Document:

COMMON SECURITIES GUARANTEE AGREEMENT

                          CASCADE FINANCIAL CORPORATION

                            Dated as of March 1, 2000

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                                TABLE OF CONTENTS
                                                                          Page
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.  Definitions and Interpretation................................3

                                   ARTICLE II

                                    GUARANTEE

SECTION 2.1.  Guarantee.....................................................4
SECTION 2.2.  Waiver of Notice and Demand...................................4
SECTION 2.3.  Obligations Not Affected......................................4
SECTION 2.4.  Rights of Holders.............................................5
SECTION 2.5.  Guarantee of Payment..........................................5
SECTION 2.6.  Subrogation...................................................5
SECTION 2.7.  Independent Obligations.......................................6

                                   ARTICLE III

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.  Limitation of Transactions....................................6
SECTION 3.2.  Ranking.......................................................7

                                   ARTICLE IV

                                   TERMINATION
SECTION 4.1.  Termination...................................................7

                                    ARTICLE V

                                  MISCELLANEOUS

SECTION 5.1.  Successors and Assigns........................................7
SECTION 5.2.  Amendments....................................................8
SECTION 5.3.  Notices.......................................................8
SECTION 5.4.  Benefit.......................................................9
SECTION 5.5.  Governing Law.................................................9

                                        1

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                      COMMON SECURITIES GUARANTEE AGREEMENT

     This  COMMON  SECURITIES   GUARANTEE   AGREEMENT  (the  "Common  Securities
Guarantee"),  dated as of March 1, 2000,  is executed  and  delivered by CASCADE
FINANCIAL CORPORATION, a Delaware corporation (the "Guarantor"), for the benefit
of the Holders (as defined  herein)  from time to time of the Common  Securities
(as defined herein) of CASCADE  CAPITAL TRUST I, a Delaware  business trust (the
"Issuer").

     WHEREAS,  pursuant to an Amended  and  Restated  Declaration  of Trust (the
"Declaration"),  dated as of March 1,  2000,  by and among the  Trustees  of the
Issuer named therein,  the Guarantor,  as sponsor,  and the holders from time to
time of undivided  beneficial  interests in the assets of the Issuer, the Issuer
is  issuing  on the date  hereof  310  common  securities  having  an  aggregate
liquidation amount of Three Hundred Ten Thousand Dollars ($310,000), to meet the
capital  requirements of the Trust;  such common securities being designated the
11.00% Common Securities (the "Common Securities").

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

     WHEREAS,  the  Guarantor  is also  executing  and  delivering  the Series A
Capital Securities Guarantee Agreement, dated as of March 1, 2000 (the "Series A
Capital Securities  Guarantee"),  for the benefit of the holders of the Series A
Capital  Securities (as defined in the Declaration) and upon consummation of the
Exchange  Offer (as  defined in the  Declaration)  will  execute and deliver the
Series  B  Capital  Securities   Guarantee  Agreement  (the  "Series  B  Capital
Securities  Guarantee")  for the  benefit of the holders of the Series B Capital
Securities (as defined in the Declaration); it being understood that if an Event
of Default (as defined in the Declaration)  has occurred and is continuing,  the
rights of Holders of the Common Securities to receive  Guarantee  Payments under
this Common  Securities  Guarantee  are  subordinated,  to the extent and in the
manner set forth  herein,  to the rights of  holders of Capital  Securities  (as
defined in the  Declaration)  to receive  Guarantee  Payments under the Series A
Capital Securities Guarantee and the Series B Capital Securities  Guarantee,  as
the case may be.

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

                                        2

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                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.  Definitions and Interpretation

     In this Common Securities Guarantee, unless the context otherwise requires:

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

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

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

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

     (e)  all  references  in this Common  Securities  Guarantee to Articles and
          Sections  are  references  to  Articles  and  Sections  of this Common
          Securities Guarantee unless otherwise specified;

     (f)  a term defined in the Trust  Indenture  Act has the same meaning as in
          the Trust  Indenture  Act  unless  otherwise  defined  in this  Common
          Securities Guarantee; and

