Document:

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                                                                    EXHIBIT 10.4

                              GUARANTEE AGREEMENT

                                 SIERRA BANCORP

                          Dated as of November 28, 2001
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                                TABLE OF CONTENTS
                                                                          PAGE
                                    ARTICLE I

                          DEFINITIONS AND INTERPRETATION

SECTION 1.1  Definitions and Interpretation.................................1

                                   ARTICLE II

                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 2.1  Powers and Duties of the Guarantee Trustee.....................4

SECTION 2.2  Certain Rights of Guarantee Trustee............................5

SECTION 2.3  Not Responsible for Recitals or Issuance of Guarantee..........7

SECTION 2.4  Events of Default; Waiver......................................7

SECTION 2.5  Events of Default; Notice......................................8

                                   ARTICLE III

                                GUARANTEE TRUSTEE

SECTION 3.1  Guarantee Trustee; Eligibility.................................8

SECTION 3.2  Appointment, Removal and Resignation of Guarantee Trustee......9

                                   ARTICLE IV

                                    GUARANTEE

SECTION 4.1  Guarantee......................................................9

SECTION 4.2  Waiver of Notice and Demand...................................10

SECTION 4.3  Obligations Not Affected......................................10

SECTION 4.4  Rights of Holders.............................................11

SECTION 4.5  Guarantee of Payment..........................................11

SECTION 4.6  Subrogation...................................................11

SECTION 4.7  Independent Obligations.......................................12

SECTION 4.8  Enforcement...................................................12

                                        i
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                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1  Limitation of Transactions....................................12

SECTION 5.2  Ranking.......................................................13

                                   ARTICLE VI

                                  TERMINATION

SECTION 6.1  Termination...................................................13

                                  ARTICLE VII

                                INDEMNIFICATION

SECTION 7.1  Exculpation...................................................13

SECTION 7.2  Indemnification...............................................14

SECTION 7.3  Compensation; Reimbursement of Expenses.......................15

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.1  Successors and Assigns........................................15

SECTION 8.2  Amendments....................................................16

SECTION 8.3  Notices.......................................................16

SECTION 8.4  Benefit.......................................................17

SECTION 8.5  Governing Law.................................................17

SECTION 8.6  Counterparts..................................................17

                                       ii
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                              GUARANTEE AGREEMENT
                              -------------------

          This GUARANTEE AGREEMENT (the "Guarantee"), dated as of November 28,
2001, is executed and delivered by Sierra Bancorp, a bank holding company
incorporated in California (the "Guarantor"), and Wilmington Trust Company, a
Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of Sierra 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 November 28, 2001, among the trustees named
therein of the Issuer, Sierra Bancorp, 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 securities, having an aggregate liquidation
amount of up to $15,000,000, designated the Floating Rate TRUPS(R) (the
"Capital Securities");

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

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

                                    ARTICLE I

                        DEFINITIONS AND INTERPRETATION

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

In this Guarantee, unless the context otherwise requires:

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

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

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

          (d) all references in this Guarantee to Articles and
     Sections are to Articles and Sections of this Guarantee, unless
     otherwise specified;

          (e) terms defined in the Declaration as at the date of
     execution of this Guarantee have the same meanings when used in this
     Guarantee, unless otherwise defined in this Guarantee or unless the
     context otherwise requires; and

          (f) a reference to the singular includes the plural and vice
     versa.
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          "Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

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

          "Covered Person" means any Holder of Capital Securities.

          "Debentures" means the junior subordinated debentures of Sierra
Bancorp, designated the Floating Rate Junior Subordinated Debt Securities due
2031, held by the Institutional Trustee (as defined in the Declaration) of the
Issuer.

          "Event of Default" has the meaning set forth in Section 2.4.

          "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) which are required to be paid on such Capital
Securities to the extent the Issuer shall have funds available in the Property
Account (as defined in the Declaration) therefor at such time, (ii) the
Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
any Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
Capital Securities called for redemption upon the occurrence of a Special Event
(as defined in the Indenture), and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than
in connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available in the Property Account therefor at such
time, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer as required by applicable law (in either
case, the "Liquidation Distribution").

          "Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

          "Holder" means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
                                       --------  -------
whether the holders of the requisite percentage of Capital Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.

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

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          "Indenture" means the Indenture dated as of November 28, 2001,
between the Guarantor and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

          "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

          "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of
all Capital Securities then outstanding.

          "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations
of the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

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

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

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

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

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

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

          "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with
direct responsibility for the administration of any matters relating to this
Guarantee, including any Vice President, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular corporate trust matter, any
other officer to whom

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such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.

