECTION 13.2. GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Connecticut and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of

                                       45
<PAGE>

Connecticut or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Connecticut; provided, however,
that there shall not be applicable to the Trust, the Institutional Trustee or
this Declaration any provision of the laws (statutory or common) of the State of
Connecticut pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.

         SECTION 13.3. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.

         SECTION 13.4. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.

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

         SECTION 13.6. PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.

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

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

                                       46
<PAGE>

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

                                 U.S. BANK NATIONAL
                                 ASSOCIATION, as
                                 Institutional Trustee

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

                                 Donegal Group Inc., as Sponsor

                                 By:  /s/ Donald H. Nikolaus
                                    --------------------------------------------
                                      Name: Donald H. Nikolaus
                                      Title: President

                                 DGI STATUTORY TRUST I

                                 By:  /s/ Ralph G. Spontak
                                    --------------------------------------------
                                          Ralph G. Spontak, as Administrator

                                 By:   /s/ Daniel J. Wagner
                                    --------------------------------------------
                                          Daniel J. Wagner, as Administrator

                                 By:   /s/ Jeffrey D. Miller
                                    --------------------------------------------
                                          Jeffrey D. Miller, as Administrator

                                       47
<PAGE>

                                   ANNEX I

                               TERMS OF SECURITIES

         Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of May 15, 2003 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):

         1. Designation and Number.

         (a) 15,000 Floating Rate Capital Securities of DGI Statutory Trust I
(the "Trust"), with an aggregate stated liquidation amount with respect to the
assets of the Trust of fifteen million dollars ($15,000,000.00) and a stated
liquidation amount with respect to the assets of the Trust of $1,000.00 per
Capital Security, are hereby designated for the purposes of identification only
as the "Capital Securities". The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.

         (b) 464 Floating Rate Common Securities of the Trust (the "Common
Securities") will be evidenced by Common Security Certificates substantially in
the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.

         2. Distributions.

         (a) Distributions will be payable on each Security for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) August 15, 2003 at a rate per annum of 5.41125% and shall bear
interest for each successive period beginning on (and including) August 15,
2003, and each succeeding Distribution Payment Date, and ending on (but
excluding) the next succeeding Distribution Payment Date (each, a "Distribution
Period") at a rate per annum equal to the 3-Month LIBOR, determined as described
below, plus 4.10% (the "Coupon Rate"); provided, however, that prior to May 15,
2008, the Coupon Rate shall not exceed 12.50%, applied to the stated liquidation
amount thereof, such rate being the rate of interest payable on the Debentures
to be held by the Institutional Trustee. Distributions in arrears will bear
interest thereon compounded quarterly at the applicable Distribution Rate (to
the extent permitted by law). Distributions, as used herein, include cash
distributions, any such compounded distributions and any Additional Sums payable
on the Debentures unless otherwise noted. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. In the event that any date on which a Distribution is
payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date shall be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding

                                      I-1
<PAGE>

calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. The amount of the Distribution payable for any
Distribution Period will be calculated by applying the Distribution Rate to the
stated liquidation amount outstanding at the commencement of the Distribution
Period and multiplying each such amount by the actual number of days in the
Distribution Period concerned divided by 360. All percentages resulting from any
calculations on the Capital Securities will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting
from such calculation will be rounded to the nearest cent (with one-half cent
being rounded upward)).

         "3-Month LIBOR" means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture Trustee in the
following order of priority:

                  (1) the rate (expressed as a percentage per annum) for U.S.
         dollar deposits having a three-month maturity that appears on Telerate
         Page 3750 as of 11:00 a.m. (London time) on the related Determination
         Date (as defined below). "Telerate Page 3750" means the display
         designated as "Page 3750" on the Dow Jones Telerate Service or such
         other page as may replace Page 3750 on that service or such other
         service or services as may be nominated by the British Bankers'
         Association as the information vendor for the purpose of displaying
         London interbank offered rates for U.S. dollar deposits;

                  (2) if such rate cannot be identified on the related
         Determination Date, the Debenture Trustee will request the principal
         London offices of four leading banks in the London interbank market to
         provide such banks' offered quotations (expressed as percentages per
         annum) to prime banks in the London interbank market for U.S. dollar
         deposits having a three-month maturity as of 11:00 a.m. (London time)
         on such Determination Date. If at least two quotations are provided,
         3-Month LIBOR will be the arithmetic mean of such quotations;