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

     "Guarantee Payments" means the following payments or distributions, without
duplication,  with respect to the Common  Securities,  to the extent not paid or
made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions
(as  defined in the  Declaration)  that are  required  to be paid on such Common
Securities,  to the extent the Issuer has funds  legally  available  therefor at
such time,  (ii) the  redemption  price,  including all  accumulated  and unpaid
Distributions to the date of redemption (the "Redemption  Price"), to the extent
the Issuer has funds legally  available  therefor at such time,  with respect to
any Common  Securities  called for  redemption,  and (iii) upon a  voluntary  or
involuntary dissolution,  winding-up or liquidation of the Issuer (other than in
connection with the  distribution of Debentures (as defined in the  Declaration)
to the Holders in  exchange  for Common  Securities  or in  connection  with the
redemption  of  the  Common  Securities,   in  each  case  as  provided  in  the
Declaration),  the lesser of (a) the aggregate of the liquidation amount and all
accumulated  and unpaid  Distributions  on the Common  Securities to the date of
payment,  to the extent the Issuer has funds legally available  therefor at such
time,  and (b) the  amount of  assets  of the  Issuer  remaining  available  for
distribution  to the Holders after  satisfaction  of liabilities to creditors of
the Issuer as required  by  applicable  law (in either  case,  the  "Liquidation
Distribution").  If an Event of  Default  under the  Declaration,  the  Series A
Capital  Securities  Guarantee  Agreement  or the  Series B  Capital  Securities
Guarantee Agreement has occurred and is continuing, no Guarantee

                                        3

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Payments  with respect to the Common  Securities  shall be made until holders of
Capital  Securities  shall be paid in full the Guarantee  Payments to which they
are entitled  under the Series A Capital  Securities  Guarantee and the Series B
Capital Securities Guarantee, as the case may be.

     "Holder"  means any holder,  as  registered on the books and records of the
Issuer, of any Common Securities.

     "Other Guarantees" means all guarantees,  other than this Common Securities
Guarantee,  to be issued by the Guarantor with respect to common  securities (if
any) similar to the Common  Securities issued by trusts other than the Issuer to
be established by the Guarantor (if any), in each case similar to the Issuer.

                                   ARTICLE II
                                    GUARANTEE
SECTION 2.1.  Guarantee

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

SECTION 2.2.  Waiver of Notice and Demand

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

SECTION 2.3.  Obligations Not Affected

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

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

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

                                        4

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

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

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

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

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

it being the intent of this Section 2.3 that the  obligations  of the  Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.

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

SECTION 2.4.  Rights of Holders

     The  Guarantor  expressly  acknowledges  that  any  Holder  of  the  Common
Securities may institute a legal  proceeding  directly  against the Guarantor to
enforce  its rights  under  this  Common  Securities  Guarantee,  without  first
instituting a legal proceeding against the Issuer or any other Person.

SECTION 2.5.  Guarantee of Payment

     This Common Securities  Guarantee creates a guarantee of payment and not of
collection.

SECTION 2.6.  Subrogation

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

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shall be paid to the  Guarantor  in  violation of the  preceding  sentence,  the
Guarantor  agrees to hold such  amount in trust for the  Holders and to pay over
such amount to the Holders.

SECTION 2.7.  Independent Obligations

     The Guarantor  acknowledges that its obligations  hereunder are independent
of the obligations of the Issuer with respect to the Common  Securities and that
the  Guarantor  shall be liable as  principal  and as debtor  hereunder  to make
Guarantee  Payments  pursuant to the terms of this Common  Securities  Guarantee
notwithstanding  the  occurrence  of any event  referred to in  subsections  (a)
through (g), inclusive, of Section 2.3 hereof.

                                   ARTICLE III
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.  Limitation of Transactions

