Document:

RF INDUSTRIES, LTD.

                             2000 STOCK OPTION PLAN

                              AS ADOPTED EFFECTIVE

                                   MAY 5, 2000

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                               TABLE OF CONTENTS

                                                                            Page
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ARTICLE 1.  INTRODUCTION...................................................... 1

ARTICLE 2.  ADMINISTRATION.................................................... 1
          2.1  Committee  Composition......................................... 1
          2.2  Powers of the Committee........................................ 1
          2.3  Committee for Non-Officer Grants .............................. 2

ARTICLE 3.  SHARES AVAILABLE FOR GRANTS........................................2
          3.1  Basic Limitation............................................... 2
          3.2  Annual Increase in Shares ..................................... 3
          3.3  Additional Shares ............................................. 3

ARTICLE 4.  ELIGIBILITY........................................................3
          4.1  Incentive Stock Options........................................ 3
          4.2  Other Grants................................................... 3

ARTICLE 5.  OPTIONS............................................................3
          5.1  Stock Option Agreement..........................................3
          5.2  Number of Shares ...............................................3
          5.3  Exercise Price..................................................4
          5.4  Exercisability and Term.........................................4
          5.5  Manner of Exercise..............................................4
          5.6  Effect of Change in Control.....................................4
          5.7  Modification or Assumption of Options...........................4
          5.8  Buyout Provisions...............................................5

ARTICLE 6.  PAYMENT FOR OPTION SHARES..........................................5
          6.1  General Rule....................................................5
          6.2  Surrender of Stock..............................................5
          6.3  Exercise/Sale...................................................5
          6.4  Exercise/Pledge.................................................5
          6.5  Promissory Note.................................................6
          6.6  Other Forms of Payment..........................................6

ARTICLE 7.  PROTECTION AGAINST DILUTION........................................6
          7.1  Adjustments.....................................................6
          7.2  Dissolution or Liquidation......................................6
          7.3  Reorganizations.................................................6

ARTICLE 8.  AWARDS UNDER OTHER PLANS...........................................7

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ARTICLE 9.  LIMITATION ON RIGHTS...............................................7
          9.1  Retention Rights................................................7
          9.2  Stockholers' Rights.............................................7
          9.3  Conditions Upon Issuance of Common Shares.......................7

ARTICLE 10. WITHHOLDING TAXES..................................................8
         10.1  General.........................................................8
         10.2  Share Withholding...............................................8

ARTICLE 11. FUTURE OF THE PLAN.................................................8
         11.1  Term of the Plan................................................8
         11.2  Amendment or Termination........................................8
         11.3  Stockholder Approval............................................8
         11.4  Effect of Amendment or Termination..............................8

ARTICLE 12. LIMITATION ON PARACHUTE PAYMENTS...................................8
         12.1  Scope of Limitation.............................................8
         12.2  Basic Rule......................................................9
         12.3  Reduction of Payments...........................................9
         12.4  Overpayments and Underpayments..................................9
         12.5  Related Corporations...........................................10

ARTICLE 13. INDEMNIFICATION.................................................. 10

ARTICLE 14. PROVISION OF INFORMATION..........................................10

ARTICLE 15. DEFINITIONS.......................................................10

ARTICLE 16. EXECUTION.........................................................13

                                     ii

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                              RF INDUSTRIES, LTD.

                             2000 STOCK OPTION PLAN

ARTICLE 1.  INTRODUCTION.

     The Plan was adopted by the Board effective May 5, 2000. The purpose of the
Plan is to promote the  long_term  success of the  Company  and the  creation of
stockholder   value  by  (a)  encouraging   Employees,   Outside  Directors  and
Consultants to focus on critical  long_range  objectives,  (b)  encouraging  the
attraction and retention of Employees,  Outside  Directors and Consultants  with
exceptional  qualifications  and (c) linking  Employees,  Outside  Directors and
Consultants directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this  purpose by  providing  for Awards in the form of
Options  (which may constitute  incentive  stock options or  nonstatutory  stock
options). Terms defined herein shall have the meanings set forth in "Article 2 -
Definitions."

     The Plan shall be governed by, and construed in accordance with, the
laws of the State of Nevada (except their choice_of_law provisions).

ARTICLE 2.  ADMINISTRATION.

     2.1Committee Composition . The Plan shall be administered by the Committee.
The Committee shall consist exclusively of two or more directors of the Company,
who shall be  appointed  by the  Board.  In  addition,  the  composition  of the
Committee  shall  satisfy  such  requirements  as the  Securities  and  Exchange
Commission  may  establish  for  administrators  acting under plans  intended to
qualify for  exemption  under Rule 16b_3 (or its  successor)  under the Exchange
Act.