                  (3) if fewer than two such quotations are provided as
         requested in clause (2) above, the Debenture Trustee will request four
         major New York City banks to provide such banks' offered quotations
         (expressed as percentages per annum) to leading European banks for
         loans in U.S. dollars as of 11:00 a.m. (London time) on such
         Determination Date. If at least two such quotations are provided,
         3-Month LIBOR will be the arithmetic mean of such quotations; and

                  (4) if fewer than two such quotations are provided as
         requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR
         determined with respect to the Distribution Period immediately
         preceding such current Distribution Period.

         If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.

                                      I-2
<PAGE>

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

         "Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.

         "Interest Rate" means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) August 15, 2003 the rate
per annum of 5.41125% and for each Distribution Period thereafter, the Coupon
Rate.

         "Maturity Date" means May 15, 2033.

         (b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable, subject to extension of
distribution payment periods as described herein, quarterly in arrears on August
15, November 15, February 15 and May 15 of each year, commencing on August 15,
2003 (each a "Distribution Payment Date") when, as and if available for payment.
The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures, so long as no Indenture Event of Default has
occurred and is continuing, by deferring the payment of interest on the
Debentures for up to 20 consecutive quarterly periods (each an "Extension
Period") at any time and from time to time, subject to the conditions described
below, during which Extension Period no interest shall be due and payable.
During any Extension Period, interest will continue to accrue on the Debentures,
and interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded quarterly
(from the date such interest would have been payable were it not for the
Extension Period, to the extent permitted by law (such interest referred to
herein as "Additional Interest") during any Extension Period. No Extension
Period may end on a date other than a Distribution Payment Date. At the end of
any such Extension Period the Debenture Issuer shall pay all interest then
accrued and unpaid on the Debentures (together with Additional Interest
thereon); provided, however, that no Extension Period may extend beyond the
Maturity Date and provided further, however, that during any such Extension
Period, the Debenture Issuer shall not, and shall not permit any Affiliate of
the Debenture Issuer controlled by the Debenture Issuer to, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Debenture Issuer's or such
Affiliates' capital stock (other than payments of dividends or distributions to

                                      I-3
<PAGE>

the Debenture Issuer or a Subsidiary of the Debenture Issuer) or make any
guarantee payments with respect to the foregoing, or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Debenture Issuer or any Affiliate of the Debenture
Issuer controlled by the Debenture Issuer that rank PARI PASSU in all respects
with or junior in interest to the Debentures (other than, with respect to
clauses (i) and (ii) above, (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Debenture Issuer or any Subsidiary of the
Debenture Issuer in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer or of such Subsidiary (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the Debenture
Issuer's capital stock (or any capital stock of a Subsidiary of the Debenture
Issuer) for any class or series of the Debenture Issuer's capital stock (or in
the case of a Subsidiary of the Debenture Issuer, any class or series of such
Subsidiary's capital stock) or of any class or series of the Debenture Issuer's
indebtedness for any class or series of the Debenture Issuer's capital stock (or
in the case of indebtedness of a Subsidiary of the Debenture Issuer, of any
class or series of such Subsidiary's indebtedness for any class or series of
such Subsidiary's capital stock), (c) the purchase of fractional interests in
shares of the Debenture Issuer's capital stock (or the capital stock of a
Subsidiary of the Company) pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholders' rights plan, or
the issuance of rights, stock or other property under any stockholders' rights
plan, or the redemption or repurchase of rights pursuant thereto, (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks PARI PASSU with or junior to such stock and any cash payments in lieu of
fractional shares issued in connection therewith, or (f) payments under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Debenture Issuer may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid interest and Additional Interest, the Debenture Issuer may commence a
new Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

         (c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. The relevant record dates shall be 15 days before the relevant
Distribution Payment Date. Distributions payable on any Securities that are not
punctually paid on any Distribution Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case may be,
when due (taking into account any Extension Period), will cease to be payable to
the Person in whose name such Securities are registered on the relevant record
date, and such defaulted Distribution will instead be payable to the Person in
whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which

                                      I-4
<PAGE>

Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such payment
date.

         (d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.

