Document:

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                                                                    EXHIBIT 10.3

                            INDEMNIFICATION AGREEMENT

        THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this 5th day of July, 2001, by and between ROSS E. ROEDER (the "Indemnified
Party") and CHICO'S FAS, INC., a Florida corporation (the "Corporation").

                              W I T N E S S E T H:

        WHEREAS, it is essential to the Corporation to retain and attract as
Directors and/or Executive Officers the most capable persons available; and

        WHEREAS, the substantial increase in corporate litigation subjects
directors and officers to expensive litigation risks at the same time that the
availability of directors' and officers' liability insurance has been severely
limited; and

        WHEREAS, in addition, the statutory indemnification provisions of the
Florida Business Corporation Act and Article VII of the bylaws of the
Corporation (the "Article") expressly provide that they are non-exclusive; and

        WHEREAS, the Indemnified Party does not regard the protection available
under the Article and insurance, if any, as adequate in the present
circumstances, and considers it necessary and desirable to his service as a
Director and/or Executive Officer to have adequate protection, and the
Corporation desires the Indemnified Party to serve in such capacity and have
such protection; and

        WHEREAS, the Florida Business Corporation Act and the Article provide
that indemnification of Directors and Executive Officers of the Corporation may
be authorized by agreement, and thereby contemplates that contracts of this
nature may be entered into between the Corporation and the Indemnified Party
with respect to indemnification of the Indemnified Party as a Director and/or
Executive Officer of the Corporation.

        NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement, it is hereby agreed as follows:

        1. INDEMNIFICATION GENERALLY.

               (a) Grant of Indemnity. (i) Subject to and upon the terms and
conditions of this Agreement, the Corporation shall indemnify and hold harmless
the Indemnified Party in respect of any and all costs, claims, losses, damages
and expenses which may be incurred or suffered by the Indemnified Party as a
result of or arising out of prosecuting, defending, settling or investigating:

                             (1) any threatened, pending, or completed claim,
               demand, inquiry, investigation, action, suit or proceeding,
               whether formal or informal or brought by or in the right of the
               Corporation or otherwise and whether of a civil, criminal,
               administrative or investigative nature, in which the Indemnified
               Party may be or may have been involved as a party or otherwise,
               arising out of the fact that the Indemnified Party is or was a

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               director, officer, employee, independent contractor or
               stockholder of the Corporation or any of its "Affiliates" (as
               such term is defined in the rules and regulations promulgated by
               the Securities and Exchange Commission under the Securities Act
               of 1933), or served as a director, officer, employee, independent
               contractor or stockholder in or for any person, firm,
               partnership, corporation or other entity at the request of the
               Corporation (including without limitation service in any capacity
               for or in connection with any employee benefit plan maintained by
               the Corporation or on behalf of the Corporation's employees);

                             (2) any attempt (regardless of its success) by any
               person to charge or cause the Indemnified Party to be charged
               with wrongdoing or with financial responsibility for damages
               arising out of or incurred in connection with the matters
               indemnified against in this Agreement; or

                             (3) any expense, interest, assessment, fine, tax,
               judgment or settlement payment arising out of or incident to any
               of the matters indemnified against in this Agreement including
               reasonable fees and disbursements of legal counsel, experts,
               accountants, consultants and investigators (before and at trial
               and in appellate proceedings).

                        (ii) The obligation of the Corporation under this
Agreement is not conditioned in any way on any attempt by the Indemnified Party
to collect from an insurer any amount under a liability insurance policy.

                        (iii) In no case shall any indemnification be provided
under this Agreement to the Indemnified Party by the Corporation in:

                                (1)     Any action or proceeding brought by or
                                        in the name or interest of the
                                        Indemnified Party against the
                                        Corporation; or

                                (2)     Any action or proceeding brought by the
                                        Corporation against the Indemnified
                                        Party, which action is initiated at the
                                        direction of the Board of Directors of
                                        the Corporation.

               (b) Claims for Indemnification. (i) Whenever any claims shall
arise for indemnification under this Agreement, the Indemnified Party shall
notify the Corporation promptly and in any event within 30 days after the
Indemnified Party has actual knowledge of the facts constituting the basis for
such claim. The notice shall specify all facts known to the Indemnified Party
giving rise to such indemnification right and the amount or an estimate of the
amount of liability (including estimated expenses) arising therefrom.

                        (ii) Any indemnification under this Agreement shall be
made no later than 30 days after receipt by the Corporation of the written
notification specified in Section 1(b)(i), unless

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a determination is made within such 30 day period by (X) the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
the matter described in the notice or (Y) independent legal counsel, agreed to
by the Corporation, in a written opinion (which counsel shall be appointed if
such a quorum is not obtainable), that the Indemnified Party has not met the
relevant standards for indemnification under this Agreement.

               (c) Rights to Defend or Settle; Third Party Claims, etc. (i) If
the facts giving rise to any indemnification right under this Agreement shall
involve any actual or threatened claim or demand against the Indemnified Party,
or any possible claim by the Indemnified Party against any third party, such
claim shall be referred to as a "Third Party Claim." If the Corporation provides
the Indemnified Party with an agreement in writing in form and substance
satisfactory to the Indemnified Party and his counsel, agreeing to indemnify,
defend or prosecute and hold the Indemnified Party harmless from all costs and
liability arising from any Third Party Claim (an "Agreement of Indemnity"), and
demonstrating to the satisfaction of the Indemnified Party the financial
wherewithal to accomplish such indemnification, the Corporation may at its own
expense undertake full responsibility for the defense or prosecution of such
Third Party Claim. The Corporation may contest or settle any such Third Party
Claim for money damages on such terms and conditions as it deems appropriate but
shall be obligated to consult in good faith with the Indemnified Party and not
to contest or settle any Third Party Claim involving injunctive or equitable
relief against or affecting the Indemnified Party or his properties or assets
without the prior written consent of the Indemnified Party, such consent not to
be withheld unreasonably. The Indemnified Party may participate at his own
expense and with his own counsel in defense or prosecution of a Third Party
Claim pursuant to this Section 1(c)(i), and such participation shall not relieve
the Corporation of its obligation to indemnify the Indemnified Party under this
Agreement.

                        (ii) If the Corporation fails to deliver a satisfactory
Agreement of Indemnity and evidence of financial wherewithal within 10 days
after receipt of notice pursuant to Section 1(b), the Indemnified Party may
contest or settle the Third Party Claim on such terms as it sees fit but shall
not reach a settlement with respect to the payment of money damages without
consulting in good faith with the Corporation. The Corporation may participate
at its own expense and with its own counsel in defense or prosecution of a Third
Party Claim pursuant to this Section 1(c)(ii), but any such participation shall
not relieve the Corporation of its obligations to indemnify the Indemnified
Party under this Agreement. All expenses (including attorneys' fees) incurred in
defending or prosecuting any Third Party Claim shall be paid promptly by the
Corporation as the suit or other matter is proceeding, upon the submission of
bills therefor or other satisfactory evidence of such expenditures during the
pendency of any matter as to which indemnification is available under this
Agreement. The failure to make such payments within 10 days after submission of
evidence of those expenses shall constitute a breach of a material obligation of
the Corporation under this Agreement.

                        (iii) If by reason of any Third Party Claim a lien,
attachment, garnishment or execution is placed upon any of the property or
assets of the Indemnified Party, the Corporation shall promptly furnish a
satisfactory indemnity bond to obtain the prompt release of such lien,
attachment, garnishment or execution.

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                        (iv) The Indemnified Party shall cooperate in the
defense of any Third Party Claim which is controlled by the Corporation, but the
Indemnified Party shall continue to be entitled to indemnification and
reimbursement for all costs and expenses incurred by him in connection therewith
as provided in this Agreement.

               (d) Cooperation. The parties to this Agreement shall execute such
powers of attorney as may be necessary or appropriate to permit participation of
counsel selected by any party hereto and, as may be reasonably related to any
such claim or action, shall provide to the counsel, accountants and other
representatives of each party access during normal business hours to all
properties, personnel, books, records, contracts, commitments and all other
business records of such other party and will furnish to such other party copies
of all such documents as may be reasonably requested (certified, if requested).

               (e) Choice of Counsel. In all matters as to which indemnification
is available to the Indemnified Party under this Agreement, the Indemnified
Party shall be free to choose and retain counsel, provided that the Indemnified
Party shall secure the prior written consent of the Corporation as to such
selection, which consent shall not be unreasonably withheld.

               (f) Consultation. If the Indemnified Party desires to retain the
services of an attorney prior to the determination by the Corporation as to
whether it will undertake the defense or prosecution of the Third Party Claim as
provided in Section 1(c), the Indemnified Party shall notify the Corporation of
such desire in the notice delivered pursuant to Section 1(b)(i), and such notice
shall identify the counsel to be retained. The Corporation shall then have 10
days within which to advise the Indemnified Party whether it will assume the
defense or prosecution of the Third Party Claim in accordance with Section
1(c)(i). If the Indemnified Party does not receive an affirmative response
within such 10 day period, he shall be free to retain counsel of his choice, and
the indemnity provided in Section 1(a) shall apply to the reasonable fees and
disbursements of such counsel incurred after the expiration of such 10 day
period. Any fees or disbursements incurred prior to the expiration of such 10
day period shall not be covered by the indemnity of Section 1(a).

               (g) Repayment. (i) Notwithstanding the other provisions of this
Agreement to the contrary, if the Corporation has incurred any cost, damage or
expense under this Agreement paid to or for the benefit of the Indemnified Party
and it is determined by a court of competent jurisdiction from which no appeal
may be taken that the Indemnified Party's actions or omissions constitute
"Nonindemnifiable Conduct" as that term is defined in Section 1(g)(ii), the
Indemnified Party shall and does hereby undertake in such circumstances to
reimburse the Corporation for any and all such amounts previously paid to or for
the benefit of the Indemnified Party.

                        (ii) For these purposes, "Nonindemnifiable Conduct"
shall mean actions or omissions of the Indemnified Party material to the cause
of action to which the indemnification under this Agreement related is
determined to involve:

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                             (1) a violation of the criminal law, unless the
               Indemnified Party had reasonable cause to believe his conduct was
               lawful and had no reasonable cause to believe his conduct was
               unlawful;

                             (2) a transaction in which the Indemnified Party
               derived an improper personal benefit;

                             (3) if the Indemnified Party is a director of the
               Corporation, a circumstance under which the liability provisions
               of Section 607.0834 (or any successor or similar statute) are
               applicable;

                             (4) willful misconduct or a conscious disregard for
               the best interests of the Corporation (when indemnification is
               sought in a proceeding by or in the right of the Corporation to
               procure a judgment in favor of the Corporation or when
               indemnification is sought in a proceeding by or in the right of a
               stockholder); or

                             (5) conduct pursuant to then applicable law that
               prohibits such indemnification.