     2.2 Powers of the Committee . Subject to the  provisions  of the Plan, and,
subject to the specific  duties  delegated by the Board to such  Committee,  the
Committee shall have the authority, in its discretion:

          (a)  to  determine  the Fair  Market  Value of the Common  Shares,  in
               accordance with Section 15 of the Plan;

          (b)  to select the  Consultants  and  Employees  to whom Awards may be
               granted hereunder;

          (c)  to determine whether and to what extent Awards or any combination
               thereof are granted hereunder;

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          (d)  to  determine  the number of Common  Shares to be covered by each
               Award granted hereunder;

          (e)  to approve forms of agreement for use under the Plan;

          (f)  to determine the terms and conditions,  not inconsistent with the
               terms of the Plan, of any Award granted hereunder. Such terms and
               conditions  include,  but are not limited to, the exercise price,
               the time or times  when  Awards  may be  exercised  (which may be
               based on  performance  criteria),  any vesting,  acceleration  or
               waiver  of  forfeiture  restrictions,   and  any  restriction  or
               limitation  regarding  any Awards or the Common  Shares  relating
               thereto, based in each case on such factors as the Committee,  in
               its sole discretion, shall determine;

          (g)  to construe and interpret the terms of the Plan;

          (h)  to prescribe, amend and rescind rules and regulations relating to
               the Plan;

          (i)  to determine whether and under what circumstances an Award may be
               settled in cash instead of Common Shares or Common Shares instead
               of cash;

          (j)  to reduce the exercise price of any Award;

          (k)  to modify or amend each Award (subject to the Plan);

          (l)  to  authorize  any person to execute on behalf of the Company any
               instrument  required  to effect the grant of an Award  previously
               granted by the Board;

          (m)  to determine the terms and restrictions applicable to Awards; and

          (n)  to make all other  determinations  deemed  necessary or advisable
               for administering the Plan.

     2.3 Committee for  Non_Officer  Grants  . The  Board  may  also  appoint  a
secondary  committee  of the  Board,  which  shall  be  composed  of one or more
directors of the Company who need not satisfy the  requirements  of Section 2.1.
Such  secondary  committee may administer the Plan with respect to Employees and
Consultants  who are not  considered  officers or directors of the Company under
section  16 of the  Exchange  Act,  may  grant  Awards  under  the  Plan to such
Employees and  Consultants and may determine all features and conditions of such
Awards. Within the limitations of this Section 2.3, any reference in the Plan to
the Committee shall include such secondary committee.

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ARTICLE 3.  SHARES AVAILABLE FOR GRANTS.

     3.1 Basic  Limitation.  Common  Shares  issued  pursuant to the Plan may be
authorized  but unissued  shares or treasury  shares.  The  aggregate  number of
Options  awarded  under  the Plan  shall not  exceed  (a)  300,000  plus (b) the
additional  Common Shares  described in Sections 3.2 and 3.3. The  limitation of
this Section 3.1 shall be subject to adjustment pursuant to Article 7.

     3.2 Annual Increase in Shares. As of January 1of each year, commencing with
the year 2001,  the  aggregate  number of Options that may be awarded  under the
Plan shall  automatically  increase by a number equal to the lesser of (a) 4% of
the total number of Common Shares then outstanding or (b) 10,000 Shares.

     3.3 Additional Shares. If Common Shares issued upon the exercise of Options
are forfeited,  then such Common Shares shall again become  available for Awards
under the Plan.  If Options are  forfeited  or  terminate  for any other  reason
before being exercised,  then the corresponding Common Shares shall again become
available  for  Awards  under  the  Plan.  The  foregoing  notwithstanding,  the
aggregate  number of Common  Shares  that may be issued  under the Plan upon the
exercise of ISOs shall not be increased when Common Shares are forfeited.

ARTICLE 4.  ELIGIBILITY.

     4.1 Incentive Stock Options. Only Employees who are common_law employees of
the Company,  a Parent or a Subsidiary  shall be eligible for the grant of ISOs.
In  addition,  an Employee who owns more than 10% of the total  combined  voting
power of all classes of  outstanding  stock of the Company or any of its Parents
or  Subsidiaries  shall  not be  eligible  for the  grant of an ISO  unless  the
requirements set forth in section 422(c)(6) of the Code are satisfied.

     4.2 Other Grants . Only Employees,  Outside Directors and Consultants shall
be eligible for the grant of NSOs under the Plan.

ARTICLE 5.  OPTIONS.

     5.1 Stock  Option  Agreement . Each grant of an Option under the Plan shall
be evidenced by a Stock Option  Agreement  between the Optionee and the Company.
Such  Option  shall be  subject to all  applicable  terms of the Plan and may be
subject to any other terms that are not  inconsistent  with the Plan.  The Stock
Option  Agreement  shall  specify  whether  the Option is an ISO or an NSO.  The
provisions  of the various Stock Option  Agreements  entered into under the Plan
need not be identical. Options may be granted in consideration of a reduction in
the Optionee's other  compensation.  A Stock Option Agreement may provide that a
new  Option  will  be  granted  automatically  to the  Optionee  when  he or she
exercises a prior  Option and pays the Exercise  Price in the form  described in
Section 6.2.

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     5.2 Number of Shares . Each Stock Option Agreement shall specify the number
of Common Shares  subject to the Option and shall provide for the  adjustment of
such  number in  accordance  with  Article 7. The  limitations  set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 7.

     5.3 Exercise Price . Each Stock Option Agreement shall specify the Exercise
Price;  provided that the Exercise  Price under an ISO shall in no event be less
than 100% of the Fair  Market  Value of a Common  Share on the date of grant and
the  Exercise  Price under an NSO shall in no event be less than 85% of the Fair
Market Value of a Common Share on the date of grant.

     5.4 Exercisability and Term . Each Stock Option Agreement shall specify the
date  or  event  when  all  or  any  installment  of  the  Option  is to  become
exercisable,  which may include vesting requirements and/or performance criteria
with respect to the Company  and/or the  Optionee.  The Stock  Option  Agreement
shall also  specify  the term of the  Option;  provided  that the term of an ISO
shall in no event  exceed  10 years  from  the  date of  grant.  A Stock  Option
Agreement  may  provide  for  accelerated  exercisability  in the  event  of the
Optionee's  death,  disability or retirement or other events and may provide for
expiration  prior to the end of its term in the event of the  termination of the
Optionee's service.