     So long as any Common Securities remain outstanding, the Guarantor will not
(i)  declare or pay any  dividends  or  distribution  on, or  redeem,  purchase,
acquire or make a  liquidation  payment with  respect to any of the  Guarantor's
capital stock, (ii) make any payment of principal of, or interest or premium, if
any, on or repay,  repurchase  or redeem any debt  securities  of the  Guarantor
(including Other  Debentures,  as defined in the Indenture) that rank pari passu
with or junior in right of payment to the Debentures or (iii) make any guarantee
payments with respect to any  guarantee by the Guarantor of the debt  securities
of any subsidiary of the Guarantor  (including Other  Guarantees,  as defined in
the  Indenture)  if such  guarantee  ranks pari passu with or junior in right of
payment to the Debentures  (other than (a) dividends or  distributions in shares
of, or options,  warrants  or rights to  subscribe  for or  purchase  shares of,
common stock of the Guarantor,  (b) any  declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future,  or the  redemption or repurchase of any such
rights  pursuant  thereto,  (c) payments  under the Series A Capital  Securities
Guarantee and the Series B Capital  Securities  Guarantee,  (d) as a result of a
reclassification  of  the  Guarantor's  capital  stock  or the  exchange  or the
conversion of one class or series of the  Guarantor's  capital stock for another
class or series of the Guarantor's capital stock, (e) the purchase of fractional
interests in shares of the Guarantor's  capital stock pursuant to the conversion
or exchange  provisions of such capital stock or the security being converted or
exchanged,  and (f)  purchases of common stock related to the issuance of common
stock or rights under any of the Guarantor's  benefit or compensation  plans for
its  directors,  officers  or  employees  or  any of  the  Guarantor's  dividend
reinvestment  plans) if at such time (1) there shall have  occurred any event of
which the  Guarantor  has  actual  knowledge  that (A) is, or with the giving of
notice or the lapse of time,  or both,  would be, an Event of Default and (B) in
respect of which the Guarantor  shall not have taken  reasonable  steps to cure,
(2) if such Debentures are held by the Property Trustee,  the Guarantor shall be
in default  with  respect to its payment of any  obligations  under the Series A
Capital Securities Guarantee or the Series B Capital Securities Guarantee or (3)
the  Guarantor  shall have given  notice of its  election of the exercise of its
right to  commence  an  Extended  Interest  Payment  Period as  provided  in the
Indenture and shall not have rescinded such notice,  and such Extended  Interest
Payment Period, or an extension thereof, shall have commenced and be continuing.

                                        6

<PAGE>

SECTION 3.2.  Ranking

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

                                   ARTICLE IV
                                   TERMINATION

SECTION 4.1.  Termination

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

                                    ARTICLE V
                                  MISCELLANEOUS

SECTION 5.1.  Successors and Assigns

     All guarantees and agreements contained in this Common Securities Guarantee
shall bind the successors,  assigns, receivers,  trustees and representatives of
the  Guarantor  and shall  inure to the  benefit  of the  Holders  of the Common
Securities then outstanding.

SECTION 5.2.  Amendments

     Except with  respect to any changes  which do not  adversely  affect in any
material  respect  the  rights of the  Holders  (in which case no consent of the
Holders will be required),  this Common Securities Guarantee may only be amended
with the prior  approval of the Holders of a majority in  liquidation  amount of
all the outstanding Common Securities. The provisions of Section

                                        7

<PAGE>

12.2 of the  Declaration  with  respect  to  meetings  of  Holders  of the Trust
Securities apply to the giving of such approval.

SECTION 5.3.  Notices

     All notices  provided for in this Common  Securities  Guarantee shall be in
writing,  duly signed by the party giving such notice,  and shall be  delivered,
telecopied or mailed by registered or certified mail, as follows:

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

                         CASCADE CAPITAL TRUST I
                         c/o Cascade Financial Corporation
                         2828 Colby Avenue
                         Everett, Washington 98201
                         Attention:  Chief Financial Officer
                         Telephone:    (425) 339-5500
                         Telecopier:   (425) 259-8512

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

                         CASCADE FINANCIAL CORPORATION
                         2828 Colby Avenue
                         Everett, Washington 98201
                         Attention:  Chief Financial Officer
                         Telephone:    (425) 339-5500
                         Telecopier:   (425) 259-8512

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

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

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<PAGE>

SECTION 5.4.  Benefit

     This Common  Securities  Guarantee is solely for the benefit of the Holders
of the Common  Securities  and is not separately  transferrable  from the Common
Securities.

SECTION 5.5.  Governing Law

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

     This Common  Securities  Guarantee is executed as of the day and year first
above written.