        2. TERM.

               This Agreement shall be effective upon its execution by all
parties and shall continue in full force and effect until the date seven years
after the date of this Agreement, or seven years after the termination of the
Indemnified Party's employment or term of office, whichever is later, provided
that such term shall be extended by any period of time during which the
Corporation is in breach of a material obligation to the Indemnified Party, plus
ninety days. Such term shall also be extended with respect to each Third Party
Claim then pending and as to which notice under Section 1(b) has theretofore
been given by the Indemnified Party to the Corporation, and this Agreement shall
continue to be applicable to each such Third Party Claim.

        3. REPRESENTATIONS AND AGREEMENTS OF THE CORPORATION.

               (a) Authority. The Corporation represents, covenants and agrees
that it has the corporate power and authority to enter into this Agreement and
to carry out its obligations under this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors of the Corporation. This Agreement is a valid and binding obligation
of the Corporation and is enforceable against the Corporation in accordance with
its terms.

               (b) Noncontestability. The Corporation represents, covenants and
agrees that it will not initiate, and that it will use its best efforts to cause
any of its Affiliates not to initiate, any action, suit or proceeding
challenging the validity or enforceability of this Agreement.

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               (c) Good Faith Judgment. The Corporation represents, covenants
and agrees that it will exercise good faith judgment in determining the
entitlement of the Indemnified Party to indemnification under this Agreement.

        4. RELATIONSHIP OF THIS AGREEMENT TO OTHER INDEMNITIES.

               (a) Nonexclusivity. (i) This Agreement and all rights granted to
the Indemnified Party under this Agreement are in addition to and are not deemed
to be exclusive with or of any other rights that may be available to the
Indemnified Party under any Articles of Incorporation, bylaw, statute,
agreement, or otherwise.

                        (ii) The rights, duties and obligations of the
Corporation and the Indemnified Party under this Agreement do not limit,
diminish or supersede the rights, duties and obligations of the Corporation and
the Indemnified Party with respect to the indemnification afforded to the
Indemnified Party under any liability insurance, the Florida Business
Corporation Act, or under the bylaws or the Articles of Incorporation of the
Corporation. In addition, the Indemnified Party's rights under this Agreement
will not be limited or diminished in any respect by any amendment to the bylaws
or the Articles of Incorporation of the Corporation.

               (b) Availability, Contribution, Etc.. (i) The availability or
nonavailability of indemnification by way of insurance policy, Articles of
Incorporation, bylaw, vote of stockholders, or otherwise from the Corporation to
the Indemnified Party shall not affect the right of the Indemnified Party to
indemnification under this Agreement, provided that all rights under this
Agreement shall be subject to applicable statutory provisions in effect from
time to time.

                        (ii) Any funds received by the Indemnified Party by way
of indemnification or payment from any source other than from the Corporation
under this Agreement shall reduce any amount otherwise payable to the
Indemnified Party under this Agreement.

                        (iii) If the Indemnified Party is entitled under any
provision of this Agreement to indemnification by the Corporation for some
claims, issues or matters, but not as to other claims, issues or matters, or for
some or a portion of the expenses, judgments, fines or penalties actually and
reasonably incurred by him or amounts actually and reasonably paid in settlement
by him in the investigation, defense, appeal or settlement of any matter for
which indemnification is sought under this Agreement, but not for the total
amount thereof, the Corporation shall nevertheless indemnify the Indemnified
Party for the portion of such claims, issues or matters or expenses, judgments,
fines, penalties or amounts paid in settlement to which the Indemnified Party is
entitled.

                        (iv) If for any reason a court of competent jurisdiction
from which no appeal can be taken rules that the indemnity provided under this
Agreement is unavailable, or if for any reason the indemnity under this
Agreement is insufficient to hold the Indemnified Party harmless as provided in
this Agreement, then in either event, the Corporation shall contribute to the
amounts paid or

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payable by the Indemnified Party in such proportion as equitably reflects the
relative benefits received by, and fault of the Indemnified Party and the
Corporation and its Affiliates.

               (c) Allowance for Compliance with SEC Requirements. The
Indemnified Party acknowledges that the Securities and Exchange Commission
("SEC") has expressed the opinion that indemnification of directors and officers
from liabilities under the Securities Act of 1933 (the "1933 Act") is against
public policy as expressed in the 1933 Act and, is therefore, unenforceable. The
Indemnified Party hereby agrees that it will not be a breach of this Agreement
for the Corporation to undertake with the SEC in connection with the
registration for sale of any stock or other securities of the Corporation from
time to time that, in the event a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a director or officer of the Corporation in the successful defense of
any action, suit or proceeding) is asserted in connection with such stock or
other securities being registered, the Corporation will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of competent jurisdiction on the question of whether or not such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue. The Indemnified Party
further agrees that such submission to a court of competent jurisdiction shall
not be a breach of this Agreement.

        5. MISCELLANEOUS.

               (a) Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
telephone line facsimile transmission or other similar electronic or digital
transmission method; the day after it is sent, if sent by recognized expedited
delivery service; and five days after it is sent, if mailed, first class mail,
postage prepaid. In each case notice shall be sent to:

        If to the Indemni-
         fied Party:                              Ross E. Roeder
                                                  Suite 200
                                                  1355 Snell Isle Blvd., N.E.
                                                  St. Petersburg, FL  33704

        If to the
         Corporation:                             Chico's FAS, Ins.
                                                  11215 Metro Parkway
                                                  Ft. Myers, Florida 33912

or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Section 5(a).

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               (b) Construction and Interpretation. (i) This Agreement shall be
construed pursuant to and governed by the substantive laws of the State of
Florida (and any provision of Florida law shall not apply if the law of a state
or jurisdiction other than Florida would otherwise apply).

                        (ii) The headings of the various sections in this
Agreement are inserted for the convenience of the parties and shall not affect
the meaning, construction or interpretation of this Agreement.

                        (iii) Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or non-
authorization without invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision in any other
jurisdiction. In any such case, such determination shall not affect any other
provision of this Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect. If any provision or term of this
Agreement is susceptible to two or more constructions or interpretations, one or
more of which would render the provision or term void or unenforceable, the
parties agree that a construction or interpretation which renders the term or
provision valid shall be favored.

                        (iv) As used in this Agreement, (2) the word "including"
is always without limitation; (3) the words in the singular number include words
of the plural number and vice versa; and (4) the word "person" includes a trust,
corporation, association, partnership, joint venture, business trust,
unincorporated organization, limited liability company, government, public body
or authority and any governmental agency or department, as well as a natural
person.

               (c) Entire Agreement. This Agreement constitutes the entire
Agreement, and supersedes all prior agreements and understandings, oral and
written, among the parties to this Agreement with respect to the subject matter
hereof.

               (d) Specific Enforcement. (i) The parties agree and acknowledge
that in the event of a breach by the Corporation of its obligation promptly to
indemnify the Indemnified Party as provided in this Agreement, or breach of any
other material provision of this Agreement, damages at law will be an
insufficient remedy to the Indemnified Party. Accordingly, the parties agree
that, in addition to any other remedies or rights that may be available to the
Indemnified Party, the Indemnified Party shall also be entitled, upon
application to a court of competent jurisdiction, to obtain temporary or
permanent injunctions to compel specific performance of the obligations of the
Corporation under this Agreement.

                        (ii) There shall exist in such action a rebuttable
presumption that the Indemnified Party has met the applicable standard(s) of
conduct and is therefore entitled to indemnification pursuant to this Agreement,
and the burden of proving that the relevant standards have not been met by the
Indemnified Party shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel)
prior to the commencement of such

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action to have made a determination that indemnification is proper in the
circumstances because the Indemnified Party has met the applicable standard of
conduct, nor an actual determination by the Corporation (including its Board of
Directors or independent legal counsel) that the Indemnified Party has not met
such applicable standard of conduct, shall (X) constitute a defense to the
action, (Y) create a presumption that the Indemnified Party has not met the
applicable standard of conduct, or (Z) otherwise alter the presumption in favor
of the Indemnified Party referred to in the preceding sentence.

               (e) Cost of Enforcement; Interest. (i) If the Indemnified Party
engages the services of an attorney or any other third party or in any way
initiates legal action to enforce his rights under this Agreement, including but
not limited to the collection of monies due from the Corporation to the
Indemnified Party, the prevailing party shall be entitled to recover all
reasonable costs and expenses (including reasonable attorneys' fees before and
at trial and in appellate proceedings). Should the Indemnified Party prevail,
such costs and expenses shall be in addition to monies otherwise due him under
this Agreement.

                        (ii) If any monies shall be due the Indemnified Party
from the Corporation under this Agreement and shall not be paid within 30 days
from the date of written request for payment, interest shall accrue on such
unpaid amount at the rate of 2% per annum in excess of the prime rate announced
from time to time by Bank of America, or such lower rate as may be required to
comply with applicable law from the date when due until it is paid in full.

               (f) Application to Third Parties, Etc.. Nothing in this
Agreement, whether express or implied, is intended or should be construed to
confer upon, or to grant to, any person, except the Corporation, the Indemnified
Party and their respective heirs, assignees and successors, any claim, right or
remedy under or because of this Agreement or in any provision of it. This
Agreement shall be binding upon and inure to the benefit of the successors in
interest and assigns, heirs and personal representatives, as the case may be, of
the parties, including any successor corporation resulting from a merger,
consolidation, recapitalization, reorganization, sale of all or substantially
all of the assets of the Corporation, or any other transaction resulting in the
successor corporation assuming the liabilities of the Corporation under this
Agreement (by operation of law, or otherwise).

               (g) Further Assurances. The parties to this Agreement will
execute and deliver, or cause to be executed and delivered, such additional or
further documents, agreements or instruments and shall cooperate with one
another in all respects for the purpose of carrying out the transactions
contemplated by this Agreement.

               (h) Venue; Process. The parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in the Circuit Court of the Twentieth Judicial
Circuit of the State of Florida in and for Lee County or in the United States
District Court for the Middle District of Florida, Tampa Division. Such
jurisdiction and venue are merely permissive; jurisdiction and venue shall also
continue to lie in any court where jurisdiction and venue would

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otherwise be proper. The parties agree that they will not object that any action
commenced in the foregoing jurisdictions is commenced in a forum non conveniens.
The parties further agree that the mailing by certified or registered mail,
return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without the
necessity for service by any other means provided by statute or rule of court.

               (i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same instrument.

               (j) Waiver and Delay. No waiver or delay in enforcing the terms
of this Agreement shall be construed as a waiver of any subsequent breach. No
action taken by the Indemnified Party shall constitute a waiver of his rights
under this Agreement.

        IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.

                                      CHICO'S FAS, INC.