         3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate of the stated liquidation amount of $1,000.00 per Security plus
accrued and unpaid Distributions thereon to the date of payment, to the extent
the Trust shall have funds available therefor, and (ii) the amount of assets of
the Trust remaining available for contributions to Holders in liquidation of the
Trust (such amount being, the "Liquidation Distribution"), unless in connection
with such Liquidation, the Debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Securities, with an
interest rate equal to the Distribution Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, and
having the same record date as, such Securities, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with the Statutory Trust Act, shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

         The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event) and, after satisfaction of liabilities to
creditors of the Trust, cause the Debentures to be distributed to the Holders of
the Securities on a Pro Rata basis in accordance with the aggregate stated
liquidation amount thereof.

         If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical, in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

                                      I-5
<PAGE>

         If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Securities
on a Pro Rata basis, except that if an Event of Default has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.

         After the date for any distribution of the Debentures upon dissolution
of the Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder's Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to Holders of Securities in respect of any payments due and
payable under the Debentures; provided, however that such failure to pay shall
not be deemed to be an Event of Default and shall not entitle the Holder to the
benefits of the Guarantee), and (iv) all rights of Holders of Securities under
the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.

         4. Redemption and Distribution.

         (a) The Debentures will mature on May 15, 2033. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part at any time and from time
to time on or after May 15, 2008, at the Optional Redemption Price. In addition,
the Debentures may be redeemed by the Debenture Issuer at the Special Redemption
Price, in whole but not in part, at any Distribution Payment Date, upon the
occurrence and continuation of a Special Event within 120 days following the
occurrence of such Special Event at the Special Redemption Price, upon not less
than 30 nor more than 60 days' notice to holders of such Debentures so long as
such Special Event is continuing.

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

          "Optional Redemption Date" shall mean the date fixed for the
redemption of Capital Securities, which shall be August 15, November 15,
February 15 or May 15 on or after May 15, 2008.

                                      I-6
<PAGE>

         "Optional Redemption Price" means 100% of the principal amount of the
Debentures being redeemed, plus accrued and unpaid interest on such Debentures
to the Optional Redemption Date.

         "Special Event" means a Tax Event or an Investment Company Event.

         "Special Redemption Date" means a date on which a Special Event
redemption occurs, which shall be any August 15, November 15, February 15 or May
15.

         "Special Redemption Price" means (i) 107.5% of the principal amount of
the Debentures being redeemed on a Special Redemption Date that occurs before
May 15, 2008, and (ii) 100% of the principal amount of the Debentures being
redeemed on a Special Redemption Date that occurs on May 15, 2008 or after,
plus, in each case, accrued and unpaid interest on such Debentures to the
Special Redemption Date.

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

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

         (c) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro Rata and
the Capital Securities to be redeemed will be redeemed Pro Rata from each Holder
of Capital Securities.

                                      I-7
<PAGE>

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

         (e) Redemption or Distribution Procedures.

            (i) Notice of any redemption of or notice of distribution of the
      Debentures in exchange for, the Securities (a "Redemption/Distribution
      Notice") will be given by the Trust by mail to each Holder of Securities
      to be redeemed or exchanged not fewer than 30 nor more than 60 days before
      the date fixed for redemption or exchange thereof which, in the case of a
      redemption, will be the date fixed for redemption of the Debentures. For
      purposes of the calculation of the date of redemption or exchange and the
      dates on which notices are given pursuant to this paragraph 4(e)(i), a
      Redemption/Distribution Notice shall be deemed to be given on the day such
      notice is first mailed by first-class mail, postage prepaid, to Holders of
      such Securities. Each Redemption/Distribution Notice shall be addressed to
      the Holders of such Securities at the address of each such Holder
      appearing on the books and records of the Trust. No defect in the
      Redemption/Distribution Notice or in the mailing thereof with respect to
      any Holder shall affect the validity of the redemption or exchange
      proceedings with respect to any other Holder.