                                      CASCADE FINANCIAL CORPORATION

                                      By:  /s/ Frank M. McCord
                                         --------------------------------------
                                         Frank M. McCord
                                         Chairman and Chief Executive Officer

                                        9-----------------------------------------------------------------------

                 SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
                          CASCADE FINANCIAL CORPORATION
                            Dated as of March 1, 2000

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

<PAGE>

                                TABLE OF CONTENTS
                                                                          Page

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

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

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1  Trust Indenture Act; Application.................................5
SECTION 2.2  Lists of Holders of Securities...................................5
SECTION 2.3  Reports by the Capital Securities Guarantee Trustee..............6
SECTION 2.4  Periodic Reports.................................................6
SECTION 2.5  Evidence of Compliance with Conditions Precedent.................6
SECTION 2.6  Waiver of Events of Default......................................6
SECTION 2.7  Notice of Events of Default......................................6
SECTION 2.8  Conflicting Interests............................................7

                                   ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                      CAPITAL SECURITIES GUARANTEE TRUSTEE

SECTION 3.1  Powers and Duties of the Capital Securities Guarantee Trustee ...7
SECTION 3.2  Certain Rights of Capital Securities Guarantee Trustee...........9
SECTION 3.3  Not Responsible for Recitals or Issuance of Series
             A Capital Securities Guarantee..................................10

                                   ARTICLE IV

                      CAPITAL SECURITIES GUARANTEE TRUSTEE

SECTION 4.1  Capital Securities Guarantee Trustee; Eligibility...............11
SECTION 4.2  Appointment, Removal and Resignation of Capital Securities
                           Guarantee Trustee.................................11

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1  Guarantee.......................................................12
SECTION 5.2  Waiver of Notice and Demand.....................................12
SECTION 5.3  Obligations Not Affected........................................12
SECTION 5.4  Rights of Holders...............................................13
SECTION 5.5  Guarantee of Payment............................................14

                                       (i)

<PAGE>

                                                                           Page

SECTION 5.6  Subrogation.....................................................14
SECTION 5.7  Independent Obligations.........................................14

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1  Limitation of Transactions......................................14
SECTION 6.2  Ranking.........................................................15

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1  Termination.....................................................15

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1  Exculpation.....................................................16
SECTION 8.2  Compensation and Indemnification................................16

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1  Successors and Assigns..........................................17
SECTION 9.2  Amendments......................................................17
SECTION 9.3  Notices.........................................................17
SECTION 9.4  Exchange Offer..................................................18
SECTION 9.5  Benefit.........................................................18
SECTION 9.6  Governing Law...................................................19

                                      (ii)

<PAGE>

                              CROSS REFERENCE TABLE

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

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

                                      (iii)

<PAGE>

                 SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT

         This SERIES A CAPITAL  SECURITIES  GUARANTEE  AGREEMENT  (the "Series A
Capital  Securities  Guarantee"),  dated  as of March 1,  2000 is  executed  and
delivered  by  CASCADE  FINANCIAL  CORPORATION,   a  Delaware  corporation  (the
"Guarantor"),  and WILMINGTON TRUST COMPANY, a Delaware banking corporation,  as
trustee (the  "Capital  Securities  Guarantee  Trustee" or  "Trustee"),  for the
benefit of the  Holders (as  defined  herein)  from time to time of the Series A
Capital  Securities (as defined  herein) of CASCADE  CAPITAL TRUST I, a Delaware
statutory business trust (the "Issuer").

         WHEREAS,  pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"),  dated as of March 1,  2000,  by and among the  trustees  of the
Issuer named therein,  the Guarantor,  as sponsor,  and the Holders from time to
time of undivided  beneficial  interests in the assets of the Issuer, the Issuer
(i) is issuing on the date hereof 10,000 capital securities, having an aggregate
liquidation  amount of $10,000,000,  such capital  securities  being  designated
the11.00%  Capital  Securities,  Series A  (collectively  the  "Series A Capital
Securities")  and (ii) in connection  with an Exchange  Offer (as defined in the
Declaration), will execute and deliver the Series B Capital Securities Guarantee
(as  defined  in the  Declaration)  for the  benefit  of Holders of the Series B
Capital Securities (as defined in the Declaration).

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

         WHEREAS,  the  Guarantor is also  executing and  delivering  the Common
Securities  Guarantee  Agreement,  dated  as  of  March  1,  2000  (the  "Common
Securities Guarantee"),  for the benefit of the holders of the Common Securities
(as defined herein),  the terms of which provide that if an Event of Default (as
defined  in the  Declaration)  has  occurred  and is  continuing,  the rights of
holders of the Common Securities to receive Guarantee  Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set forth
in the Common Securities Guarantee, to the rights of Holders of Series A Capital
Securities  and the Series B Capital  Securities to receive  Guarantee  Payments
under  this  Series A  Capital  Securities  Guarantee  and the  Series B Capital
Securities Guarantee, as the case may be.