                                      By:  /s/ Marvin J. Gralnick
                                           -------------------------------------
                                           Marvin J. Gralnick,
                                           Chief Executive Officer and President

WITNESSES:

  /s/ Charles J. Kleman                      /s/ Ross E. Roeder
--------------------------------------     -------------------------------------
                                           Ross E. Roeder

  /s/ Sherry Terzian
--------------------------------------

                                      -10-<PAGE>   1
                                                                     EXHIBIT 4.1

                                TRUST INDENTURE

        THIS TRUST INDENTURE (the "Indenture") dated as of April 30, 2001 is
made by and between Vineyard National Bancorp (the "Issuer"), a California
corporation organized and existing under the laws of the State of California,
and Union Bank of California, N.A., a national banking association (the
"Trustee") authorized to exercise corporate trust powers:

                              W I T N E S S E T H:

        WHEREAS, the Issuer has determined that all things necessary to make the
Debentures, when issued, executed and delivered by the Issuer and authenticated
by the Trustee, to the extent required pursuant to this Indenture, the valid,
binding and legal obligations of the Issuer has been done and performed, and the
creation, execution and delivery of this Indenture, and the execution, issuance
and delivery of the Debentures, subject to the terms hereof, have in all
respects been duly authorized;

        TO HAVE AND TO HOLD unto the Trustee and its successors in trust and its
and their assigns forever;

        BUT IN TRUST, NEVERTHELESS, and subject to the provisions hereof,

                (a) for the equal and proportionate benefit, security and
protection of all Debentures,

                (b) for the enforcement of the payment of the principal of,
redemption premium, if any, and interest on the Debentures, and all other
amounts due from time to time under this Indenture, including those due to the
Trustee, when payable, according to the true intent and meaning thereof and of
this Indenture, and

                (c) to secure the performance and observance of and compliance
with the covenants, agreements, obligations, terms and conditions of this
Indenture without preference, priority or distinction as to lien or otherwise,
except as provided herein, of any one Debenture over any other by reason of
designation, number, date of the Debentures, or of authorization, issuance,
sale, execution, authentication, delivery or maturity thereof, or otherwise, so
that each Debenture and all Debentures shall have the same right, lien and
privilege under this Indenture; provided, however, that, upon satisfaction of
and in accordance with the provisions of Article VIII, the rights assigned
hereby shall cease, determine and be void to the extent described therein;
otherwise, such rights shall be and remain in full force and effect;

        IT IS DECLARED that all Debentures issued under this Indenture are to be
issued, authenticated and delivered, and that all Revenues are to be dealt with
and disposed of under, upon and subject to, the terms, conditions, stipulations,
covenants, agreements, obligations, trusts, uses and purposes provided in this
Indenture; and the Issuer has agreed and covenanted, and agrees and covenants
with the Trustee and with each and all Debenture holders, as follows:

                                      -1-
<PAGE>   2

                                    ARTICLE I
                     DEFINITIONS AND RULES OF INTERPRETATION

        SECTION 1.01 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for all purposes of this Indenture and of
any indenture supplemental hereto, have the meanings herein specified:

"Attesting Officer" means the Secretary of the Issuer.

"Authorized Denomination" means Debentures issued in units of $25,000, and any
multiple thereof.

"Bankruptcy Law" means Title 11 of the United States Code, as it is amended from
time to time and any successor to or replacement of such Title and any other
applicable federal or state bankruptcy, insolvency or other similar law.

"Beneficial Owner" means, for any Debenture which is held by a nominee, the
beneficial owner of such Debenture.

"Business Day" means any day of the year other than (a) a Saturday or Sunday,
(b) any day on which banks located in California or the city in which the Office
of the Trustee is located are required or authorized by law to remain closed, or
(c) any day on which the New York Stock Exchange is closed.

"Code" means the Internal Revenue Code of 1986, as amended, and the Regulations
thereto.

"Debenture" or "Debentures" means the Debentures issued under this Indenture.

"Debenture Counsel" means, with respect to the Debentures, BUXBAUM & CHAKMAK,
Claremont, California, or any other firm of attorneys selected by the Issuer and
acceptable to the Issuer and the Trustee.

"Debenture holder" or "holder of Debentures" or "Owner of Debentures" means the
Person who owns a Debenture, provided that the Person in whose name a Debenture
is registered in the Debenture Register shall be regarded for all purposes as
such owner.

"Event of Bankruptcy" means the filing of a petition in bankruptcy (or other
commencement of a bankruptcy or similar proceedings) by or against the Issuer,
as debtor, under Bankruptcy Law.

"Event of Default" or "Default" means any of the events specified in Section
6.01 to be an Event of Default. A "default" means any event which, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default.

"Executive" means the Chief Executive Officer of the Issuer.

                                      -2-
<PAGE>   3

"Immediate Notice" means notice transmitted by electronic means, in writing, by
telecopier or other electronic means, or by telephone (promptly confirmed in
writing), and received by the party addressed.

"Indenture" means this Trust Indenture as amended or supplemented from time to
time.

"Interest Payment Date" means (a) for the Debentures, the last business day of
March, June, September and December of each year, commencing on the first
Interest Payment Date after the date on which the Debenture was issued, and for
additional Debentures, the days designated in the supplemental indenture
authorizing such additional Debentures, (b) for Debentures subject to redemption
in whole or in part on any date, the date of such redemption, and (c) for all
Debentures any date determined pursuant to Section 6.07.

"Issue Date" means the date of issuance and delivery of a Debenture to the
initial purchaser thereof.

"Issuer" means the Vineyard National Bancorp, and its successors and assigns.

"Office of the Trustee" means the designated corporate trust office or offices
of the Trustee, which office or offices at the date of acceptance by the Trustee
of the duties and obligations imposed on the Trustee by this Indenture are set
out in Section 10.04.

"Officer's Certificate" of the Issuer means a written certificate, statement,
request, direction or order signed in the name of the Issuer by its Executive,
Attesting Officer, or such other person as may be designated and authorized in
writing to sign for the Issuer and forwarded to the Trustee.

"Outstanding," in connection with Debentures means, as of the date in question,
all Debentures authenticated and delivered under this Indenture, except:

        (a) Debentures theretofore cancelled or delivered to the Trustee for
cancellation under Section 2.09;

        (b) Debentures which are deemed to be no longer Outstanding in
accordance with Article VIII; and

        (c) Debentures in substitution for which other Debentures have been
authenticated and delivered pursuant to Article II.

"Person" or "person" means an individual, corporation, firm, association,
partnership, limited liability company, trust, or other legal entity or group of
entities, including a governmental entity or any agency or political subdivision
thereof.

"Rating Service" means any nationally recognized securities rating service that
shall have assigned a rating that is then in effect with respect to the
Debentures upon application of the Issuer.

                                      -3-
<PAGE>   4

"Record Date" means, (a) with respect to any Interest Payment Date, the
Trustee's close of business 15 days prior to such Interest Payment Date,
regardless of whether such day is a Business Day, and (b) with respect to any
other Interest Payment Date, a date selected by the Trustee in accordance with
Section 6.07(c).

"Regulations" means any applicable Internal Revenue Service Regulations
promulgated in proposed, temporary or final form. Proposed regulations are
"applicable" only if, in the event they are adopted in final form, such
regulations would apply to the Debentures.

"Responsible Officer," when used with respect to the Trustee, means any officer
in the corporate trust department (or any successor thereto) of the Trustee, or
any other officer or representative of the Trustee customarily performing
functions similar to those performed by any of such officers and also means,
with respect to a particular corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.

"Revenues" means that portion of the dividends received by the Issuer from its
subsidiary, Vineyard National Bank, which is needed to pay the principal of,
redemption premium, if any, or interest on, the Debentures in accordance with
the terms of this Trust Indenture.

"State" means the State of California.

"Trustee" means Union Bank of California, N.A., and any successor trustee under
this Indenture, acting in its trust capacity.

        SECTION 1.02 RULES OF INTERPRETATION. For purposes of this Indenture,
except as otherwise expressly provided or the context otherwise requires:

                (a) The words "herein," "hereof" and "hereunder" and other
similar words refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

                (b) The definitions in this Article are applicable whether the
terms defined are used in the singular or the plural.

                (c) All accounting terms which are not defined in this Indenture
have the meanings assigned to them in accordance with then applicable generally
accepted accounting principles.

                (d) Any pronouns used in this Indenture include both the
singular and the plural and cover both genders.

                (e) Any terms defined elsewhere in this Indenture have the
meanings attributed to them where defined.

                                      -4-
<PAGE>   5

                (f) Words referring to the redemption or calling for redemption
of Debentures shall not be deemed to refer to the payment of Debentures at their
stated maturity.

                (g) The captions or headings herein are for convenience only and
in no way define, limit or describe the scope or intent, or control or affect
the meaning or construction, of any provisions or sections hereof.

                (h) Any references to Section numbers are to Sections of this
Indenture unless stated otherwise.

                                   ARTICLE II
                            AUTHORIZATION, EXECUTION,
             AUTHENTICATION, REGISTRATION AND DELIVERY OF DEBENTURES

        SECTION 2.01 AUTHORIZATION OF DEBENTURES; LIMITATION. The Debentures are
hereby authorized to be issued as Debentures of the Issuer in the minimum
aggregate principal amount of $3,000,000 and in the maximum aggregate principal
amount of $5,000,000 designated "10% Convertible Subordinated Debentures, Due
2008."

        SECTION 2.02 DEBENTURES OBLIGATIONS. Subject to Section 5.01(e) on the
subordination of Debentures, the Debentures shall be general obligations of the
Issuer, constituting a valid claim of the respective owners thereof payable from
any income, revenues, funds or assets of the Issuer.

        SECTION 2.03 DETAILS OF DEBENTURES. The Debentures shall be issued in
Authorized Denominations, shall be dated on the Issue Date, shall be numbered
from one (1) upward, and shall bear interest (calculated on the basis of a
360-day year of twelve 30-day months) payable on the last business day of March,
June, September and December (the "Interest Payment Date"), commencing on the
first Interest Payment Date after the date on which the Debenture was issued
(the "Issue Date"), at ten percent (10%) per annum and shall mature on June 30,
2008.

        All Debentures shall bear interest (a) from the Issue Date, if
authenticated prior to the first Interest Payment Date, or (b) otherwise from
the Interest Payment Date that is, or that immediately precedes, the date on
which the Debenture is authenticated (unless payment of interest is in default,
in which case the Debenture shall bear interest from the date to which interest
has been paid).

        The principal, redemption premium, if any, and interest on the
Debentures shall be payable in lawful money of the United States of America.
Principal of and redemption premium, if any, on the Debentures shall be payable
by the Trustee upon presentation and surrender of the Debentures as they become
due at the Office of the Trustee. Interest on Debentures shall be payable by the
Trustee to the Debenture holders by check or draft mailed to such holders at
their addresses as they appear on the register of Debenture holders ("Debenture
Register") on the Record Date. If any principal or interest on any Debenture is
not paid when due (whether at

                                      -5-
<PAGE>   6

maturity, by acceleration or call for redemption or otherwise), then the overdue
installments of principal shall bear interest until paid at the same rate set
forth in the Debenture.