     5.5  Manner of  Exercise  . An Option  shall be deemed  exercised  when the
Company  receives:  (i) notice of exercise (in accordance  with the Stock Option
Agreement)  from the person  entitled  to  exercise  the  Option,  and (ii) full
payment  for the Common  Shares with  respect to which the Option is  exercised.
Full payment may consist of any consideration  and method of payment  authorized
by the  Committee  and  permitted by the Stock Option  Agreement.  Common Shares
issued upon  exercise of an Option  shall be issued in the name of the  Optionee
or, if  requested  by the  Optionee,  in the name of the Optionee and his or her
spouse.  Until the Common  Shares are issued (as  evidenced  by the  appropriate
entry on the books of the Company or of a duly authorized  transfer agent of the
Company),  no  right to vote or  receive  dividends  or any  other  rights  as a
stockholder shall exist with respect to the Common Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be  issued)  such  Common  Shares  promptly  after the Option is  exercised.  No
adjustment  will be made for a dividend or other right for which the record date
is prior to the date the Common Shares are issued, except as provided in Article
7 of the Plan.

     Exercising  an Option in any  manner  shall  decrease  the number of Common
Shares  thereafter  available,  both for purposes of the Plan and for sale under
the Option, by the number of Common Shares as to which the Option is exercised.

     5.6 Effect of Change in Control . The Committee may determine,  at the time
of granting an Option or thereafter,  that such Option shall become  exercisable
as to all or part of the Common Shares  subject to such Option in the event that
a Change in Control occurs with respect to the Company, subject to the following
limitation:

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          (a)  In the case of an ISO, the acceleration of  exercisability  shall
               not occur without the Optionee's written consent.

     5.7  Modification  or Assumption of Options . Within the limitations of the
Plan,  the Committee  may modify,  extend or assume  outstanding  options or may
accept the  cancellation of outstanding  options (whether granted by the Company
or by another  issuer) in return for the grant of new  options for the same or a
different  number of shares and at the same or a different  exercise price.  The
foregoing  notwithstanding,  no  modification  of an Option  shall,  without the
consent  of the  Optionee,  alter or impair  his or her  rights  or  obligations
determined pursuant to the Option Agreement representing such Option.

     5.8 Buyout  Provisions . The Committee may at any time (a) offer to buy out
for a payment in cash or cash  equivalents an Option  previously  granted or (b)
authorize  an Optionee  to elect to cash out an Option  previously  granted,  in
either  case at such  time and  based  upon such  terms  and  conditions  as the
Committee shall establish.

ARTICLE 6.  PAYMENT FOR OPTION SHARES.

     6.1 General Rule . The entire  Exercise  Price of Common Shares issued upon
exercise  of Options  shall be payable in cash or cash  equivalents  at the time
when such Common Shares are purchased, except as follows:

          (a)  In the case of an ISO granted  under the Plan,  payment  shall be
               made only pursuant to the express  provisions  of the  applicable
               Stock Option  Agreement.  The Stock Option  Agreement may specify
               that payment may be made in any form(s) described in this Article
               6.

          (b)  In the  case of an NSO,  the  Committee  may at any  time  accept
               payment in any form(s) described in this Article 6.

     6.2 Surrender of Stock . To the extent that this Section 6.2 is applicable,
all or any part of the Exercise Price may be paid by surrendering,  or attesting
to the ownership of, Common Shares that are already owned by the Optionee.  Such
Common  Shares  shall be valued at their Fair Market  Value on the date when the
new  Common  Shares  are  purchased  under  the  Plan.  The  Optionee  shall not
surrender,  or attest to the  ownership  of,  Common  Shares in  payment  of the
Exercise Price if such action would cause the Company to recognize  compensation
expense (or  additional  compensation  expense)  with  respect to the Option for
financial reporting purposes.

     6.3 Exercise/Sale . To the extent that this Section 6.3 is applicable,  all
or any part of the  Exercise  Price  and any  withholding  taxes  may be paid by
delivering (on a form  prescribed by the Company) an irrevocable  direction to a
securities  broker  approved  by the  Company  to sell all or part of the Common
Shares  being  purchased  under the Plan and to deliver all or part of the sales
proceeds to the Company.

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     6.4  Exercise/Pledge  . To the extent that this Section 6.4 is  applicable,
all or any part of the Exercise Price and any  withholding  taxes may be paid by
delivering  (on a form  prescribed by the Company) an  irrevocable  direction to
pledge  all or part of the Common  Shares  being  purchased  under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.

     6.5  Promissory  Note . To the extent that this Section 6.5 is  applicable,
all or any part of the Exercise Price and any  withholding  taxes may be paid by
delivering  (on a form  prescribed  by the Company) a  full_recourse  promissory
note. However, to the extent required by state corporation law, the par value of
the Common Shares being purchased under the Plan, if newly issued, shall be paid
in cash or cash equivalents.

     6.6  Other  Forms of  Payment . To the  extent  that  this  Section  6.6 is
applicable,  all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable  laws,  regulations
and rules.

ARTICLE 7.  PROTECTION AGAINST DILUTION.