          "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

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

                                    ARTICLE II

                   POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 2.1. Powers and Duties of the Guarantee Trustee
             ------------------------------------------

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

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

          (c) The Guarantee Trustee, before the occurrence of any Event of
     Default and after curing all Events of Default that may have occurred,
     shall undertake to perform only such duties as are specifically set forth
     in this Guarantee, and no implied covenants shall be read into this
     Guarantee against the Guarantee Trustee. In case an Event of Default has
     occurred (that has not been cured or waived pursuant to Section 2.4) and
     is actually known to a Responsible Officer of the Guarantee Trustee, the
     Guarantee Trustee shall exercise such of the rights and powers vested in
     it by this Guarantee, and use the same degree of care and skill in its
     exercise thereof, as a prudent person would exercise or use under the
     circumstances in the conduct of his or her own affairs.

          (d) No provision of this Guarantee shall be construed to relieve the
     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 and after
          the curing or waiving of all such Events of Default that may have
          occurred:

                        (A) the duties and obligations of the Guarantee
               Trustee shall be determined solely by the express provisions
               of this Guarantee, and the Guarantee Trustee shall not be
               liable except for the performance of such duties and
               obligations as are specifically set forth in this Guarantee,
               and

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               no implied covenants or obligations shall be read into this
               Guarantee against the Guarantee Trustee; and

                        (B) in the absence of bad faith on the part of the
               Guarantee Trustee, the 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 Guarantee Trustee and conforming to
               the requirements of this Guarantee; but in the case of any
               such certificates or opinions furnished to the Guarantee
               Trustee, the 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 Guarantee;

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

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

               (iv)  no provision of this Guarantee shall require the 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 Guarantee
          Trustee shall have reasonable grounds for believing that the
          repayment of such funds is not reasonably assured to it under the
          terms of this Guarantee, or security and indemnity, reasonably
          satisfactory to the Guarantee Trustee, against such risk or
          liability is not reasonably assured to it.

SECTION 2.2 Certain Rights of Guarantee Trustee
            -----------------------------------

          (a)  Subject to the provisions of Section 2.1:

               (i)   The 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
          Guarantee shall be sufficiently evidenced by an Officer's
          Certificate.

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               (iii) Whenever, in the administration of this Guarantee, the
          Guarantee Trustee shall deem it desirable that a matter be proved or
          established before taking, suffering or omitting any action
          hereunder, the 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 Officer's Certificate of
          the Guarantor which, upon receipt of such request, shall be promptly
          delivered by the Guarantor.

               (iv)  The Guarantee Trustee shall have no duty to see to any
          recording, filing or registration of any instrument or other writing
          (or any rerecording, refiling or registration thereof).

               (v)   The 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. Such counsel may be counsel to the Guarantor or any of its
          Affiliates and may include any of its employees. The Guarantee
          Trustee shall have the right at any time to seek instructions
          concerning the administration of this Guarantee from any court of
          competent jurisdiction.

               (vi)  The Guarantee Trustee shall be under no obligation to
          exercise any of the rights or powers vested in it by this Guarantee
          at the request or direction of any Holder, unless such Holder shall
          have provided to the Guarantee Trustee such security and indemnity,
          reasonably satisfactory to the Guarantee Trustee, against the costs,
          expenses (including attorneys' fees and expenses and the expenses of
          the 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 Guarantee Trustee; provided, however, that nothing
                                              --------  -------
          contained in this Section 2.2(a)(vi) shall be taken to relieve the
          Guarantee Trustee, upon the occurrence of an Event of Default, of
          its obligation to exercise the rights and powers vested in it by
          this Guarantee.

               (vii) The Guarantee Trustee shall not be bound to make any
          investigation into the facts or matters stated in any resolution,
          certificate, statement, instrument, opinion, report, notice,
          request, direction, consent, order, bond, debenture, note, other
          evidence of indebtedness or other paper or document, but the
          Guarantee Trustee, in its discretion, may make such further inquiry
          or investigation into such facts or matters as it may see fit.

               (viii) The 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
          Guarantee Trustee shall not be responsible for any misconduct or
          negligence on the part of any agent or attorney appointed with due
          care by it hereunder.

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

               (x) Whenever in the administration of this Guarantee the
          Guarantee Trustee shall deem it desirable to receive instructions
          with respect to enforcing any remedy or right or taking any other
          action hereunder, the Guarantee Trustee (A) may request instructions
          from the Holders of a Majority in liquidation amount of the Capital
          Securities, (B) may refrain from enforcing such remedy or right or
          taking such other action until such instructions are received and
          (C) shall be protected in conclusively relying on or acting in
          accordance with such instructions.