        SECTION 2.04 EXECUTION OF DEBENTURES. The Debentures shall be signed by
the manual or facsimile signature of the Executive of the Issuer and attested by
the manual or facsimile signature of the Attesting Officer of the Issuer. The
Debentures may bear the seal of the Issuer or a facsimile thereof affixed to or
imprinted on the Debentures. In case any officer whose signature or a facsimile
of whose signature shall appear on any Debenture shall cease to be such officer
before the delivery of such Debenture, such signature or facsimile shall
nevertheless be valid and sufficient for all purposes as if such officer had
remained in office until such delivery.

        SECTION 2.05 AUTHENTICATION OF DEBENTURES. The Debentures shall bear a
certificate of authentication, substantially in the form set forth in Appendix
A, duly executed by the Trustee. The Trustee shall authenticate each Debenture
with the manual signature of a Responsible Officer of the Trustee, but it shall
not be necessary for the same Responsible Officer to authenticate all of the
Debentures of a Series. Only such authenticated Debentures shall be entitled to
any right or benefit under this Indenture. Such certificate on any Debenture
issued hereunder shall be conclusive evidence that the Debenture has been duly
issued and is secured by the provisions hereof.

        SECTION 2.06 FORMS OF DEBENTURES. The Debentures shall be substantially
in the form set forth in Appendix B with such appropriate variations, legends,
omissions and insertions as permitted or required by this Indenture.

        SECTION 2.07 DELIVERY OF DEBENTURES. The Trustee shall authenticate,
release and deliver the Debentures when there have been filed with it the
following:

                (a) A copy of the Debenture certified by the Attesting Officer
of the Issuer, and a certified copy of the resolution of the Board of Directors
of the Issuer, authorizing (1) the execution and delivery of this Indenture, and
(2) the issuance, sale, execution and delivery of the Debentures;

                (b) An original executed counterpart of this Indenture;

                (c) An opinion or opinions of Debenture Counsel, addressed to
the Issuer and the Trustee, to the effect that this Indenture and the Debentures
have each been validly authorized, are binding and enforceable against the
Issuer, subject to bankruptcy and equitable principles, and comply with all
federal and state securities and "Blue Sky" laws.

                (d) A request and authorization of the Issuer, signed by its
Executive, to the Trustee to authenticate and deliver the Debentures to such
person or persons named therein upon payment for the account of the Issuer of a
specified sum;

        SECTION 2.08 MUTILATED, LOST OR DESTROYED DEBENTURES. If any Debenture
has been mutilated, lost or destroyed, the Issuer shall execute, and the Trustee
shall authenticate and deliver to the Debenture holder, a new Debenture of like
date and tenor in exchange and

                                      -6-
<PAGE>   7

substitution for, and upon cancellation of, such mutilated Debenture, or in lieu
of and in substitution for such lost or destroyed Debenture but only if the
Debenture holder has paid the reasonable expenses and charges of the Issuer and
the Trustee in connection therewith and, in the case of a lost or destroyed
Debenture, (a) filed with the Trustee evidence satisfactory to the Trustee that
such Debenture was lost or destroyed and (b) furnished to the Trustee and the
Issuer indemnity satisfactory to each. If any such Debenture has matured or been
called for redemption and is payable, instead of issuing a new Debenture the
Trustee may pay the same without issuing a replacement Debenture. If, after the
delivery of a replacement Debenture, the original Debenture in lieu of which
such replacement Debenture was issued is presented for payment or registration,
the Trustee shall seek to recover such replacement Debenture from the person to
whom it was delivered or any person taking therefrom, and shall be entitled to
recover from the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Trustee or the Issuer in
connection therewith.

        SECTION 2.09 TRANSFER, CANCELLATION AND DISPOSITION OF DEBENTURES. The
registration of any Debenture may be transferred by the person in whose name it
is registered upon surrender of such Debenture for cancellation at the office of
the Trustee in Los Angeles, California, accompanied by delivery of the completed
written instrument of transfer attached to the form of Debenture, all in form
acceptable to the Trustee. The transferor shall pay the reasonable expenses and
charges of the Issuer and the Trustee in connection therewith, together with a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.

The Issuer may deliver Debentures to the Trustee for cancellation at any time
and for any reason, and the Trustee is hereby authorized to cancel such
Debentures. All Debentures that have been paid (whether at maturity or by
acceleration), converted to Bancorp shares as herein provided, or delivered to
the Trustee for cancellation shall not be reissued. Unless otherwise directed by
the Issuer, the Trustee shall treat such Debentures in accordance with its
document retention policies or as may be directed by state law.

                                   ARTICLE III
                     REDEMPTION AND CONVERSION OF DEBENTURES

        SECTION 3.01 REDEMPTION DATES AND PRICES. The Debentures may not be
called for redemption by the Issuer except as provided in this Article III.

        SECTION 3.02 REDEMPTION OF DEBENTURES. The Debentures may be redeemed at
the option of the Issuer, in whole or in part, from time to time (selected
proportionately by lot within any maturity) at any time on or after July 1,
2003, and after receipt of notice from the Issuer as provided in Section 3.04,
on the condition that for the ninety (90) days immediately preceding the
redemption date the average closing price of the Issuer's common stock on the
Over-The-Counter Bulletin Board (OTCBB) equaled or exceeded $6.00 per share
(adjusted as necessary to provide price equivalency for any stock split,
recapitalization, merger, reorganization or other such event affecting the
stock's price)(the "Condition of Redemption"). The prices for redemption of the
Debentures are expressed as percentages of the principal amount, plus accrued

                                      -7-
<PAGE>   8

interest to the redemption date. The percentages of the principal amount,
redeemed during the twelve month periods beginning on July 1 of the years shown
below, are:

<TABLE>
                   <S>                                <C>
                   2003                               103%
                   2004                               102%
                   2005                               101%
                   2006 and thereafter                100%
</TABLE>

The Trustee shall redeem Debentures as described in this Article III upon
receipt of an Officer's Certificate from the Issuer which attests that the
Condition of Redemption has been met, and is properly executed by an authorized
officer of Issuer. In the event that Issuer has given notice of redemption as
provided in Section 3.04, and the Condition of Redemption has not been met,
Issuer shall cancel the redemption by notice given to all Debenture holders, and
other persons and entities, who received notice of the planned redemption.

Payment of principal and interest on the Debentures may be accelerated in the
case of certain events of default.

        SECTION 3.03 SELECTION OF DEBENTURES FOR REDEMPTION. If less than all of
the Debentures are called for redemption, they shall be redeemed proportionately
by lot. The portion of any Debenture to be redeemed shall be an Authorized
Denomination or any multiple thereof, and in selecting Debentures for
redemption, each Debenture shall be considered as representing that number of
Debentures which is obtained by dividing the principal amount of such Debenture
by the Authorized Denomination. If a portion of a Debenture shall be called for
redemption, a new Debenture in a principal amount equal to the unredeemed
portion thereof shall be issued to the Debenture holder upon the surrender
thereof.

        SECTION 3.04 NOTICE OF REDEMPTION. When Debentures (or portions thereof)
are to be redeemed, the Issuer shall give or cause to be given notice of the
redemption of the Debentures to the Trustee no later than sixty (60) days prior
to the redemption date or such shorter time as may be acceptable to the Trustee.
The Trustee, at the expense of the Issuer, shall send notices of any redemption,
identifying at a minimum the Debentures to be redeemed, the redemption date and
the method and place of payment by first class mail to each holder of a
Debenture called for redemption to the holder's address listed on the Debenture
Register. Such notice shall be sent by the Trustee by first class mail between
30 and 60 days prior to the scheduled redemption date. If notice is given as
stated in this paragraph, the failure of any Debenture holder to receive such
notice, or any defect in the notice, shall not affect the redemption or the
validity of the proceedings for the redemption of the Debentures.

                On or before the date fixed for redemption moneys shall be
deposited with the Trustee to pay the principal, redemption premium, if any, and
interest accrued to the redemption date on the Debentures called for redemption.
Upon the deposit of such moneys, the Debentures shall cease to bear interest on
the redemption date and shall no longer be entitled to the benefits of this
Indenture (other than for payment and transfer and exchange) and shall no longer
be considered Outstanding.

                                      -8-
<PAGE>   9

        SECTION 3.05 FUNDS AND ACCOUNTS. The Trustee shall have the authority to
create and maintain such funds and accounts as it may deem necessary for proper
administration of the Debentures hereunder.

        SECTION 3.06 CONVERSION INTO COMMON STOCK. A Debenture holder desiring
to convert a Debenture into capital stock must give written notice to the
Issuer, and simultaneously surrender the Debenture at the Issuer's principal
office in Rancho Cucamonga, California. The Issuer will promptly issue to the
Debenture holder the shares of stock into which this Debenture is to be
convertible at the rate of $5 per share in multiples of $25,000 units (5,000
shares). Shares of the Issuer's capital stock issued on the conversion will not
be entitled to any dividend declared on the stock prior to the date of receipt
by the Issuer of the notice of election to convert and the Debenture accompanied
by any instrument of assignment and transfer. On conversion the Debenture holder
shall be entitled to any interest on the Debenture which is due and payable at
or prior to the date the notice of election to convert is received by the
Issuer. The Issuer shall issue a new debenture to the Debenture holder in the
amount of any excess purchase balance. The Issuer shall give written notice to
the Trustee of any conversion of a Debenture into the Issuer's common stock for
the Trustee's records.

                                   ARTICLE IV
                         INVESTMENT OR DEPOSIT OF FUNDS

        SECTION 4.01 DEPOSITS AND SECURITY THEREFOR. All moneys received by the
Trustee under this Indenture shall be considered trust funds. Subject to the
foregoing requirements as to security, if at any time the commercial department
of the Trustee is unwilling to accept such deposits or unable to secure them as
provided above, the Trustee may deposit such moneys with any other depository
which is authorized to receive and secure them as aforesaid and the deposits of
which are insured by the Federal Deposit Insurance Corporation. All security for
deposits shall be perfected in such manner as may be required or permitted under
applicable law in order to grant to the Trustee a perfected lien on or security
interest in such security.

        SECTION 4.02 INVESTMENT OF FUNDS. Moneys on deposit with the Trustee may
be invested upon receipt of written instructions from the Issuer. Such monies
shall be prudently invested by the Trustee, which investments may include money
market funds for which the Trustee or its affiliates may provide investment
advisory or other management services.. The Trustee may acquire or dispose of
investments as principal or agent.

        SECTION 4.03 VALUATION OF FUNDS. The Trustee shall determine the market
value of any invested moneys on deposit on the end of each calendar quarter. As
soon as practicable after each such valuation date, the Trustee shall furnish to
the Issuer a report of the status of the investments as of such date.

                                    ARTICLE V

                                      -9-
<PAGE>   10

                     COVENANTS AND AGREEMENTS OF THE ISSUER

        SECTION 5.01 COVENANTS AND AGREEMENTS OF THE ISSUER. In addition to any
other covenants and agreements of the Issuer contained in this Indenture, the
Issuer further covenants and agrees with the Debenture holders and the Trustee
as follows:

                (a) Payment of Principal and Interest. The Issuer will pay all
principal of, redemption premium, if any, and interest on the Debentures or
cause them to be paid, solely from the sources provided herein, on the dates, at
the places and in the manner provided in this Indenture.