     7.1 Adjustments . In the event of a subdivision of the  outstanding  Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend  payable  in a form other than  Common  Shares in an amount  that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by  reclassification  or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin_off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole  discretion,  deems
appropriate in one or more of:

     (a)  The number of Options available for future Awards under Article 3;

     (b)  The limitations set forth in Section 5.2;

     (c)  The number of Common Shares covered by each outstanding Option; or

     (d)  The Exercise Price under each outstanding Option.

Except as  provided  in this  Article 7, a  Participant  shall have no rights by
reason  of any  issue  by the  Company  of  stock  of any  class  or  securities
convertible  into stock of any class, any subdivision or consolidation of shares
of stock of any class,  the payment of any stock  dividend or any other increase
or decrease in the number of shares of stock of any class.

     7.2 Dissolution or Liquidation . To the extent not previously  exercised or
settled,  Options  shall  terminate  immediately  prior  to the  dissolution  or
liquidation of the Company.

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     7.3  Reorganizations . In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for:

     (a)  The  continuation  of the  outstanding  Awards by the Company,  if the
          Company is a surviving corporation;

     (b)  The assumption of the outstanding Awards by the surviving  corporation
          or its parent or subsidiary;

     (c)  The  substitution  by  the  surviving  corporation  or its  parent  or
          subsidiary of its own awards for the outstanding Awards;

     (d)  Full  exercisability  or vesting  and  accelerated  expiration  of the
          outstanding Awards; or

     (e)  Settlement of the full value of the outstanding Awards in cash or cash
          equivalents followed by cancellation of such Awards.

ARTICLE 8.  AWARDS UNDER OTHER PLANS.

     The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Common  Shares  issued  under this Plan.  Such  Common
Shares shall,  when issued,  reduce the number of Common Shares  available under
Article 3.

ARTICLE 9.  LIMITATION ON RIGHTS.

     9.1  Retention  Rights . Neither the Plan nor any Award  granted  under the
Plan  shall be deemed  to give any  individual  a right to  remain an  Employee,
Outside  Director or Consultant.  The Company and its Parents,  Subsidiaries and
Affiliates  reserve the right to terminate the service of any Employee,  Outside
Director or Consultant at any time, with or without cause, subject to applicable
laws,  the  Company's  certificate  of  incorporation  and by_laws and a written
employment agreement (if any).

     9.2  Stockholders'  Rights . A Participant  shall have no dividend  rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock  certificate for such
Common  Shares is  issued  or, if  applicable,  the time when he or she  becomes
entitled to receive such Common Shares by filing any required notice of exercise
and paying any required  Exercise  Price.  No adjustment  shall be made for cash
dividends  or other  rights  for which the  record  date is prior to such  time,
except as expressly provided in the Plan.

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     9.3 Conditions  Upon Issuance of Common Shares . Common Shares shall not be
issued  pursuant to the  exercise of an Award  unless the exercise of such Award
and the  issuance  and  delivery of such  Common  Shares  shall  comply with all
relevant provisions of law, including,  without limitation,  the Securities Act,
as amended,  the Exchange Act, the  securities  laws of applicable  states,  the
rules  and  regulations  promulgated   thereunder,   applicable  laws,  and  the
requirements  of any stock  exchange or  quotation  system upon which the Common
Shares  may then be  listed  or  quoted,  and shall be  further  subject  to the
approval of counsel for the Company with respect to such compliance.

ARTICLE 10.  WITHHOLDING TAXES.

     10.1 General . To the extent required by applicable  federal,  state, local
or foreign law, a Participant  or his or her successor  shall make  arrangements
satisfactory  to  the  Company  for  the  satisfaction  of any  withholding  tax
obligations  that arise in  connection  with the Plan.  The Company shall not be
required  to issue any  Common  Shares or make any cash  payment  under the Plan
until such obligations are satisfied.

     10.2 Share  Withholding . The Committee may permit a Participant to satisfy
all or part of his or her  withholding  or income tax  obligations by having the
Company  withhold all or a portion of any Common Shares that otherwise  would be
issued to him or her or by  surrendering  all or a portion of any Common  Shares
that he or she previously acquired.  Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.

ARTICLE 11.  FUTURE OF THE PLAN.

     11.1  Term of the  Plan . The  Plan,  as set  forth  herein,  shall  become
effective on May 5, 2000. The Plan shall remain in effect until it is terminated
under  Section  11.2,  except that no ISOs shall be granted on or after the 10th
anniversary  of the later of (a) the date when the Board adopted the Plan or (b)
the date when the Board adopted the most recent increase in the number of Common
Shares   available   under  Article  3  which  was  approved  by  the  Company's
stockholders.

     11.2  Amendment or  Termination  . The Board may at any time amend,  alter,
suspend or terminate the Plan for any reason.

     11.3 Stockholder  Approval . The Company shall obtain stockholder  approval
of any Plan  amendment  to the  extent  requested  by  applicable  law,  rule or
regulation,  including the  requirements of any exchange or quotation  system on
which the Common  Shares are listed or quoted.  Such  stockholder  approval,  if
required  shall be obtained in such a manner and to such a degree as is required
by the applicable laws, rules or regulations.

     11.4  Effect  of  Amendment  or  Termination  . No  amendment,  alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless  mutually  agreed  otherwise  between the Optionee  and the Board,  which
agreement  must be in writing and signed by the Optionee and the Company  unless
such amendment,  alteration,  suspension or termination is required to enable an

<PAGE>

Option  designated  as an Incentive  Stock  Option to qualify as a  Nonqualified
Stock Option or is necessary to comply with any  applicable  laws or  government
regulations.