               (xi) The Guarantee Trustee shall not be liable for any action
          taken, suffered, or omitted to be taken by it in good faith and
          reasonably believed by it to be authorized or within the discretion
          or rights or powers conferred upon it by this Guarantee.

          (b) No provision of this Guarantee shall be deemed to impose any duty
          or obligation on the 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 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 Guarantee Trustee shall be
          construed to be a duty.

SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee
             -----------------------------------------------------

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

SECTION 2.4. Events of Default; Waiver
             -------------------------

          (a)  An Event of Default under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.

          (b) The Holders of a Majority in liquidation amount of Capital
Securities may, voting or consenting as a class, on behalf of the Holders of
all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Guarantee,
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

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<PAGE>

SECTION 2.5. Events of Default; Notice
             -------------------------

          (a) The Guarantee Trustee shall, within 90 days after the
     occurrence of an Event of Default, transmit by mail, first class postage
     prepaid, to the Holders of the Capital Securities, notices of all Events
     of Default actually known to a Responsible Officer of the Guarantee
     Trustee, unless such defaults have been cured before the giving of such
     notice, provided, however, that the Guarantee Trustee shall be protected
             --------  -------
     in withholding such notice if and so long as a Responsible Officer of the
     Guarantee Trustee in good faith determines that the withholding of such
     notice is in the interests of the Holders of the Capital Securities.

          (b) The Guarantee Trustee shall not be charged with knowledge of
     any Event of Default unless the Guarantee Trustee shall have received
     written notice thereof from the Guarantor or a Holder of the Capital
     Securities, or a Responsible Officer of the Guarantee Trustee charged with
     the administration of this Guarantee shall have actual knowledge thereof.

                                  ARTICLE III

                               GUARANTEE TRUSTEE

SECTION 3.1. Guarantee Trustee; Eligibility
             -------------------------------

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

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

               (ii) be a corporation 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 Person
          authorized under such laws to exercise corporate trust powers, having
          a combined capital and surplus of at least 50 million U.S. dollars
          ($50,000,000), and subject to supervision or examination by Federal,
          State, Territorial or District of Columbia authority. If such
          corporation publishes reports of condition at least annually,
          pursuant to law or to the requirements of the supervising or
          examining authority referred to above, then, for the purposes of this
          Section 3.1(a) (ii), 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 Guarantee Trustee shall cease to be
     eligible to so act under Section 3.1(a), the Guarantee Trustee shall
     immediately resign in the manner and with the effect set out in Section
     3.2(c).

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

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<PAGE>

SECTION 3.2. Appointment, Removal and Resignation of Guarantee Trustee
             ----------------------------------------------------------

          (a) Subject to Section 3.2(b), the Guarantee Trustee may be
     appointed or removed without cause at any time by the Guarantor except
     during an Event of Default.

          (b) The Guarantee Trustee shall not be removed in accordance
     with Section 3.2(a) until a Successor Guarantee Trustee has been appointed
     and has accepted such appointment by written instrument executed by such
     Successor Guarantee Trustee and delivered to the Guarantor.

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

          (d) If no Successor Guarantee Trustee shall have been appointed
     and accepted appointment as provided in this Section 3.2 within 60 days
     after delivery of an instrument of removal or resignation, the Guarantee
     Trustee resigning or being removed may petition any court of competent
     jurisdiction for appointment of a Successor Guarantee Trustee. Such court
     may thereupon, after prescribing such notice, if any, as it may deem
     proper, appoint a Successor Guarantee Trustee.

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

          (f) Upon termination of this Guarantee or removal or resignation
     of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall
     pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee
     under Sections 7.2 and 7.3 accrued to the date of such termination,
     removal or resignation.

                                  ARTICLE IV

                                  GUARANTEE

SECTION 4.1. Guarantee
             ---------

          (a) 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
(except as defense of payment by the Issuer), 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.

          (b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions

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<PAGE>

hereof, the Guarantor hereby irrevocably and unconditionally
guarantees to each Beneficiary the full payment, when and as due, of any and
all obligations to such Beneficiaries. This Agreement is intended to be for the
Beneficiaries who have received notice hereof.