                (b) Payment of Dividends and Use of Capital Stock. The Issuer
shall not pay dividends on, or repurchase, its capital stock unless it retains
cash, cash equivalents or marketable securities in an amount sufficient to cover
the next four (4) consecutive quarterly interest payments to the Debenture
holders.

                (c) Inspection of Books. All books, instruments and documents in
the Issuer's possession relating to the Revenues and payment of the Debentures
shall be open to inspection at all times during the Issuer's regular business
hours by any accountants or other agents of holders of ten percent (10%) or more
in principal amount of the Debentures then Outstanding, or a designated
representative thereof.

                (d) Register. At reasonable times and under reasonable
regulations established by Issuer, the register of Debenture holders and
transfers may be inspected and copied by or delivered to the holders of ten
percent (10%) or more in principal amount of the Debentures then Outstanding, or
a designated representative thereof.

                (e) Subordination of Debentures. The payment of principal and
premium, if any, and interest on the Debentures will be subordinated to Issuer's
future Senior Indebtedness. "Senior Indebtedness" is defined as any indebtedness
or liability of the Issuer, whether existing on or created or incurred after the
date of issuance of the Debentures, which is not expressly by its terms
subordinate or pari passu in right of payment to the Debentures. The Issuer
currently has no Senior Indebtedness. While the Issuer has no current plan to
incur indebtedness ranking senior to, or any additional indebtedness ranking on
par with, the Debentures, this Indenture does not limit the incurrence of
indebtedness, including Senior Indebtedness, by the Issuer.

                (f) Restrictions on Issuer Activities. Until the date of
maturity, or until all of the Debentures have been converted or redeemed,
whichever occurs earlier, the Issuer agrees not pay dividends on, or repurchase,
its capital stock unless it retains cash, cash equivalents or marketable
securities in an amount sufficient to cover the next four (4) consecutive
quarterly interest payments. The Issuer also agrees not to consolidate or merge
with, or transfer substantially all its assets to another entity unless: (i)
such other entity assumes the Issuer's obligations with respect to the
Debentures, (ii) immediately after such transaction takes effect, the Issuer
will not be in default (as defined herein) under the Indenture, and (iii) the
Issuer has delivered to the Trustee an appropriate opinion of counsel to the
effect that the surviving entity is

                                      -10-
<PAGE>   11

legally obligated to assume the Issuer's obligations with respect to the
Debentures. The Issuer is not prohibited or restricted from selling or issuing
additional shares of capital stock or other debt securities, nor from pledging
its capital stock, subject to the following stock cost adjustments to assure an
equivalent stock cost for shares being converted or redeemed: If the outstanding
shares of stock of the Issuer are increased, decreased, or changed into, or
exchanged for a different number or kind of shares or securities of the Issuer
through reorganization, merger, recapitalization, reclassification, stock
split-up, stock dividend, stock consolidation or otherwise, an appropriate
adjustment shall be made in the convertible share price. If the Issuer issues
shares of common stock (or any other security convertible into or exchangeable
for shares of common stock) at a price below $5.00 per share (as adjusted from
time to time under certain circumstances), an appropriate adjustment shall be
made in the convertible share price; provided, however, that there will be no
adjustment to the convertible share price upon the issuance of employee,
director or consultant options approved by the board of directors, for
securities issued in connection with acquisitions or strategic relationships,
upon conversion of securities in existence on the date hereof, or upon other
standard carve outs which are approved by the board of directors. If the Issuer
is merged into another entity and is not the survivor, appropriate adjustments
shall be made to assure a conversion to the survivor's stock which is equivalent
to the Issuer's stock as herein described. Adjustments under this section shall
be made by the Issuer's or the surviving entity's Board, whose determination as
to what adjustments shall be made, and their extent, shall be final, binding and
conclusive. No fractional shares of stock shall be issued on account of any
adjustment, and a debenture shall be issued for any remaining cash balance after
conversion."

        SECTION 5.02 OBSERVANCE AND PERFORMANCE OF COVENANTS, AGREEMENTS,
AUTHORITY AND ACTIONS. The Issuer hereby agrees to observe and perform at all
times all covenants, agreements, authority, actions, undertakings, stipulations
and provisions to be observed or performed on its part under the Agreement, this
Indenture, and the Debentures which are executed, authenticated and delivered
under this Indenture. The Issuer represents and warrants that:

                (a) It is duly authorized by the Constitution and laws of the
State, to issue the Debentures, to execute and deliver this Indenture and to
provide payment of the principal of, redemption premium, if any, and interest on
the Debentures in the manner and to the extent set forth in this Indenture.

                (b) All actions required on its part to be performed for the
issuance, sale and delivery of the Debentures and for the execution and delivery
of this Indenture to which it is a party have been or will be taken duly and
effectively.

                (c) The Debentures will be valid and enforceable obligations of
the Issuer according to their terms, subject to bankruptcy and equitable
principles.

                                   ARTICLE VI
                         EVENTS OF DEFAULT AND REMEDIES

                                      -11-
<PAGE>   12

        SECTION 6.01 EVENTS OF DEFAULT DEFINED. Each of the following is an
"Event of Default" hereunder:

                (a) Default in the payment of any installment of interest on any
Debenture when it becomes due and payable;

                (b) Default in the payment of principal of, (or redemption
premium, if any), on any Debenture when it becomes due and payable;

                (c) Default in the performance, or breach, of any covenant,
warranty or representation of the Issuer contained in this Indenture (other than
a default under subsections (a) and (b) of this Section) which is not fully
cured by Issuer within thirty (30) days of receiving written notice of the
default from the Trustee; or

                (d) (1) An Event of Bankruptcy of the Issuer; (2) the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official of the Issuer or of any substantial
portion of its property; or (3) the ordering of the winding up or liquidation of
the affairs of the Issuer.

        SECTION 6.02 REMEDIES UPON DEFAULT.

                (a) If an Event of Default occurs and is continuing, the Trustee
may, and upon the written request to the Trustee by the holder or holders of not
less than a majority in aggregate principal amount of the Debentures then
Outstanding shall by written notice to the Issuer, declare the principal of the
Debentures and all interest accrued thereon to the date of acceleration to be
immediately due and payable.

                (b) At any time after such a declaration of acceleration has
been made and before the entry of a judgment or decree for payment of the money
due, the Trustee may, or the holders of not less than a majority in aggregate
principal amount of the Debentures then Outstanding, may by written notice to
the Issuer and the Trustee, and subject to the requirements of Section 7.02(d),
direct the Trustee to rescind and annul such declaration and its consequences
if:

                        (1) there has been paid to or deposited with the Trustee
by or for the account of the Issuer, or provision satisfactory to the Trustee
has been made for the payment of a sum sufficient to pay: (A) all overdue
installments of interest on the Debentures; (B) the principal of, and redemption
premium, if any, on any Debentures which have become due other than by such
declaration of acceleration and interest thereon; (C) to the extent lawful,
interest upon overdue installments of interest and redemption premium, if any;
and (D) all sums paid or advanced by the Trustee hereunder, together with the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel prior to the date of notice of rescission; and

                                      -12-
<PAGE>   13

                        (2) all Events of Default, other than the nonpayment of
principal of, redemption premium, if any, and interest on the Debentures which
have occasioned such acceleration, have been cured or waived.

                (c) No such rescission and annulment shall affect any subsequent
default or impair any consequent right.

        SECTION 6.03 ADDITIONAL REMEDIES. The Trustee, upon the occurrence of an
Event of Default may, and upon the written request of the holders of not less
than a majority in aggregate principal amount of the Debentures Outstanding, and
subject to the requirements of Section 7.02(d), shall:

                (a) exercise any or all rights of the Issuer; and

                (b) The Trustee shall proceed to protect and enforce its rights
and the rights of the holders of the Debentures under this Indenture by a suit
or suits in equity or at law, either for the specific performance of any
covenant or agreement contained in this Indenture or in aid of the execution of
any power therein granted, or for the enforcement of any other appropriate legal
or equitable remedy, and the Trustee in reliance upon the advice of counsel may
deem most effective to protect and enforce any of the rights or interests of the
holders of the Debentures under the Debentures or this Indenture.

                (c) Without limiting the generality of the foregoing, the
Trustee shall at all times have the power to institute and maintain such
proceedings as it may deem expedient: (1) to prevent any impairment of the
Revenues by any acts which may be unlawful or in violation of this Indenture,
and (2) to protect its interests and the interests of the Debenture holders in
the Revenues and in the issues, profits, revenues and other income arising
therefrom, including the power to maintain proceedings to restrain the
enforcement of or compliance with any governmental enactment, rule or order
which may be unconstitutional or otherwise invalid, if the enforcement of, or
compliance with, such enactment, rule or order would impair the Revenues or be
prejudicial to the interests of the Debenture holders or the Trustee.

        SECTION 6.04 MARSHALING OF ASSETS. Upon the occurrence of an Event of
Default, all moneys held by the Trustee shall be available to be utilized by the
Trustee in accordance with this Article. Subsequent to the curing or waiver of
any such Event of Default, the provisions of this Indenture relating to
utilization of funds, including the provisions of Article IV, shall be
reinstated.

        SECTION 6.05 TRUSTEE MAY FILE PROOFS OF CLAIM.

                (a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding under the Bankruptcy Code relating to the Issuer, any
other obligor upon the Debentures or any property of the Issuer, the Trustee
(whether or not the principal of the Debentures shall then be due and payable by
acceleration or otherwise, and whether or not the Trustee shall have made any

                                      -13-
<PAGE>   14

demand upon the Issuer for the payment of overdue principal, redemption premium,
if any, and interest) shall be entitled and empowered, by intervention in such
proceeding or other means:

                        (1) to file and prove a claim for the whole amount of
the principal of, redemption premium, if any, and interest owing and unpaid in
respect of the Debentures then Outstanding or for breach of this Indenture and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and Counsel) and of the holders allowed in such proceeding; and

                        (2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator or similar official in any
such judicial proceeding is hereby authorized by each holder to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and Counsel, and any other amounts due the
Trustee under this Indenture.

                (b) No provision of this Indenture empowers the Trustee to
authorize or consent to or accept or adopt on behalf of any holders of the
Debentures any plan of reorganization, arrangement, adjustment or composition
affecting any of the Debentures or the rights of any holder thereof, or to
authorize the Trustee to vote in respect of the claim of any holder in any
proceeding described in subsection (a) of this Section.

        SECTION 6.06 POSSESSION OF DEBENTURES NOT REQUIRED. All rights under
this Indenture and the Debentures may be enforced by the Trustee without
possession of any Debentures or the production of them at trial or other
proceedings. Any proceedings instituted by the Trustee may be brought in its
name for itself or as representative of the Debenture holders without the
necessity of joining Debenture holders as parties, and any recovery resulting
from such proceedings shall, subject to Section 6.07, be for the ratable benefit
of the Debenture holders.