            (ii) If the Securities are to be redeemed and the Trust gives a
      Redemption/ Distribution Notice, which notice may only be issued if the
      Debentures are redeemed as set out in this paragraph 4 (which notice will
      be irrevocable), then, provided that the Institutional Trustee has a
      sufficient amount of cash in connection with the related redemption or
      maturity of the Debentures, the Institutional Trustee will pay the
      relevant Optional Redemption Price or Special Redemption Price, as
      applicable, to the Holders of such Securities by check mailed to the
      address of each such Holder appearing on the books and records of the
      Trust on the Optional Redemption Date or Special Redemption Date. If a
      Redemption/Distribution Notice shall have been given and funds deposited
      as required then immediately prior to the close of business on the date of
      such deposit Distributions will cease to accrue on the Securities so
      called for redemption and all rights of Holders of such Securities so
      called for redemption will cease, except the right of the Holders of such
      Securities to receive the applicable Optional Redemption Price or Special
      Redemption Price specified in paragraph 4(a), but without interest on such
      Optional Redemption Price or Special Redemption Price. If any date fixed
      for redemption of Securities is not a Business Day, then payment of any
      such Optional Redemption Price or Special Redemption Price payable on such
      date will be made on the next succeeding day that is a Business Day (and
      without any interest or other payment in respect of any such delay) except
      that, if such Business Day falls in the next calendar year, such payment
      will be made on the immediately preceding Business Day, in each case with
      the same force and effect as if made on such date fixed for redemption. If
      payment of the Optional Redemption Price or Special Redemption Price in
      respect of any Securities is improperly withheld or refused and not paid
      either by the Trust or by the Debenture Issuer as guarantor pursuant to
      the Guarantee, Distributions on such Securities will continue to accrue at
      the Distribution Rate from the original Optional Redemption Date or
      Special Redemption Date to the actual date of payment, in which case the
      actual payment date will be considered the date fixed for redemption for

                                      I-8
<PAGE>

      purposes of calculating the Optional Redemption Price or Special
      Redemption Price. In the event of any redemption of the Capital Securities
      issued by the Trust in part, the Trust shall not be required to (i) issue,
      register the transfer of or exchange any Security during a period
      beginning at the opening of business 15 days before any selection for
      redemption of the Capital Securities and ending at the close of business
      on the earliest date on which the relevant notice of redemption is deemed
      to have been given to all Holders of the Capital Securities to be so
      redeemed, or (ii) register the transfer of or exchange any Capital
      Securities so selected for redemption, in whole or in part, except for the
      unredeemed portion of any Capital Securities being redeemed in part.

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

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

         5. Voting Rights - Capital Securities.

         (a) Except as provided under paragraphs 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights. The Administrators are required to call a meeting of the
Holders of the Capital Securities if directed to do so by Holders of at least
10% in liquidation amount of the Capital Securities.

         (b) Subject to the requirements of obtaining a tax opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the Capital
Securities, voting separately as a class, have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available under the Indenture as the holder of the Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable, or (iv) consent on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where
a consent or action under the Indenture would require the consent or act of the
holders of greater than a simple majority in aggregate principal amount of
Debentures (a "Super Majority") affected thereby, the Institutional Trustee may
only give such consent or take such action at the written direction of the
Holders of at least the proportion in liquidation amount of the Capital
Securities outstanding which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. If the Institutional
Trustee fails to enforce its rights under the Debentures after the Holders of a
Majority in liquidation amount of such Capital Securities have so directed the

                                      I-9
<PAGE>

Institutional Trustee, to the fullest extent permitted by law, a Holder of the
Capital Securities may institute a legal proceeding directly against the
Debenture Issuer to enforce the Institutional Trustee's rights under the
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption, the Optional Redemption Date or the Special
Redemption Date, as applicable), then a Holder of record of the Capital
Securities may directly institute a proceeding for enforcement of payment on or
after the respective due dates specified in the Debentures, to such Holder
directly of the principal of or interest on the Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder. The Institutional Trustee shall notify all Holders of
the Capital Securities of any default actually known to the Institutional
Trustee with respect to the Debentures unless (x) such default has been cured
prior to the giving of such notice, or (y) the Institutional Trustee determines
in good faith that the withholding of such notice is in the interest of the
Holders of such Capital Securities, except where the default relates to the
payment of principal of or interest on any of the Debentures. Such notice shall
state that such Indenture Event of Default also constitutes an Event of Default
hereunder. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, the Trust will not be classified as other than a
grantor trust for United States federal income tax purposes.

         In the event the consent of the Institutional Trustee, as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.