SECTION 4.2. Waiver of Notice and Demand
             ---------------------------

          The Guarantor hereby waives notice of acceptance of this
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 4.3. Obligations Not Affected
             ------------------------

          The obligations, covenants, agreements and duties of the Guarantor
under this 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 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, Special Redemption Price,
     Liquidation Distribution or any other sums payable under the terms of the
     Capital Securities or the extension of time for the performance of any
     other obligation under, arising out of, or in connection with, the
     Capital Securities (other than an extension of time for payment of
     Distributions, Redemption Price, Special Redemption Price, Liquidation
     Distribution or other sum payable that results from the extension of any
     interest payment period on the Debentures or any extension of the
     maturity date of the Debentures permitted by the Indenture);

          (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 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 Capital
     Securities;

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

          (g) any other circumstance whatsoever that might otherwise constitute
     a legal or equitable discharge or defense of a guarantor, it being the
     intent of this Section 4.3 that

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<PAGE>

     the obligations of the Guarantor hereunder 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 4.4. Rights of Holders
             -----------------

          (a) The Holders of a Majority in liquidation amount of the Capital
     Securities have the right to direct the time, method and place of
     conducting any proceeding for any remedy available to the Guarantee
     Trustee in respect of this Guarantee or to direct the exercise of any
     trust or power conferred upon the Guarantee Trustee under this Guarantee;
     provided, however, that (subject to Sections 2.1 and 2.2) the Guarantee
     --------  -------
     Trustee shall have the right to decline to follow any such direction if
     the Guarantee Trustee shall determine that the actions so directed would
     be unjustly prejudicial to the Holders not taking part in such direction
     or if the Guarantee Trustee being advised by counsel determines that the
     action or proceeding so directed may not lawfully be taken or if the
     Guarantor Trustee in good faith by its board of directors or trustees,
     executive committees or a trust committee of directors or trustees and/or
     Responsible Officers shall determine that the action or proceedings so
     directed would involve the Guarantee Trustee in personal liability.

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

SECTION 4.5. Guarantee of Payment
             --------------------

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

SECTION 4.6. Subrogation
             -----------

          The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
                                                       --------  -------
the Guarantor shall not (except to the extent required by applicable 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 Guarantee, if, after giving effect to any
such payment, any amounts are due and unpaid under this 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.

                                       11
<PAGE>

SECTION 4.7. Independent Obligations
             -----------------------

          The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the 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 Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8. Enforcement
             -----------

          A Beneficiary may enforce the obligations of the Guarantor contained
in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.

          The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that
                                                     --------  -------
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any rights 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 Guarantee, if, after giving effect to
such payment, any amounts are due and unpaid under this Guarantee.

                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1. Limitation of Transactions
             --------------------------

          So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or (b) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (x) 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 or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank pari passu in all respects with or junior
in interest to the Debentures (other than (i) payments under this Guarantee,
(ii) repurchases, redemptions or other acquisitions of shares of capital stock
of the Guarantor (A) in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of one or more employees,
officers, directors, or consultants, (B) in connection with a dividend
reinvestment or stockholder stock purchase plan or (C) in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange of conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness

                                       12
<PAGE>

for any class or series of the Guarantor's capital stock, (iv) 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, (v) any declaration of a dividend in connection with
any stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or repurchase
of rights pursuant thereto, or (vi) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
                                                           ---- -----
junior to such stock).

SECTION 5.2. Ranking
             -------

          This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities
agrees to the foregoing provisions of this Guarantee and the other terms set
forth herein.

          The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under
this Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI

                                  TERMINATION

SECTION 6.1. Termination
             -----------

          This Guarantee shall terminate as to the Capital Securities (i) upon
full payment of the Redemption Price or the Special Redemption Price, as the
case may be, of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.

                                  ARTICLE VII

                                INDEMNIFICATION

SECTION 7.1. 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

                                       13
<PAGE>

     incurred by reason of any act or omission performed or omitted by such
     Indemnified Person in good faith in accordance with this 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
     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 Issuer or the Guarantor and upon such
     information, opinions, reports or statements presented to the Issuer or
     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, if selected by such Indemnified Person, has been
     selected with reasonable care by such Indemnified Person, 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
     Capital Securities might properly be paid.