        SECTION 6.07 PRIORITY OF PAYMENT FOLLOWING EVENT OF DEFAULT.

                (a) If at any time after the occurrence of an Event of Default
the moneys held by the Trustee under this Indenture shall not be sufficient to
pay the principal of and interest on the Debentures as the same become due and
payable, such moneys, together with any moneys then available or thereafter
becoming available for such purpose, whether through the exercise of remedies in
this Article or otherwise, shall, subject to subsections (b) and (c) of this
Section, be applied by the Trustee as follows:

                        (1) first, to the payment of any expenses necessary in
the opinion of the Trustee to protect the interests of Debenture holders and the
payment of the reasonable fees, charges and expenses of the Trustee (including
the reasonable fees and disbursements of its counsel and accountants) incurred
in and about the performance of its powers and duties under this Indenture;

                                      -14-
<PAGE>   15

                        (2) second, to the payment of all installments of
interest on the Debentures then due and payable in the order in which such
installments became due and payable, and, if the amount available shall not be
sufficient to pay in full any particular installment, then to the payment,
ratably, according to the amounts due on such installments, without
discrimination or preference;

                        (3) third, to the payment of the unpaid principal amount
of any of the Debentures which shall have become due and payable, in the order
of due dates (other than Debentures called for redemption or contracted to be
purchased for the payment of which moneys are held pursuant to the provisions of
this Indenture), with interest upon the principal amount of the Debentures from
the respective dates upon which they shall have become due and payable, and, if
the amount available shall not be sufficient to pay in full the principal of
such Debentures due and payable on any particular due date, together with such
interest, then to the payment first of such interest, ratably, according to the
amount of principal due on such date, without any discrimination or preference;
and

                        (4) fourth, to the payment of principal of, interest on
and redemption premium if any, on Debentures called for redemption under Section
3.02, if any.

                (b) If the principal of all Debentures shall have become due and
payable, whether by their terms or by a declaration of acceleration, and subject
to subsection (a)(1) of this Section regarding payment to the Trustee, all such
moneys shall be applied to the payment of the principal and interest then due
and unpaid upon the Debentures, without preference or priority of principal over
interest or of interest over principal, or of any installment of interest over
any other installment of interest, or of any Debenture over any other Debenture,
ratably, according to the amounts due respectively for principal and interest,
without any discrimination or preference.

                (c) Whenever moneys are to be applied pursuant to the provisions
of this Section, the Trustee may, in its discretion, establish and maintain a
reserve for future fees and expenses, and may apply moneys to be distributed at
such times, and from time to time, as the Trustee shall determine, having due
regard for the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the
future. Whenever the Trustee shall apply such funds, it shall fix a date (which
shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made and upon such date interest
on the amounts of principal to be paid on such dates, and for which moneys are
available, shall cease to accrue. The Trustee shall also select a Record Date
for such payment date. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any moneys and of the fixing of any such
Record Date and payment date, and shall not be required to make payment to the
holder of any Debenture until such Debenture shall be presented to the Trustee
for appropriate endorsement or for cancellation if fully paid.

        SECTION 6.08 DEBENTURE HOLDERS MAY DIRECT PROCEEDINGS. The owners of a
majority in aggregate principal amount of the Debentures Outstanding shall,
subject to the requirements of Section 7.02(d), have the right, by an instrument
or instruments in writing executed and delivered to the Trustee, to direct the
method and place of conducting all remedial proceedings by the

                                      -15-
<PAGE>   16

Trustee hereunder, provided that such direction shall not be in conflict with
any rule of law or this Indenture, and that the Trustee shall have the right to
decline to follow any such direction which in the opinion of the Trustee would
be unduly prejudicial to the rights of Debenture holders not parties to such
direction or would subject the Trustee to personal liability or expense.
Notwithstanding the foregoing, the Trustee shall have the right to select and
retain counsel of its choosing to represent it in any such proceedings. The
Trustee may take any other action which is not inconsistent with any direction
under this Section.

        SECTION 6.09 LIMITATIONS ON RIGHTS OF DEBENTURE HOLDERS.

                (a) No Debenture holder shall have any right to pursue any other
remedy under this Indenture or the Debentures unless: (1) an Event of Default
shall have occurred and is continuing; (2) the owners of not less than a
majority in aggregate principal amount of all Debentures then Outstanding have
requested the Trustee, in writing, to exercise the powers herein above granted
or to pursue such remedy in its or their name or names; (3) the Trustee has been
offered indemnity satisfactory to it against costs, expenses and liabilities
reasonably anticipated to be incurred; (4) the Trustee has declined to comply
with such request, or has failed to do so, within sixty (60) days after its
receipt of such written request and offer of indemnity; and (5) no direction
inconsistent with such request has been given to the Trustee during such 60-day
period by the holders of a majority in aggregate principal amount of the
Debentures Outstanding.

                (b) The provisions of subsection (a) of this Section are
conditions precedent to the exercise by any Debenture holder of any remedy
hereunder. The exercise of such rights is further subject to the provisions of
Sections 6.08, 6.10 and 6.13. No one or more Debenture holders shall have any
right in any manner whatever to enforce any right under this Indenture, except
in the manner herein provided. All proceedings at law or in equity with respect
to an Event of Default shall be instituted and maintained in the manner herein
provided for the equal and ratable benefit of the Debenture holders of all
Debentures Outstanding.

        SECTION 6.10 UNCONDITIONAL RIGHT OF DEBENTURE HOLDER TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, any Debenture holder
shall have the absolute and unconditional right to receive payment of principal
of, redemption premium, if any, and interest on the Debentures on and after the
due date thereof, and to institute suit for the enforcement of any such payment.

        SECTION 6.11 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Debenture holder has instituted any proceeding to enforce any right or remedy
under this Indenture, and any such proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee or such
Debenture holder, then the Trustee and the Debenture holder shall, subject to
any determination in such proceeding, be restored to their former positions
hereunder, and all rights and remedies of the Trustee and the Debenture Holder
shall continue as though no such proceeding had been instituted.

                                      -16-
<PAGE>   17

        SECTION 6.12 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Trustee is intended to be exclusive of any
other right or remedy, but each such right or remedy shall, to the extent
permitted by law, be cumulative of and in addition to every other right or
remedy given hereunder or now or hereafter existing at law, in equity or
otherwise. The assertion or employment of any right or remedy hereunder shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

        SECTION 6.13 DELAY OR OMISSION NOT WAIVER. No delay or omission by the
Trustee or any Debenture holder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of such Event of Default. Every right and remedy given by this Article or
by law to the Trustee or the Debenture holders may be exercised from time to
time, and as often as may as deemed expedient, by the Trustee or the Debenture
holders, as the case may be.

        SECTION 6.14 WAIVER OF DEFAULTS. The holders of a majority in aggregate
principal amount of the Outstanding Debentures may, by written notice to the
Trustee and subject to the requirements of Section 7.02(d), waive any existing
default or Event of Default and its consequences, except an Event of Default
under Section 6.01. Upon any such waiver, the default or Event of Default shall
be deemed cured and shall cease to exist for all purposes. No waiver of any
default or Event of Default shall extend to or effect any subsequent default or
Event of Default or shall impair any right or remedy consequent thereto.

        SECTION 6.15 NOTICE OF EVENTS OF DEFAULT. If an Event of Default occurs
of which the Trustee has or is deemed to have notice under Section 7.02(g), the
Trustee shall give Immediate Notice thereof to the Issuer. Within five (5) days
thereafter (unless such Event of Default has been cured or waived), the Trustee
shall give notice of such Event of Default to each holder of Debentures then
Outstanding, provided, however, that except in the instance of an Event of
Default under Section 6.01, the Trustee may withhold such notice to Debenture
holders if and so long as the Trustee in good faith determines that the
withholding of such notice is in the interests of Debenture holders.

                                   ARTICLE VII
                                   THE TRUSTEE

        SECTION 7.01 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.

                (a) Prior to the occurrence of an Event of Default of which it
has or is deemed to have notice hereunder, and after the curing or waiver of any
Event of Default which may have occurred:

                        (1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

                                      -17-
<PAGE>   18

                        (2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee that conform to the requirements of this Indenture; but the Trustee is
under a duty to examine such certificates and opinions to determine whether they
conform to the requirements of this Indenture.

                (b) In case an Event of Default of which the Trustee has or is
deemed to have notice hereunder has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use in the conduct of such person's own affairs.

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

                        (1) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;

                        (2) the Trustee is not liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proven that the
Trustee was willful or grossly negligent in ascertaining the pertinent facts;

                        (3) the Trustee is not liable with respect to any action
it takes or omits to be taken by it in good faith in accordance with the
direction of the Debenture holders under any provision of this Indenture
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Indenture; and

                        (4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it has reasonable grounds for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.

                (d) The Trustee shall maintain records of all investments and
disbursements of proceeds in the funds and accounts established pursuant to this
Indenture through the date ending six (6) years following the date on which all
the Debentures have been retired.

                (e) Whether or not expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee is subject to the provisions of this
Section.

        SECTION 7.02 CERTAIN RIGHTS OF THE TRUSTEE. Except as otherwise herein
provided:

                                      -18-
<PAGE>   19

                (a) the Trustee may rely and is protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval, debenture
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;

                (b) whenever in the administration of this Indenture the Trustee
deems it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
thereof is specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;

                (c) the Trustee may consult with counsel acceptable to the
Trustee, who may be counsel for the Issuer, and the written advice of such
counsel or an opinion of counsel shall be full and complete authorization and
protection for any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion;

                (d) the Trustee is under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Debenture holders unless such holders have offered to the Trustee
security or indemnity satisfactory to the Trustee as to its terms, coverage,
duration, amount and otherwise with respect to the costs, expenses and
liabilities which may be incurred by it in compliance with such request or
direction, and the provision of such indemnity shall be mandatory for any remedy
taken upon direction of the holders of a majority in aggregate principal amount
of the Debentures;

                (e) the Trustee is not required to make any inquiry or
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, approval, Debenture, debenture or other paper or document but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit and, if the Trustee determines to make
such further inquiry or investigation, it is entitled to examine the books,
records and premises of the Issuer and the Borrower, in person or by agent or
attorney;

                (f) the Trustee may execute any of its trusts or powers or
perform any duties under this Indenture either directly or by or through agents
or attorneys, and may in all cases pay such reasonable compensation as it deems
proper to all such agents and attorneys reasonably employed or retained by it,
and the Trustee shall not be responsible for any misconduct or negligence of any
agent or attorney appointed with due care by it;

                (g) the Trustee is not required to take notice or deemed to have
notice of any default or Event of Default hereunder, except Events of Default
under Section 6.01(a) or (b), unless a Responsible Officer of the Trustee has
actual knowledge thereof or has received notice in writing of such default or
Event of Default from the Issuer, or the holders of at least a majority in
aggregate principal amount of the Outstanding Debentures, and in the absence of
any such notice, the Trustee may conclusively assume that no such default or
Event of Default exists;

                                      -19-
<PAGE>   20

                (h) the Trustee is not required to give any Debenture or surety
with respect to the performance of its duties or the exercise of its powers
under this Indenture;

                (i) in the event the Trustee receives inconsistent or
conflicting requests and indemnity from two or more groups of holders of
Debentures, each representing less than a majority in aggregate principal amount
of the Debentures Outstanding, pursuant to the provisions of this Indenture, the
Trustee, in its sole discretion, may determine what action, if any, shall be
taken;

                (j) the Trustee's immunities and protections from liability and
its right to indemnification in connection with the performance of its duties
under this Indenture shall extend to the Trustee's officers, directors, agents,
attorneys and employees. Such immunities and protections and right to
indemnification, together with the Trustee's right to compensation, shall
survive the Trustee's resignation or removal, the defeasance or discharge of
this Indenture and final payment of the Debentures;

                (k) the permissive right of the Trustee to take the actions
permitted by this Indenture shall not be construed as an obligation or duty to
do so; and

                (l) except for information provided by the Trustee concerning
the Trustee, the Trustee shall have no responsibility for any information in any
offering memorandum or other disclosure material distributed with respect to the
Debentures, and the Trustee shall have no responsibility for compliance with any
state or federal securities laws in connection with the Debentures.