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

                                      - 1 -

<PAGE>

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

         SECTION 1.1       Definitions and Interpretation

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

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

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

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

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

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

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

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

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

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

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

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

                                      - 2 -

<PAGE>

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

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

         "Debentures"  shall mean the series of subordinated  debt securities of
the Guarantor  designated  the11.00%  Junior  Subordinated  Deferrable  Interest
Debentures due March 1, 2030, Series A, held by the Property Trustee (as defined
in the Declaration) of the Issuer.

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

         "Guarantee   Payments"   shall   mean   the   following   payments   or
distributions,  without  duplication,  with  respect  to the  Series  A  Capital
Securities,  to the extent not paid or made by or on behalf of the  Issuer:  (i)
any accumulated and unpaid  Distributions  (as defined in the Declaration)  that
are required to be paid on such Series A Capital  Securities,  to the extent the
Issuer has funds legally  available  therefor at such time,  (ii) the redemption
price,  including  all  accumulated  and  unpaid  Distributions  to the  date of
redemption (the "Redemption  Price"), to the extent the Issuer has funds legally
available therefor at such time, with respect to any Series A Capital Securities
called for  redemption,  and (iii) upon a voluntary or involuntary  dissolution,
winding up or  liquidation  of the Issuer  (other  than in  connection  with the
distribution  of  Debentures  to the  Holders in  exchange  for Series A Capital
Securities  or in  connection  with  the  redemption  of the  Series  A  Capital
Securities, in each case as provided in the Declaration),  the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid Distributions
on the Series A Capital  Securities  to the date of  payment,  to the extent the
Issuer has funds legally available  therefor at such time, and (b) the amount of
assets of the Issuer  remaining  available  for  distribution  to Holders  after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law (in either case, the "Liquidation Distribution"). If an Event of Default has
occurred and is continuing,  no Guarantee  Payments under the Common  Securities
Guarantee with respect to the Common  Securities or any guarantee  payment under
the Common Securities  Guarantee or any Other Common Securities  Guarantee shall
be made until the  Holders of the Series A Capital  Securities  shall be paid in
full the  Guarantee  Payments  to which they are  entitled  under this  Series A
Capital Securities Guarantee.

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

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

                                      - 3 -

<PAGE>

         "Indenture"  shall  mean the  Indenture,  dated  as of  March 1,  2000,
between Cascade Financial  Corporation,  as issuer of Debentures (the "Debenture
Issuer"),  and  Wilmington  Trust  Company,  as  trustee,  pursuant to which the
Debentures are to be issued to the Property Trustee of the Issuer.

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

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

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

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

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

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

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

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

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

         "Registration  Rights  Agreement"  shall mean the  Registration  Rights
Agreement, dated as of February 25, 2000, by and among the Guarantor, the Issuer
and the Initial  Purchaser  named  therein,  as such  agreement  may be amended,
modified or supplemented from time to time.

                                      - 4 -

<PAGE>

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

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

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

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

                                   ARTICLE II

                               TRUST INDENTURE ACT

         SECTION 2.1       Trust Indenture Act; Application

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

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

         SECTION 2.2       Lists of Holders of Securities

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

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

                                      - 5 -

<PAGE>

         SECTION 2.3       Reports by the Capital Securities Guarantee Trustee

         Within 60 days after the date hereof, and no later than the anniversary
date hereof in each succeeding year, the Capital  Securities  Guarantee  Trustee
shall provide to the Holders of the Series A Capital  Securities such reports as
are required by Section 313 of the Trust  Indenture Act, if any, in the form and
in the manner  provided by Section 313 of the Trust  Indenture  Act. The Capital
Securities  Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.

         SECTION 2.4       Periodic Reports

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

         SECTION 2.5       Evidence of Compliance with Conditions Precedent

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

         SECTION 2.6       Waiver of Events of Default

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

         SECTION 2.7       Notice of Events of Default

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

                                      - 6 -

<PAGE>

faith  determines that the withholding of such notice is in the interests of the
Holders of the Series A Capital Securities.