         A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of Holders of the Capital Securities may be given at a separate meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the Securities in the Trust or pursuant to written consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution

                                      I-10
<PAGE>

proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought, and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.

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

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

         6. Voting Rights - Common Securities.

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

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

         (c) Subject to Section 6.7 of the Declaration and only after each Event
of Default (if any) with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past default and its
consequences that is waivable under the Indenture, or (iii) exercising any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable; provided, however, that, where a consent or action under the
Indenture would require a Super Majority, the Institutional Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
or consent of the Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action described in (i),

                                      I-11
<PAGE>

(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional Trustee fails to enforce its rights under the
Declaration to the fullest extent permitted by law, any Holder of the Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.

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

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

         7. Amendments to Declaration and Indenture.

         (a) In addition to any requirements under Section 11.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Institutional Trustee, Sponsor or Administrators otherwise propose to effect,
(i) any action that would adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the Liquidation of the Trust, other than as described in
Section 7.1 of the Declaration, then the Holders of outstanding Securities,
voting together as a single class, will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities, affected thereby; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.

         (b) In the event the consent of the Institutional Trustee as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
a Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.

                                      I-12
<PAGE>

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

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

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

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

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

                                      I-13
<PAGE>

         11. No Preemptive Rights. The Holders of the Securities shall have no
preemptive or similar rights to subscribe for any additional securities.

         12. Miscellaneous. These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to a Holder without charge on written request to the Sponsor at its
principal place of business.

                                      I-14
<PAGE>
                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.

         THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH

                                     A-1-1
<PAGE>

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

         THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.

         THIS SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF TREASURY
REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND WITHHOLDING
TAX PURPOSES.

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

                Certificate Number P-1 15,000 Capital Securities

                                  May 15, 2003

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                              DGI Statutory Trust I

               (liquidation amount $1,000.00 per Capital Security)

         DGI Statutory Trust I, a statutory trust created under the laws of the
State of Connecticut (the "Trust"), hereby certifies that Hare & Co. (the
"Holder"), as the nominee of The Bank of New York, indenture trustee under the
Indenture dated as of May 15, 2003, among I-Preferred Term Securities II, Ltd.,
I-Preferred Term Securities II, Inc. and The Bank of New York, is the registered
owner of capital securities of the Trust representing undivided beneficial
interests in the assets of the Trust, (liquidation amount $1,000.00 per capital
security) (the "Capital Securities"). Subject to the Declaration (as defined

                                     A-1-2
<PAGE>

below), the Capital Securities are transferable on the books and records of the
Trust in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of May 15,
2003, among Jeffrey D. Miller, Ralph G. Spontak and Daniel J. Wagner, as
Administrators, U.S. Bank National Association, as Institutional Trustee,
Donegal Group Inc., as Sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Trust, including the designation of
the terms of the Capital Securities as set forth in Annex I to such amended and
restated declaration as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

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

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

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

                       SIGNATURES APPEAR ON FOLLOWING PAGE

                                     A-1-3
<PAGE>

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

                                           DGI STATUTORY TRUST I

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

                          CERTIFICATE OF AUTHENTICATION

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

                                           U.S. BANK NATIONAL
                                           ASSOCIATION, as the
                                           Institutional Trustee

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

                                     A-1-4
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

         Distributions payable on each Capital Security will be payable at an
annual rate equal to 5.41125% beginning on (and including) the date of original
issuance and ending on (but excluding) August 15, 2003 and at an annual rate for
each successive period beginning on (and including) August 15, 2003, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a "Distribution Period"), equal to
3-Month LIBOR, determined as described below, plus 4.10% (the "Coupon Rate");
provided, however, that prior to May 15, 2008, the Coupon Rate shall not exceed
12.50%, applied to the stated liquidation amount of $1,000.00 per Capital
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term "Distributions" as used herein includes payments of
cash distributions and any such compounded distributions and any Additional Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. In the event that any date on
which a Distribution is payable on this Capital Security is not a Business Day,
then a payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.

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

                                     A-1-5
<PAGE>

offered quotations (expressed as percentages per annum) to leading European
banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date.