        SECTION 7.03 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals
contained in this Indenture and in the Debentures (other than the certificate of
authentication on the Debentures) are statements of the Issuer and the Trustee
assumes no responsibility for their correctness. The Trustee is not accountable
for the use or application of any moneys paid over by the Trustee in accordance
with any provision of this Indenture or the Agreement.

        SECTION 7.04 QUALIFICATIONS OF TRUSTEE. There shall at all times be a
trustee hereunder which shall be a corporation or banking association organized
and doing business under the laws of the United States of America or of any
state, authorized under such laws to exercise corporate trust powers, which has
a combined capital and surplus of at least ten million dollars ($10,000,000).

        SECTION 7.05 COMPENSATION AND EXPENSES OF TRUSTEE.

                (a) The Issuer shall pay to the Trustee compensation for all
services rendered by it hereunder in accordance with terms agreed to in writing
from time to time and attached and made a part of this Trust Indenture, and,
subsequent to default, in accordance with the Trustee's then-currant fee
schedule for default administration (the entirety of which compensation shall
not be limited by any provision of law regarding compensation of a trustee of an
express trust)

                                      -20-
<PAGE>   21

                (b) To reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture, any other agreement relating to
the Debenture to which it is a party or in complying with any request by the
Issuer with respect to the Debentures, including the reasonable compensation,
expenses and disbursements of its agents and counsel, except any such expense,
disbursement or advance attributable to the Trustee's negligence or bad faith;
and

                (c) To indemnify, defend and hold the Trustee harmless from and
against any loss, liability or expense incurred without negligence or bad faith
on its part arising out of or in connection with the acceptance or
administration of the office of Trustee under this Indenture, including the
costs of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder or thereunder.
In the event the Trustee incurs expenses or renders services in any proceedings
under Bankruptcy Law relating to the Issuer, the expenses so incurred and
compensation for services so rendered are intended to constitute expenses of
administration under Bankruptcy Law.

        SECTION 7.06 RESIGNATION OR REMOVAL OF TRUSTEE; APPOINTMENT OF SUCCESSOR
TRUSTEE.

                (a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.06.

                (b) The Trustee may resign at any time by giving written notice
to the Issuer. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor Trustee by an instrument in writing. If an
instrument of acceptance has not been delivered to the resigning Trustee within
30 days after the giving of such notice of resignation, the resigning Trustee or
any holder of a Debenture then Outstanding may petition a court of competent
jurisdiction for the appointment of a successor Trustee.

                (c) If at any time: (1) the Trustee shall cease to be eligible
and qualified under Section 7.04 and shall fail or refuse to resign after
written request to do so by the Issuer or the holder of any Debenture, or (2)
the Trustee shall become incapable of acting or shall be adjudged insolvent, or
a receiver of the Trustee or its property shall be appointed, or any public
officer shall take charge or control of the Trustee, its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then in either such
case (A) the Issuer may remove the Trustee and appoint a successor Trustee in
accordance with the provisions of subsection (c) of this Section; or (B) any
holder of a Debenture then Outstanding may, on behalf of the holders of all
Outstanding Debentures, petition a court of competent jurisdiction for removal
of the Trustee and appointment of a successor Trustee.

                (d) The Issuer shall give written notice of each resignation or
removal of the Trustee and each appointment of a successor Trustee to each
holder of Debentures then Outstanding as listed in the Debenture Register. Each
such notice shall include the name and address of the applicable corporate trust
office of the successor Trustee.

                                      -21-
<PAGE>   22

        SECTION 7.07 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.

                (a) Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer, and the predecessor Trustee, an
instrument accepting its appointment. The resignation or removal of the retiring
Trustee shall thereupon become effective, and the successor Trustee shall,
without further act, deed or conveyance become vested with all the estates,
properties, rights, powers and duties of the predecessor Trustee. Upon the
request of the Issuer, or the successor Trustee, the predecessor Trustee shall
execute and deliver an instrument transferring to the successor Trustee all the
estates, properties, rights, powers and duties of the predecessor Trustee under
this Indenture, and shall duly assign, transfer, deliver and pay over to the
successor Trustee all the Trust Estate and moneys and other property then held
under this Indenture. The successor Trustee shall promptly give written notice
of its appointment to the holders of all Debentures Outstanding in the manner
prescribed herein, unless such notice has previously been given.

                (b) No successor Trustee shall accept appointment as provided in
this Section unless, as of the date of such acceptance, it is eligible and
qualified under the provisions of Section 7.04.

        SECTION 7.08 MERGER, SUCCESSION OR CONSOLIDATION OF TRUSTEE. Any
corporation or association: (a) into which the Trustee is merged or with which
it is consolidated; (b) resulting from any merger or consolidation to which the
Trustee is a party; or (c) succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor Trustee without
the execution or filing of any document or the taking of any further action. Any
such successor must nevertheless be eligible and possess the same qualifications
as the Trustee.

        SECTION 7.09 NOTICES TO DEBENTURE HOLDERS; WAIVER. Where this Indenture
provides for notice to Debenture holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, e-mailed and telecopied, to each
Debenture holder affected by each event, at his or her address as it appears on
the Debenture Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the first giving of such notice. In any case where
notice to Debenture holders is given by mail, neither the failure to mail such
notice, nor any default in any notice so mailed to any particular Debenture
holder shall affect the sufficiency of such notice with respect to other
Debenture holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to received such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Debenture holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

                                  ARTICLE VIII
                                    DISCHARGE

        SECTION 8.01 DISCHARGE. If

                                      -22-
<PAGE>   23

                (a) the principal of any Debentures and the interest due or to
become due thereon together with any redemption premium required by redemption
of any of the Debentures prior to maturity shall be paid, or is caused to be
paid, at the times and in the manner to which reference is made in the
Debentures, according to the true intent and meaning thereof, or the outstanding
Debentures shall have been paid and discharged in accordance with this Article,
and

                (b) all of the covenants, agreements, obligations, terms and
conditions of the Issuer under this Indenture shall have been kept, performed
and observed and there shall have been paid to the Trustee, all sums of money
due or to become due to them in accordance with the terms and provisions hereof,
then the right, title and interest of the Trustee in the Revenues shall
thereupon cease and the Trustee, on request of the Issuer shall release this
Indenture and the Revenues and shall execute such documents to evidence such
release as may be reasonably required by the Issuer.

                                   ARTICLE IX
                     SUPPLEMENTAL INDENTURES AND AMENDMENTS

        SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT DEBENTURE HOLDERS' CONSENT.
The Issuer and the Trustee may from time to time and at any time enter into
trust indentures supplemental to this Indenture, without the consent of or
notice to any Debenture holder, to effect any one or more of the following:

                (a) cure any ambiguity or defect or omission or correct or
supplement any provision herein or in any supplemental indenture;

                (b) grant to or confer upon the Trustee for the benefit of the
Debenture holders any additional rights, remedies, powers, authority or security
that may lawfully be granted to or conferred upon the Debenture holders or the
Trustee which are not contrary to or inconsistent with this Indenture as then in
effect.

                (c) add to the covenants and agreements of the Issuer in this
Indenture other covenants and agreements thereafter to be observed by the Issuer
or to surrender any right or power herein reserved to or conferred upon the
Issuer which are not contrary to or inconsistent with this Indenture as then in
effect;

                (d) modify, alter, supplement or amend this Indenture in such
manner as shall permit the qualification of this Indenture, if required, under
the Trust Indenture Act of 1939 or, the Securities Act of 1933, as from time to
time amended, or any similar federal statute hereafter in effect;

                (e) make any other change herein that is determined by the
Trustee to be not materially adverse to the interests of the Debenture holders.
The Trustee shall not be obligated to

                                      -23-
<PAGE>   24

enter into any such supplemental indenture which adversely affects the Trustee's
own rights, duties or immunities under this Indenture.

        SECTION 9.02 SUPPLEMENTAL INDENTURES REQUIRING DEBENTURE HOLDERS'
CONSENT. The Issuer and the Trustee, at any time and from time to time, may
execute and deliver a supplemental indenture for the purpose of making any
modification or amendment to this Indenture, but only with the written consent
of at least a majority in aggregate principal amount of the Debentures
Outstanding at the time such consent is given, and in case less than all of the
Debentures then Outstanding are affected by the modification or amendment, of
the holders of at least a majority in aggregate principal amount of the
Debentures so affected and Outstanding at the time such consent is given;
provided, however, that if such modification or amendment will, by its terms,
not take effect so long as any Debentures so affected remain Outstanding, the
consent of the holders of such Debentures shall not be required and such
Debentures shall not be deemed to be Outstanding for the purpose of any
calculation of Outstanding Debentures under this Section. Notwithstanding the
foregoing, no modification or amendment contained in any such supplemental
indenture shall permit any of the following, without the consent of each
Debenture holder whose rights are affected thereby: (a) a change in the terms of
stated maturity or redemption of any Debenture or of any installment of interest
thereon; (b) a reduction in the principal amount of or redemption premium on any
Debenture or in the rate of interest thereon or a change in the coin or currency
in which such Debenture is payable; (c) the creation of a lien on or a pledge of
any part of the Trust Estate, or the money or assets pledged under this
Indenture or any part thereof; (d) the granting of a preference or priority of
any Debenture or Debentures over any other Debenture or Debentures; (e) a
reduction in the aggregate principal amount of Debentures of which the consent
of the Debenture Holders is required to effect any such modification or
amendment; or (f) a change in the provisions of Section 6.14. Notwithstanding
the foregoing, the holder of any Debenture may extend the time for payment of
the principal of or interest on such Debenture; provided, however, that upon the
occurrence of an Event of Default, funds available hereunder for the payment of
the principal of and interest on the Debentures shall not be applied to any
payment so extended until all principal and interest payments which have not
been extended have first been paid in full. Notice of any supplemental indenture
executed pursuant to this Section shall be given to the Debenture holders
promptly following the execution thereof.