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

         SECTION 2.8       Conflicting Interests

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

                                   ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                      CAPITAL SECURITIES GUARANTEE TRUSTEE

         SECTION 3.1    Powers  and Duties of  the Capital Securities  Guarantee
                        Trustee

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

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

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

                                      - 7 -

<PAGE>

a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

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

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

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

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

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

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

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

                                      - 8 -

<PAGE>

         satisfactory to the Capital Securities Guarantee Trustee,  against such
         risk or liability is not reasonably assured to it.

         SECTION 3.2     Certain Rights of Capital Securities Guarantee Trustee

         (a)      Subject to the provisions of Section 3.1:

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

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

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

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

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

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

                                      - 9 -

<PAGE>

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

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

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

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

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

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

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

         The recitals  contained in this Series A Capital  Securities  Guarantee
shall be taken as the  statements of the Guarantor,  and the Capital  Securities
Guarantee Trustee does not assume any

                                     - 10 -

<PAGE>

responsibility for their correctness.  The Capital Securities  Guarantee Trustee
makes no  representation  as to the  validity  or  sufficiency  of this Series A
Capital Securities Guarantee.

                                   ARTICLE IV

                      CAPITAL SECURITIES GUARANTEE TRUSTEE

         SECTION 4.1       Capital Securities Guarantee Trustee; Eligibility

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

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

                  (ii) be a  corporation  or other  Person  organized  and doing
         business under the laws of the United States of America or any state or
         territory  thereof or of the District of Columbia,  or a corporation or
         other Person permitted by the Securities and Exchange Commission to act
         as an indenture trustee under the Trust Indenture Act, authorized under
         such laws to exercise corporate trust powers, having a combined capital
         and surplus of at least fifty million U.S. dollars  ($50,000,000),  and
         subject to supervision or examination by federal, state, territorial or
         District  of  Columbia  authority;  it  being  understood  that if such
         corporation  or other  Person  publishes  reports of condition at least
         annually,  pursuant to law or to the requirements of the supervising or
         examining  authority  referred to above, then, for the purposes of this
         Section  4.1(a)(ii) and to the extent  permitted by the Trust Indenture
         Act,  the  combined  capital and surplus of such  corporation  shall be
         deemed to be its combined  capital and surplus as set forth in its most
         recent report of condition so published.

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

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

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

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

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

         (c) The Capital Securities  Guarantee Trustee shall hold office until a
Successor  Capital  Securities  Guarantee  Trustee  shall  have been  appointed,
subject to Section 4.1, or until its removal

                                     - 11 -

<PAGE>

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

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

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

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

                                    ARTICLE V

                                    GUARANTEE

         SECTION 5.1       Guarantee

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

         SECTION 5.2       Waiver of Notice and Demand

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

         SECTION 5.3       Obligations Not Affected

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

                                     - 12 -

<PAGE>

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

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

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

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

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

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

         (g) the consummation  of the  Exchange Offer  (subject  to Section  7.1
             hereof); or

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

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

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

         SECTION 5.4       Rights of Holders

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

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

                                     - 13 -

<PAGE>

         SECTION 5.5       Guarantee of Payment

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

         SECTION 5.6       Subrogation

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

         SECTION 5.7       Independent Obligations

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

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

         SECTION 6.1       Limitation of Transactions

         So long as any Capital  Securities  remain  outstanding,  the Guarantor
shall not (i)  declare  or pay any  dividends  or  distributions  on, or redeem,
purchase,  acquire,  or make a  liquidation  payment with respect to, any of the
Guarantor's capital stock, (ii) make any payment of principal of, or interest or
premium,  if any, on or repay,  repurchase or redeem any debt  securities of the
Guarantor  (including  Other  Debentures) that rank pari passu with or junior in
right of payment to the  Debentures  or (iii) make any  guarantee  payments with
respect  to  any  guarantee  by the  Guarantor  of the  debt  securities  of any
subsidiary of the Guarantor (including Other Guarantees) if such guarantee ranks
pari passu with or junior in right of payment to the Debentures  (other than (a)
dividends  or  distributions  in shares  of,  or  options,  warrants,  rights to
subscribe  for or purchase  shares of,  common stock of the  Guarantor,  (b) any
declaration  of  a  dividend  in  connection  with  the   implementation   of  a
shareholders'  rights plan,  or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments  under  this  Series A Capital  Securities  Guarantee  and the Series B
Capital  Securities  Guarantee,  (d) as a result  of a  reclassification  of the
Guarantor's  capital  stock or the  exchange or the  conversion  of one class or
series  of the  Guarantor's  capital  stock for  another  class or series of the
Guarantor's capital stock, (e) the purchase of fractional interests in shares of
the Guarantor's  capital stock pursuant to the conversion or exchange provisions
of such capital  stock or the security  being  converted or  exchanged,  and (f)
purchases of common