ARTICLE 12.  LIMITATION ON PARACHUTE PAYMENTS.

     12.1 Scope of  Limitation  . This Article 12 shall apply to an Award unless
the  Committee,  at the time of  making  an Award  under the Plan or at any time
thereafter,  specifies  in writing  that such Award shall not be subject to this
Article  12. If this  Article  12 applies to an Award,  it shall  supersede  any
contrary provision of the Plan or of any Award granted under the Plan.

     12.2 Basic Rule . In the event that the independent  auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer by
the Company under the Plan to or for the benefit of a Participant  (a "Payment")
would be nondeductible by the Company for federal income tax purposes because of
the provisions  concerning  "excess  parachute  payments" in Section 280G of the
Code, then the aggregate present value of all Payments shall be reduced (but not
below zero) to the Reduced Amount.  For purposes of this Article 12 the "Reduced
Amount" shall be the amount,  expressed as a present value,  which maximizes the
aggregate  present  value of the  Payments  without  causing  any  Payment to be
nondeductible by the Company because of Section 280G of the Code.

     12.3  Reduction  of Payments . If the Auditors  determine  that any Payment
would be  nondeductible by the Company because of Section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the  detailed  calculation  thereof  and  of  the  Reduced  Amount,  and  the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments  shall be eliminated or reduced (as long as after such election the
aggregate  present  value of the Payments  equals the Reduced  Amount) and shall
advise the Company in writing of his or her  election  within 10 days of receipt
of notice.  If no such  election is made by the  Participant  within such 10_day
period,  then the Company may elect which and how much of the Payments  shall be
eliminated  or reduced (as long as after such  election  the  aggregate  present
value  of  the  Payments  equals  the  Reduced  Amount)  and  shall  notify  the
Participant  promptly of such election.  For purposes of this Article 12 present
value shall be determined in accordance with Section 280G(d)(4) of the Code. All
determinations  made by the Auditors under this Article 12 shall be binding upon
the  Company  and the  Participant  and shall be made within 60 days of the date
when a Payment  becomes  payable or  transferable.  As promptly  as  practicable
following such determination and the elections hereunder,  the Company shall pay
or transfer to or for the benefit of the  Participant  such  amounts as are then
due to him or her under the Plan and shall  promptly  pay or  transfer to or for
the benefit of the  Participant  in the future such amounts as become due to him
or her under the Plan.

     12.4  Overpayments  and  Underpayments  . As a result of uncertainty in the
application of Section 280G of the Code at the time of an initial  determination
by the Auditors  hereunder,  it is possible that Payments will have been made by
the Company that should not have been made (an "Overpayment") or that additional
Payments  that will not have been made by the  Company  could have been made (an
"Underpayment"),  consistent  in each case with the  calculation  of the Reduced

<PAGE>

Amount hereunder. In the event that the Auditors,  based upon the assertion of a
deficiency  by  the  Internal   Revenue  Service  against  the  Company  or  the
Participant  that  the  Auditors  believe  has a high  probability  of  success,
determine that an Overpayment has been made, such  Overpayment  shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company,  together  with  interest at the  applicable  federal rate  provided in
Section  7872(f)(2)  of the Code;  provided,  however,  that no amount  shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount  subject to taxation under Section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment  shall promptly be paid or transferred by the Company to or for the
benefit of the  Participant,  together with interest at the  applicable  federal
rate provided in Section 7872(f)(2) of the Code.

     12.5  Related  Corporations  . For  purposes  of this  Article 12, the term
"Company" shall include affiliated  corporations to the extent determined by the
Auditors in accordance with Section 280G(d)(5) of the Code.

ARTICLE 13.  INDEMNIFICATION.

     In addition  to such other  rights of  indemnification  as they may have as
members of the Board or officers or  employees  of the Company and any Parent or
Subsidiary,  members of the  Committee  and any  officers  or  employees  of the
Company and any Parent or Subsidiary  to whom  authority to act for the Board is
delegated shall be indemnified by the Company  against all reasonable  expenses,
including  attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding,  or in connection with any appeal
therein,  to which  they or any of them may be a party by reason  of any  action
taken or  failure  to act under or in  connection  with the  Plan,  or any right
granted  hereunder,  and against all amounts paid by them in settlement  thereof
(provided such settlement is approved by independent  legal counsel  selected by
the Company) or paid by them in  satisfaction  of a judgment in any such action,
suit or  proceeding,  except  in  relation  to  matters  as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence,  bad faith or intentional misconduct in duties;  provided,  however,
that  within  sixty  (60) days after the  institution  of such  action,  suit or
proceeding,  such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.

ARTICLE 14.  PROVISION OF INFORMATION.

     At least annually, copies of the Company's annual report or Form 10-KSB
for the  just-completed  fiscal year shall be made available to each Participant
and purchaser of Common Shares upon exercise of an Award.  The Company shall not
be  required  to provide  such  information  to key  employees  whose  duties in
connection with the Company assure them access to equivalent information.

<PAGE.

ARTICLE 15.  DEFINITIONS.

     15.1 "Affiliate"  means any entity other than a Subsidiary,  if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.

     15.2 "Award" means any award of an Option under the Plan.