SECTION 7.2. Indemnification
             ---------------

          (a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or willful
misconduct on the part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including but not limited to the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

          (b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified
Person will, if a claim in respect thereof is to be made against the Guarantor
under this Section 7.2, notify the Guarantor in writing of the commencement
thereof; but the failure so to notify the Guarantor (i) will not relieve the
Guarantor from liability under paragraph (a) above unless and to the extent
that the Guarantor did not otherwise learn of such action and such failure
results in the forfeiture by the Guarantor of substantial rights and defenses
and (ii) will not, in any event, relieve the Guarantor from any obligations to
any Indemnified Person other than the indemnification obligation provided in
paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the
Guarantor's choice at the Guarantor's expense to represent the Indemnified
Person in any action for which indemnification is sought (in which case the
Guarantor shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the Indemnified Person or Persons except as set
forth below); provided, however, that such counsel shall be satisfactory to the
              --------  -------
Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs

                                       14
<PAGE>

and expenses of such separate counsel if (i) the use of counsel chosen by the
Guarantor to represent the Indemnified Person would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person and the Guarantor and
the Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Persons which are different
from or additional to those available to the Guarantor, (iii) the Guarantor
shall not have employed counsel satisfactory to the Indemnified Person to
represent the Indemnified Person within a reasonable time after notice of the
institution of such action or (iv) the Guarantor shall authorize the
Indemnified Person to employ separate counsel at the expense of the Guarantor.
The Guarantor will not, without the prior written consent of the Indemnified
Persons, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the Indemnified Persons are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Person from all liability arising out
of such claim, action, suit or proceeding.

SECTION 7.3. Compensation; Reimbursement of Expenses
             ---------------------------------------

          The Guarantor agrees:

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

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

          The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.1. Successors and Assigns
             ----------------------

          All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor's assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of not less than a Majority in liquidation amount of
the Capital Securities.

                                       15
<PAGE>

SECTION 8.2. Amendments
             ----------

          Except with respect to any changes that do not adversely affect the
rights of Holders of the Capital Securities in any material respect (in which
case no consent of Holders will be required), this Guarantee may be amended
only with the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities. The provisions of the Declaration
with respect to amendments thereof shall apply equally with respect to
amendments of the Guarantee.

SECTION 8.3. Notices
             -------

          All notices provided for in this 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 Guarantee Trustee, at the Guarantee Trustee's
     mailing address set forth below (or such other address as the Guarantee
     Trustee may give notice of to the Holders of the Capital Securities):

                 Wilmington Trust Company
                 Rodney Square North
                 1100 North Market Street
                 Wilmington, Delaware 19890-0001
                 Attention: Corporate Trust Administration
                 Telecopy: 302-651-8882
                 Telephone: 302-651-1000

          (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 Capital Securities and to the Guarantee Trustee):

                 Sierra Bancorp
                 86 North Main Street
                 Porterville, CA 93257
                 Attention: James C. Holly

                 Copy to: Nikki Wolontis, Esq.
                 Fried, Bird & Crumpacker
                 1900 Avenue of the Stars, 25th Floor
                 Los Angeles, CA 90067

          (c) If given to any Holder of the 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.

                                       16
<PAGE>

SECTION 8.4. Benefit
             -------

          This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

SECTION 8.5. Governing Law
             -------------

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

SECTION 8.6. Counterparts
             ------------

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

                                       17
<PAGE>

          THIS GUARANTEE is executed as of the day and year first above written.

                                SIERRA BANCORP,
                                 as Guarantor

                                By:/s/ James C. Holly
                                   -------------------------------
                                   Name: James C.Holly
                                   Title: President and Chief Executive Officer

                                WILMINGTON TRUST COMPANY, as
                                Guarantee Trustee

                                By:/s/ Donald G. Mackelcan
                                   -------------------------------
                                   Name: Donald G. Mackelcan
                                   Title: Vice President

                                       18<PAGE>

                                                                     Exhibit 4.4

                                   EXHIBIT A-1
                                 (Face of Note)

                     __% [Series__] Senior Note due [_____]

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

CUSIP:
No:                                                              $______________

                       KULICKE AND SOFFA INDUSTRIES, INC.

promises to pay to _________ or registered assigns, the principal sum of _______

Dollars on _____________.
Interest Payment Dates: _____________.
Record Dates: _____________.

                                          Kulicke and Soffa Industries, Inc.

                                          By:______________________________
                                          Name:
                                          Title:

This is one of the Notes referred to in the within-mentioned Indenture:

LaSalle Bank National Association,
as Trustee

By: __________________________________
Authorized Officer

                                       1

<PAGE>

                                 (Back of Note)

                     __% [Series __] Senior Note due [____]

                  Capitalized terms used herein have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

          1. Interest. Kulicke and Soffa Industries, Inc., a Pennsylvania
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at __% per annum from [__________] until maturity. The Company will
pay interest [__________] on _________ and _________ of each year, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be ___________. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

          2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the ________ or ________ next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest and premium on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

          3. Paying Agent and Registrar. Initially, LaSalle Bank National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company may act in any such capacity.