                                     - 14 -

<PAGE>

stock  related  to the  issuance  of  common  stock or  rights  under any of the
Guarantor's  benefit  or  compensation  plans  for its  directors,  officers  or
employees or any of the Guarantor's dividend reinvestment plans) if at such time
(l) there  shall  have  occurred  any event of which the  Guarantor  has  actual
knowledge  that (A) is a Default  or Event of  Default  (each as  defined in the
Indenture)  and (B) in  respect  of which the  Guarantor  shall  not have  taken
reasonable  steps  to  cure,  (2) if the  Debentures  are  held by the  Property
Trustee,  the  Guarantor  shall be in default with respect to its payment of any
obligations  under  this  Series  A  Capital  Securities  Guarantee  or (3)  the
Guarantor  shall have given  notice of its election of the exercise of its right
to commence an Extended Interest Payment Period as provided in the Indenture and
shall not have rescinded such notice, and such Extended Interest Payment Period,
or an extension thereof, shall have commenced and be continuing.

         SECTION 6.2       Ranking

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

                                   ARTICLE VII

                                   TERMINATION

         SECTION 7.1       Termination

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

                                     - 15 -

<PAGE>

                                  ARTICLE VIII

                                 INDEMNIFICATION

         SECTION 8.1       Exculpation

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

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

         SECTION 8.2       Compensation and Indemnification

         The Guarantor agrees to pay to the Capital Securities Guarantee Trustee
such  compensation  for its  services  as shall be  mutually  agreed upon by the
Guarantor and the Capital  Securities  Guarantee  Trustee.  The Guarantor  shall
reimburse  the  Capital  Securities  Guarantee  Trustee  upon  request  for  all
reasonable  out-of-pocket  expenses  incurred by it,  including  the  reasonable
compensation and expenses of the Capital Securities  Guarantee  Trustee's agents
and counsel,  except any expense as may be attributable to the negligence or bad
faith of the Capital Securities Guarantee Trustee.

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

                                     - 16 -

<PAGE>

                                   ARTICLE IX

                                  MISCELLANEOUS

         SECTION 9.1       Successors and Assigns

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

         SECTION 9.2       Amendments

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

         SECTION 9.3       Notices

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

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

                           CASCADE CAPITAL TRUST I
                           c/o Cascade Financial Corporation
                           2828 Colby Avenue
                           Everett, Washington 98201
                           Attention:  Chief Financial Officer
                           Telephone: (425) 339-5500
                            Telecopier: (425) 258-0624

                                     - 17 -

<PAGE>

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

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

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

                         CASCADE FINANCIAL CORPORATION
                         2828 Colby Avenue
                         Everett, Washington 98201
                         Attention:  Chief Financial Officer
                         Telephone:    (425) 339-5500
                         Telecopier:   (425) 258-0624

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

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

         SECTION 9.4                Exchange Offer

         In the event an Exchange  Offer  Registration  Statement (as defined in
the Registration  Rights  Agreement)  becomes effective and the Issuer exchanges
any Series B Capital  Securities for Series A Capital Securities in the Exchange
Offer, the Guarantor will enter into the Series B Capital Securities  Guarantee,
which will be in substantially the same form as this Series A Capital Securities
Guarantee, with respect to the Series B Capital Securities.  Each Holder, by its
acceptance hereof, agrees to be bound by the Registration Rights Agreement.

         SECTION 9.5                Benefit

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

                                     - 18 -

<PAGE>

         SECTION 9.6                Governing Law

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

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

                                    CASCADE FINANCIAL CORPORATION,
                                    as Guarantor

                                    By:  /s/ Frank M. McCord
                                         -----------------------------------
                                         Frank M. McCord
                                         Chairman and Chief Executive Officer

                                    WILMINGTON TRUST COMPANY,
                                    as Capital Securities Guarantee Trustee

                                    By:   /s/ Kathleen A. Pedelini
                                         -----------------------------------
                                         Name:   Kathleen A. Pedelini
                                         Title:  Administrative Account Manager

                                     - 19 -

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