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

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

         Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on August 15, November 15, February 15
and May 15 of each year, commencing on August 15, 2003. The Debenture Issuer has
the right under the Indenture to defer payments of interest on the Debentures,
so long as no Indenture Event of Default has occurred and is continuing, by
extending the interest payment period for up to 20 consecutive quarterly periods
(each an "Extension Period") at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such accrued
interest will accrue at an annual rate equal to the Distribution Rate in effect
for each such Extension Period, compounded quarterly from the date such interest
would have been payable were it not for the Extension Period, to the extent
permitted by law (such interest referred to herein as "Additional Interest"). No
Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period the Debenture Issuer shall pay all interest
then accrued and unpaid on the Debentures (together with Additional Interest
thereon); provided, however, that no Extension Period may extend beyond the
Maturity Date. Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period, provided that such period together with
all such previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Capital Securities
shall be deferred for a period equal to the Extension Period. If Distributions
are deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the

                                     A-1-6
<PAGE>

Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

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

                                     A-1-7
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

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

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

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

         Signature Guarantee:(1)

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

                                     A-1-8
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

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

         THIS COMMON SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF
TREASURY REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND
WITHHOLDING TAX PURPOSES.

                  Certificate Number C-1 464 Common Securities

                                  May 15, 2003

             Certificate Evidencing Floating Rate Common Securities

                                       of

                              DGI Statutory Trust I

         DGI Statutory Trust I, a statutory trust created under the laws of the
State of Connecticut (the "Trust"), hereby certifies that Donegal Group Inc.
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities"). Subject to the Declaration (as defined below), the Common
Securities are transferable on the books and records of the Trust in person or
by a duly authorized attorney, upon surrender of this Certificate duly endorsed
and in proper form for transfer. The Common Securities represented hereby are
issued pursuant to, and the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities shall in all
respects be subject to, the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of May 15, 2003, among Jeffrey D. Miller, Ralph
G. Spontak and Daniel J. Wagner, as Administrators, U.S. Bank National
Association, as Institutional Trustee, Donegal Group Inc. as Sponsor, and the
holders from time to time of undivided beneficial interest in the assets of the
Trust including the designation of the terms of the Common Securities as set
forth in Annex I to such amended and restated declaration, as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.

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

                                     A-2-1
<PAGE>

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

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

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

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

                                           DGI STATUTORY TRUST I

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

                                     A-2-2
<PAGE>

                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions payable on each Common Security will be payable at an
annual rate equal to 5.41125% beginning on (and including) the date of original
issuance and ending on (but excluding) August 15, 2003 and at an annual rate for
each successive period beginning on (and including) August 15, 2003, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a "Distribution Period"), equal to
3-Month LIBOR, determined as described below, plus 4.10% (the "Coupon Rate");
provided, however, that prior to May 15, 2008, the Coupon Rate shall not exceed
12.50%, applied to the stated liquidation amount of $1,000.00 per Common
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term "Distributions" as used herein includes cash
distributions and any such compounded distributions and any Additional Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. In the event that any date on
which a Distribution is payable on this Common Security is not a Business Day,
then a payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.

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

                                     A-2-3
<PAGE>

arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

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

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

         Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on August 15, November 15, February 15
and May 15 of each year, commencing on August 15, 2003. The Debenture Issuer has
the right under the Indenture to defer payments of interest on the Debentures,
so long as no Indenture Event of Default has occurred and is continuing, by
extending the interest payment period for up to 20 consecutive quarterly periods
(each an "Extension Period") at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such accrued
interest will accrue at an annual rate equal to the Distribution Rate in effect
for each such Extension Period, compounded quarterly from the date such interest
would have been payable were it not for the Extension Period, to the extent
permitted by law (such interest referred to herein as "Additional Interest"). No
Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period the Debenture Issuer shall pay all interest
then accrued and unpaid on the Debentures (together with Additional Interest
thereon); provided, however, that no Extension Period may extend beyond the
Maturity Date. Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period, provided that such period together with
all such previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Common Securities
shall be deferred for a period equal to the Extension Period. If Distributions
are deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Common Securities as they appear
on the books and records of the Trust on the record date immediately preceding
such date. Distributions on the Common Securities must be paid on the dates

                                     A-2-4
<PAGE>

payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Common Securities will be limited to payments received from the
Debenture Issuer.

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

                                     A-2-5
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

         Signature Guarantee(2)

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

                                     A-2-6
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

<PAGE>

                                    EXHIBIT C

                               PLACEMENT AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]