     15.3 "Board" means the Company's  Board of Directors,  as constituted  from
time to time.

     15.4 "Change in Control" shall mean:

          (a)  The consummation of a merger or consolidation of the Company with
               or into another entity or any other corporate reorganization,  if
               more than 50% of the combined  voting power of the  continuing or
               surviving entity's securities outstanding  immediately after such
               merger, consolidation or other reorganization is owned by persons
               who were not  stockholders  of the Company  immediately  prior to
               such merger, consolidation or other reorganization;

          (b)  The sale,  transfer or other  disposition of all or substantially
               all of the Company's assets;

          (c)  A change in the  composition  of the Board,  as a result of which
               fewer  than 50% of the  incumbent  directors  are  directors  who
               either  (i) had  been  directors  of the  Company  on the date 24
               months  prior to the date of the  event  that  may  constitute  a
               Change  in  Control  (the  "original  directors")  or  (ii)  were
               elected,  or  nominated  for  election,  to the  Board  with  the
               affirmative  votes of at least a majority of the aggregate of the
               original  directors  who were  still in office at the time of the
               election  or  nomination  and the  directors  whose  election  or
               nomination was previously so approved; or

          (d)  Any   transaction  as  a  result  of  which  any  person  is  the
               "beneficial  owner" (as defined in Rule 13d_3 under the  Exchange
               Act),  directly  or  indirectly,  of  securities  of the  Company
               representing  at least 20% of the total voting power  represented
               by the Company's then outstanding voting securities. For purposes
               of this  Paragraph  (d),  the term  "person"  shall have the same
               meaning as when used in sections  13(d) and 14(d) of the Exchange
               Act but shall  exclude (i) a trustee or other  fiduciary  holding
               securities  under an employee benefit plan of the Company or of a
               Parent or  Subsidiary  and (ii) a corporation  owned  directly or
               indirectly by the  stockholders  of the Company in  substantially
               the same  proportions  as their  ownership of the common stock of
               the Company.

<PAGE>

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's  incorporation  or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

     15.5 "Code" means the Internal Revenue Code of 1986, as amended.

     15.6 "Committee" means a committee of the Board, as described in Article 2.

     15.7 "Common Share" means one share of the common stock of the Company.

     15.8 "Company" means RF Industries, Ltd., a Nevada corporation.

     15.9  "Consultant"  means a consultant  or adviser who  provides  bona fide
services  to  the  Company,  a  Parent,  a  Subsidiary  or  an  Affiliate  as an
independent  contractor.  Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.1.

     15.10  "Employee" means a common_law  employee of the Company,  a Parent, a
Subsidiary or an Affiliate.

     15.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     15.12  "Exercise  Price" means the amount for which one Common Share may be
purchased  upon  exercise of an Option,  as  specified in the  applicable  Stock
Option Agreement.

     15.13 "Fair Market  Value" means with respect to each Common Share the last
reported  sale  price  of the  Company's  Common  Shares  sold on the  principal
national  securities  exchanges  on  which  the  Common  Shares  are at the time
admitted  to  trading  or  listed,  or, if there  have been no sales of any such
exchange  on such day,  the  average of the  highest bid and lowest ask price on
such day as reported by the Nasdaq system,  or any similar  organization  if the
Nasdaq is no longer reporting such information, either (i) on the date which the
notice of  exercise  is deemed to have  been sent to the  Company  (the  "Notice
Date") or (ii) over a period of five (5) trading days preceding the Notice Date,
whichever  of (i) or (ii) is greater.  If on the date for which the current fair
market  value is to be  determined,  the  Common  Shares  are not  listed on any
securities  exchange  or quoted  on the  Nasdaq  system or the  over-the-counter
market,  the current  fair market  value of Common  Shares  shall be the highest
price per share which the Company  could then obtain from a willing buyer (not a
current  employee  or  director)  for Common  Shares sold by the  Company,  from
authorized but unissued shares,  as determined in good faith by the Board of the
Company,  unless prior to such date the Company has become  subject to a binding
agreement for a merger, acquisition or other consolidation pursuant to which the
Company is not the surviving  party, in which case the current fair market value
of the  Common  Shares  shall be deemed to be the  value to be  received  by the
holders of the Company's  Common  Shares for each share thereof  pursuant to the
Company's acquisition. Such determination shall be conclusive and binding on all
persons.

<PAGE>

     15.14 "ISO" means an incentive stock option  described in Section 422(b) of
the Code.

     15.15 "NSO" means a stock  option not  described  in Sections 422 or 423 of
the Code.

     15.16 "Option" means an ISO or NSO granted under the Plan and entitling the
holder to purchase Common Shares.

     15.17 "Optionee" means an individual or estate who holds an Option.

     15.18  "Outside  Director"  shall  mean a member of the Board who is not an
Employee.  Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.1.

     15.19  "Parent"  means  any  corporation  (other  than the  Company)  in an
unbroken  chain  of  corporations  ending  with  the  Company,  if  each  of the
corporations  other than the Company  owns stock  possessing  50% or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

     15.20 "Participant" means an individual or estate who holds an Award.

     15.21  "Plan" means this RF  Industries,  Ltd.  2000 Stock Option Plan,  as
amended from time to time.

     15.22  "Subsidiary"  means any  corporation  (other than the Company) in an
unbroken  chain  of  corporations  beginning  with the  Company,  if each of the
corporations  other than the last  corporation  in the unbroken chain owns stock
possessing  50% or more of the total  combined  voting  power of all  classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a  Subsidiary  on a date after the  adoption  of the Plan shall be
considered a Subsidiary commencing as of such date.