        SECTION 9.03 CONSENTS OF DEBENTURE HOLDERS AND OPINIONS. Each
supplemental indenture executed and delivered pursuant to the provisions of
Section 9.02 shall take effect only when and as provided in this Section 9.03. A
copy of such supplemental indenture (or brief summary thereof or reference
thereto in form approved by the Trustee), together with a request to Debenture
holders for their consent thereto in form satisfactory to the Trustee, shall be
sent by the Debenture holders, by registered or certified mail, postage prepaid,
provided that a failure to mail such request shall not affect the validity of
the supplemental indenture when consented to as provided hereinafter. Such
supplemental indenture shall not be effective unless and until there shall have
been filed with the Trustee (a) the written consents of Debenture holders of the
percentage of Debentures specified in Section 9.02, and (b) the opinion of
Counsel described in Section 9.06. Any such consent shall be binding upon the
Debenture holder giving such consent and upon any subsequent holder of such
Debentures and of any Debentures issued in exchange

                                      -24-
<PAGE>   25

therefor or in lieu thereof (whether or not such subsequent Debenture holder has
notice thereof), unless such consent is revoked in writing by the Debenture
holder giving such consent or a subsequent holder of such Debentures by filing
such revocation with the Trustee prior to the date the Trustee receives the
material required in subsections (a) and (b) of this Section.

        SECTION 9.04 NOTATION ON DEBENTURES. Debentures authenticated and
delivered after the effective date of any action taken as provided in this
Article may, and, if the Issuer so determines, shall bear a notation by
endorsement or otherwise in form approved by the Trustee as to such action, and
in that case upon demand of the holder of any Outstanding Debenture at such
effective date and presentation of such Debenture for the purpose at the Office
of the Trustee, or upon any transfer of any Debenture Outstanding at such
effective date, suitable notation shall be made on such Debenture or upon any
Debenture issued upon any such transfer by the Trustee as to any such action. If
the Issuer shall so determine, new Debentures so modified as in the opinion of
the Trustee and the Issuer to conform to such action shall be prepared,
authenticated and delivered, and upon demand of the holder of any Debenture then
Outstanding shall be exchanged, without cost to such Debenture holder for
Debentures then Outstanding, upon surrender of such Debentures for Debentures of
an equal aggregate principal amount and of the same Series, maturity and
interest rate, in any Authorized Denomination.

        SECTION 9.05 DELIVERY OF COUNSEL'S OPINION WITH RESPECT TO SUPPLEMENTAL
INDENTURES. The Trustee in accepting the supplemental indenture may rely, and
shall be fully protected in relying, on an opinion of Debenture Counsel
acceptable to it stating that (a) the execution of such supplemental indenture
is authorized or permitted by this Indenture and (b) all conditions precedent to
the execution and delivery of such supplemental indenture have been complied
with. The Trustee may accept and rely upon such opinion of Debenture Counsel as
conclusive evidence that any supplemental indenture executed pursuant to the
provisions of this Article complies with the requirements of this Article.

        SECTION 9.06 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution and
delivery of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every holder of any Debenture
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

                                    ARTICLE X
                            MISCELLANEOUS PROVISIONS

        SECTION 10.01 SECURITY AGREEMENT; FINANCING STATEMENTS. In addition to
the assignment by the Issuer of its rights in the Revenues to the Trustee, the
Issuer hereby acknowledges that, in order to more fully protect, perfect and
preserve the rights of the Trustee and the Debenture holders in the Revenues,
the Issuer grants to the Trustee a security interest in the Revenues and the
proceeds thereof. The Issuer agrees to cooperate with the Trustee in filing
financing statements, and continuations thereof, in such manner and in such
places as may be required by law in order to perfect such security interest. At
the time of the issuance of the

                                      -25-
<PAGE>   26

Debentures and at the required intervals under applicable State law, the
Trustee, at the expense of the Borrower, may obtain an opinion of Counsel
setting forth what, if any, actions by the Issuer or Trustee should be taken in
order to protect, perfect and preserve such security interest. The Trustee shall
cooperate with the Issuer as necessary, including the execution of any necessary
financing statements and continuations thereof. The following information is
supplied to facilitate filings under the Uniform Commercial Code of the State:

The secured party is Union Bank of California, N.A. Its address from which
information concerning the security interest may be obtained and its mailing
address is 120 South San Pedro Street, Suite 400, Los Angeles, CA 90012.

The debtor is Vineyard National Bancorp. Its mailing address is: 9590 Foothill
Boulevard, Rancho Cucamonga, California 91730.

        SECTION 10.02 LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture or the Debentures is intended or shall be construed to give to
any Person other than the parties hereto, and the Debenture holders any legal or
equitable right, remedy or claim under or in respect to this Indenture. This
Indenture and all of the covenants, conditions and provisions hereof are
intended to be and are for the sole and exclusive benefit of the parties hereto,
the Debenture holders, as herein provided.

        SECTION 10.03 SEVERABILITY. If any term or provision of this Indenture
or the Debentures shall be invalid, inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatever, and such term and
provision shall be valid and enforced to the fullest extent permitted by law.

        SECTION 10.04 NOTICES. Except as otherwise provided herein, all notices,
certificates or other communications hereunder shall be in writing and shall be
deemed given upon receipt, by hand delivery, mail, overnight delivery,
telecopier or other electronic means addressed as follows:

        Issuer:   Vineyard National Bancorp
                  9590 Foothill Boulevard
                  Rancho Cucamonga, California 91730
                  (909) 944-3210

Trustee:          Union Bank of California, N.A.
                  120 South San Pedro Street, Suite 400
                  Los Angeles, CA 90012
                  Fax (213) 972-5694

                                      -26-
<PAGE>   27

The Issuer and the Trustee may, by notice pursuant to this Section, designate
any different addresses to which subsequent notices, certificates or other
communications shall be sent. A duplicate copy of each notice, approval,
consent, request, complaint, demand or other communication given hereunder by
the Issuer or the Trustee to any one of the others shall also be given to the
others. For purposes of this Section and the definition of Immediate Notice,
"electronic means" shall mean telecopy or facsimile transmission or other
similar electronic means of communication which produces evidence of
transmission. Notwithstanding the foregoing, notices to the Trustee shall be
effective only upon receipt.

        SECTION 10.05 HOLIDAYS. If the date for making any payment or the last
date for performance of any act or the exercising of any right, as provided in
this Indenture, is not a Business Day, such payment may be made or act performed
or right exercised on the next succeeding Business Day with the same force and
effect as if done on the nominal date provided in this Indenture and no interest
shall accrue on the payment so deferred during the intervening period.

        SECTION 10.06 COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which when so executed and delivered shall constitute
an original, but all of which, when taken together, shall constitute but one and
the same instrument, and shall become effective when copies hereof shall be
delivered to each of the parties hereto, which copies, when taken together, bear
the signatures of each of the parties hereto.

        SECTION 10.07 APPLICABLE LAW. This Indenture shall be governed in all
respects including validity, interpretation and effect by, and shall be
enforceable in accordance with, the laws of the United States of America and of
the State.

        SECTION 10.08 LIMITATION OF LIABILITY OF OFFICIALS OF THE ISSUER.
Notwithstanding anything to the contrary contained herein, for payment of the
obligations of the Issuer under this Indenture and the Debentures, the Trustee,
the Debenture holders and any other party entitled to seek payment from the
Issuer under or to enforce this Indenture and the Debentures will be entitled to
look solely to amounts on deposit with and held by the Trustee for the benefit
of the Debenture holders, subject to the terms of this Indenture, if any, as may
now or hereafter be given to secure the payment of the obligations of the Issuer
under this Indenture and the Debentures, and no other property or assets of the
Issuer or any officer or director of the Issuer shall be subject to levy,
execution or other enforcement procedure for the satisfaction of the remedies
hereunder, or for any payment required to be made under this Indenture and the
Debentures, or for the performance of any of the covenants or warranties
contained herein.

        SECTION 10.09 SUCCESSORS AND ASSIGNS. All the covenants, promises and
agreements in this Indenture contained by or on behalf of the Issuer, or by or
on behalf of the Trustee, shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed or not.

        SECTION 10.10 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified person, it is not

                                      -27-
<PAGE>   28
necessary that all such matters be certified by, or covered by the opinion of,
only one such person, or that they be so certified or covered by only one
document, but one such person may certify or give an opinion with respect to
some matters and one or more other such persons as to other matters, and any
such person may certify or give an opinion as to such matters in one or several
documents. Any Officer's Certificate of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such official or officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any opinion of counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
official or officials of the Issuer stating that the information with respect to
such factual matters is in the possession of the Issuer, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Where
any person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

        SECTION 10.11 CONSENT OF HOLDERS. Any consent, request, direction,
approval, objection or other instrument required by this Indenture to be signed
and executed by the Debenture holders may be in any number of concurrent
writings of similar tenor and must be signed or executed by such Debenture
holders in person or by agent appointed in writing. Proof of the execution of
any such consent, request, direction, approval, objection or other instrument or
of the writing appointing any such agent and of the ownership of Debentures, if
made in the following manner, shall be sufficient for any of the purposes of
this Indenture, and shall be conclusive in favor of the Trustee with regard to
any action taken by it under such request or other instrument, namely:

                (a) The fact and date of the execution by any person of any such
writing may be proved by the certificate of any officer in any jurisdiction who
by law has power to take acknowledgments within such jurisdiction that the
person signing such writing acknowledged the execution thereof, or by an
affidavit of any witness to such execution.

                (b) The Issuer or the Trustee may establish a Record Date for
the purpose of identifying Debenture holders entitled to issue any such consent,
request, direction, approval or instrument.

        IN WITNESS WHEREOF, the Issuer has caused this Indenture to be signed in
its name by its Executive and attested by its Attesting Officer, and the
Trustee, in acceptance of the trusts created hereunder, has caused this
Indenture to be signed in its corporate name by its officer thereunder duly
authorized all as of the day and year first above written.

ISSUER:
VINEYARD NATIONAL BANCORP

                                      -28-
<PAGE>   29

By:
    Norman A. Morales, President

ATTEST:

By: Sara F. Ahern, Secretary

TRUSTEE:
UNION BANK OF CALIFORNIA, N.A.

By: Alison Braunstein, Authorized Officer

                                      -29-
<PAGE>   30

                                   APPENDIX A

                          CERTIFICATE OF AUTHENTICATION

                                      -30-
<PAGE>   31

                                   APPENDIX B

                                FORM OF DEBENTURE

                                      -31-

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