          4. Indenture. The Company issued the Notes under an Indenture dated as
of _____________ (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and in [a Supplemental
Indenture] [resolutions of [the [___] Committee of ] the Company's Board of
Directors] dated ______________, and those terms made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S)
77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms, and Holders
are

                                       2

<PAGE>

referred to the Indenture and the TIA for a statement of such terms. The Notes
are general obligations of the Company. "Notes" means this Note and all other
Notes of the series of which this Note is a part. The Notes are "Securities"
within the meaning of the Indenture, and references in the Indenture to
"Securities" (including terms such as "Global Securities") include the Notes
(and any "Global Notes" as used herein).

          5. Optional Redemption.

          [(a)] The Notes will not be redeemable at the Company's option prior
to _____________. The Notes may be redeemed, in whole or in part, at the option
of the Company on or after _____________, at the redemption prices specified
below (expressed as percentages of the principal amount thereof), in each case,
together with accrued and unpaid interest, hereon to the date of redemption,
upon not less than 30 nor more than 60 days' notice, if redeemed during the
twelve-month period beginning on ___________ of the years indicated below:

                                                     Redemption
     Year                                               Price
     ----                                               -----

          [(b) Notwithstanding the foregoing, prior to ____________, the Company
may, on any one or more occasions, use the net proceeds of one or more offerings
of its capital stock to redeem up to __% of the aggregate principal amount of
all notes that had been issued under the Indenture up to the time of redemption
at a redemption price of __% the principal amount of the notes redeemed, plus
accrued and unpaid interest, to the date of redemption; provided that, after any
such redemption, the aggregate principal amount of the Notes outstanding
(excluding Notes held by the Company and its Subsidiaries) must equal at least
__% of the Notes that had been issued under the Indenture up to the time of
redemption; and provided further, that any such redemption shall occur within 90
days of the date of closing of such offering of Capital Stock of the Company.]

          6. Mandatory Redemption. [The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.] or
[Describe mandatory redemption or sinking fund provisions.]

          7. Notice of Redemption. Notice of Redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

                                       3

<PAGE>

          8.  Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in all appropriate denominations. The transfer of Notes may
be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not transfer or exchange any Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.

          9.  Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

          10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority in principal amount of the then outstanding Notes and
other series of Securities affected (treating the Notes and such other series as
a single class), and any existing default or compliance with any provision of
the Indenture, the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes and other series of
Securities affected (treating the Notes and such other series as a single
class). Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.

          11. Defaults and Remedies. Each of the following constitutes an Event
of Default: (i) default by the Company in the payment of interest on the Notes
when the same becomes due and payable and default continues for a period of 30
days; (ii) default by the Company in the payment of the principal of or premium,
if any, on the Notes when the same becomes due and payable at maturity, upon
redemption or otherwise; (3) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the Notes and (4)
certain events of bankruptcy or insolvency with respect to the Company. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes and other series of
Securities affected (treating the Notes and such other series as a single class)
may declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes and other series of Securities affected (treating the
Notes and such other series as a single class) may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes and other series of
Securities

                                       4

<PAGE>

affected (treating the Notes and such other series as a single class) and other
series of Securities affected (treating the Notes and such other series as a
single class) then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default in the payment of principal, interest or premium on the Notes. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

          12. Trustee Dealings With the Company. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

          13. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.

          14. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

          15. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          16. Cusip Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

          The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:

             Kulicke and Soffa Industries, Inc.
             2101 Blair Mill Road
             Willow Grove, PA 19090
             Attention: Clifford G. Sprague, Chief Financial Officer

                                       5

<PAGE>

                                 Assignment Form

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________

to transfer this Note on the books of the Company. The agent may substitute

another to act for him.

________________________________________________________________________________

Date: ________
                                              Your
                                              Signature:________________
                                              (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee.

                                       6

<PAGE>

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>
                                                                   Principal
                          Amount of           Amount of            Amount of           Signature of
                         decrease in         increase in      this Global Amount        authorized
                          Principal           Principal         following such          officer of
       Date of         Amount of this       Amount of this          decrease              Trustee or
      Exchange           Global Note         Global Note        (or increase)         Note Custodian
  ----------------   ------------------   -----------------   ------------------    -------------------
<S>                  <C>                  <C>                 <C>                   <C>
</TABLE>

                                       7

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