ARTICLE 16.  EXECUTION.

     To record the adoption of the Plan by the Board, the Company has caused its
duly authorized officer to execute this document in the name of the Company.

         RF Industries, Ltd.

         By:  /s/  Terrie Gross
            -----------------------------------------
               Terrie Gross, Chief Financial OfficerAMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  by and among

                       STATE STREET BANK AND TRUST COMPANY
                      OF CONNECTICUT, NATIONAL ASSOCIATION,
                            as Institutional Trustee,

                             REDWOOD EMPIRE BANCORP,
                                   as Sponsor,

                                       and
           PATRICK W. KILKENNY, JAMES E. BECKWITH and GREGORY J. SMITH
                               as Administrators,

                          Dated as of February 22, 2001

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                                                                                               Page

<S>      <C>               <C>                                                                                   <C>
ARTICLE I INTERPRETATION AND DEFINITIONS..........................................................................1
         Section 1.1.      Definitions............................................................................1

ARTICLE II ORGANIZATION...........................................................................................7
         Section 2.1.      Name...................................................................................7
         Section 2.2.      Office.................................................................................7
         Section 2.3.      Purpose................................................................................7
         Section 2.4.      Authority..............................................................................8
         Section 2.5.      Title to Property of the Trust.........................................................8
         Section 2.6.      Powers and Duties of the Institutional Trustee and the Administrators..................8
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee.....................12
         Section 2.8.      Powers and Duties of the Institutional Trustee........................................13
         Section 2.9.      Certain  Duties  and   Responsibilities   of  the  Institutional   Trustee  and
                           Administrators........................................................................15
         Section 2.10.     Certain Rights of Institutional Trustee...............................................17
         Section 2.11.     Execution of Documents................................................................19
         Section 2.12.     Not Responsible for Recitals or Issuance of Securities................................19
         Section 2.13.     Duration of Trust.....................................................................19
         Section 2.14.     Mergers...............................................................................20

ARTICLE III SPONSOR..............................................................................................22
         Section 3.1.      Sponsor's Purchase of Common Securities...............................................22
         Section 3.2.      Responsibilities of the Sponsor.......................................................22
         Section 3.3.      Expenses..............................................................................22
         Section 3.4.      Right to Proceed......................................................................23

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..............................................................23
         Section 4.1.      Institutional Trustee; Eligibility....................................................23
         Section 4.2.      Administrators........................................................................24
         Section 4.3.      Appointment,   Removal   and   Resignation   of   Institutional   Trustee   and
                           Administrators........................................................................24
         Section 4.4.      Institutional Trustee Vacancies.......................................................25
         Section 4.5.      Effect of Vacancies...................................................................25
         Section 4.6.      Meetings of the Institutional Trustee and the Administrators..........................25
         Section 4.7.      Delegation of Power...................................................................26
         Section 4.8.      Conversion, Consolidation or Succession to Business...................................26

ARTICLE V DISTRIBUTIONS..........................................................................................26
         Section 5.1.      Distributions.........................................................................26

ARTICLE VI ISSUANCE OF SECURITIES................................................................................27
         Section 6.1.      General Provisions Regarding Securities...............................................27
         Section 6.2.      Paying Agent, Transfer Agent and Registrar............................................28
         Section 6.3.      Form and Dating.......................................................................28
         Section 6.4.      Mutilated, Destroyed, Lost or Stolen Certificates.....................................28
         Section 6.5.      Temporary Securities..................................................................29
         Section 6.6.      Cancellation..........................................................................29

                                       i
<PAGE>

         Section 6.7.      Rights of Holders; Waivers of Past Defaults...........................................29

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST.................................................................31
         Section 7.1.      Dissolution and Termination of Trust..................................................31

ARTICLE VIII TRANSFER OF INTERESTS...............................................................................32
         Section 8.1.      General...............................................................................32
         Section 8.2.      Transfer Procedures and Restrictions..................................................33
         Section 8.3.      Deemed Security Holders...............................................................34

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

ARTICLE X ACCOUNTING.............................................................................................39
         Section 10.1.     Fiscal Year...........................................................................39
         Section 10.2.     Certain Accounting Matters............................................................40
         Section 10.3.     Banking...............................................................................40
         Section 10.4.     Withholding...........................................................................40

ARTICLE XI AMENDMENTS AND MEETINGS...............................................................................41
         Section 11.1.     Amendments............................................................................41
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent......................43

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

ARTICLE XIII MISCELLANEOUS.......................................................................................45
         Section 13.1.     Notices...............................................................................45
         Section 13.2.     Governing Law.........................................................................46
         Section 13.3.     Intention of the Parties..............................................................46
         Section 13.4.     Headings..............................................................................46
         Section 13.5.     Successors and Assigns................................................................47
         Section 13.6.     Partial Enforceability................................................................47
         Section 13.7.     Counterparts..........................................................................47

</TABLE>

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

                                       ii

<PAGE>

                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                            REDWOOD STATUTORY TRUST I
                                February 22, 2001

     AMENDED  AND  RESTATED  DECLARATION  OF  TRUST  ("Declaration")  dated  and
effective  as of February  22, 2001,  by the  Institutional  Trustee (as defined
herein), the Administrators (as defined herein), the Sponsor (as defined herein)
and by the holders,  from time to time, of undivided beneficial interests in the
Trust (as defined herein) to be issued pursuant to this Declaration;

     WHEREAS,  the Institutional  Trustee,  the  Administrators  and the Sponsor
established Redwood Statutory Trust I (the "Trust"), a statutory trust under the
Connecticut  Statutory  Trust Act pursuant to a Declaration of Trust dated as of
February 7, 2001 (the "Original Declaration"),  and a Certificate of Trust filed
with the Secretary of State of the State of Connecticut on February 8, 2001, for
the  sole  purpose  of  issuing  and  selling  certain  securities  representing
undivided  beneficial  interests  in the assets of the Trust and  investing  the
proceeds  thereof in certain  debentures  of the  Debenture  Issuer (as  defined
herein);

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

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

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

                                   ARTICLE I

                         INTERPRETATION AND DEFINITIONS

     Section 1.1 Definitions. Unless the context otherwise requires:

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

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

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

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

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

                                        1

<PAGE>

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

     "Administrators"  means each of Patrick W. Kilkenny,  James E. Beckwith and
Gregory J. Smith, solely in such Person's capacity as Administrator of the Trust
created and continued hereunder and not in such Person's individual capacity, or
such  Administrator's  successor in interest in such capacity,  or any successor
appointed as herein provided.

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

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

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

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

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

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

     "Capital Securities" has the meaning set forth in Section 6.1(a).

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

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

     "Certificate" means any certificate evidencing Securities.

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

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

     "Commission" means the Securities and Exchange Commission.

     "Common Securities" has the meaning set forth in Section 6.1(a).

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

                                       2
<PAGE>

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

     "Comparable  Treasury Issue" has the meaning set forth in paragraph 4(a) of
Annex I.

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

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

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

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

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

     "Debenture Issuer" means Redwood Empire Bancorp, a California  corporation,
in its capacity as issuer of the Debentures under the Indenture.

     "Debenture   Trustee"   means  State  Street  Bank  and  Trust  Company  of
Connecticut,  National  Association,  as  trustee  under the  Indenture  until a
successor is appointed thereunder, and thereafter means such successor trustee.

     "Debentures"  means the  10.20%  Junior  Subordinated  Deferrable  Interest
Debentures due 2031 to be issued by the Debenture Issuer under the Indenture.

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

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

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

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

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

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

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

     (c) default in the performance,  or breach, in any material respect, of any
covenant  or  warranty of the  Trustees  in this  Declaration  (other than those
specified in clause (a) or (b) above) and continuation of such default or breach
for a period of 60 days after there has been given,  by  registered or

                                       3
<PAGE>

certified mail to the Trustees and to the Sponsor by the Holders of at least 25%
in aggregate  liquidation amount of the outstanding Capital Securities a written
notice  specifying  such  default or breach and  requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or

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

     "Exchange Act" means the  Securities  Exchange Act of 1934, as amended from
time to time, or any successor legislation.

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

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

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

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

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

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

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

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

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

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

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

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

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

     "Investment  Company  Event" has the meaning set forth in paragraph 4(a) of
Annex I. "Legal Action" has the meaning set forth in Section 2.8(d).

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

                                       4
<PAGE>

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

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

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

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

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

     "Payment Amount" has the meaning set forth in Section 5.1.

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

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

     "Primary  Treasury  Dealer" has the meaning set forth in paragraph  4(a) of
Annex I.

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

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

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

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

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

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

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

                                       5
<PAGE>

     "Reference Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.

     "Reference  Treasury  Dealer  Quotations"  has the  meaning  set  forth  in
paragraph 4(a) of Annex I.

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

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

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

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

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

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

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

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

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

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

     "Sponsor" means Redwood Empire Bancorp,  a California  corporation,  or any
successor entity in a merger, consolidation or amalgamation,  in its capacity as
sponsor of the Trust.

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

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

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

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

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

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

     "10%  in  liquidation   amount  of  the  Securities"   means  Holder(s)  of
outstanding  Securities voting together as a single class or, as the context may
require,  Holders of  outstanding  Capital  Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate  liquidation  amount  (including the stated amount that
would be paid on redemption,  liquidation or otherwise,  plus accrued and unpaid
Distributions  to the date upon which the voting  percentages are determined) of
all outstanding Securities of the relevant class.

                                       6
<PAGE>

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

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

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

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

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

                                   ARTICLE II

                                  ORGANIZATION

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

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

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

     Section 2.4.   Authority.   Except  as   specifically   provided  in  this
Declaration,  the  Institutional  Trustee  shall  have  exclusive  and  complete
authority  to carry  out the  purposes  of the  Trust.  An  action  taken by the
Institutional  Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Institutional Trustee acting on
behalf of the Trust,  no Person shall be required to inquire into the  authority
of the Institutional  Trustee to bind the Trust.  Persons dealing with the Trust
are  entitled  to  rely   conclusively   on  the  power  and  authority  of  the
Institutional Trustee as set forth in this Declaration. The Administrators shall
have  only  those   ministerial   duties  set  forth   herein  with  respect  to
accomplishing  the  purposes of the Trust and are not intended to be trustees or
fiduciaries with respect to the Trust or the Holders. The Institutional  Trustee
shall have the right,  but shall not be obligated  except as provided in Section
2.6, to perform those duties assigned to the Administrators.

     Section 2.5. Title to Property of the Trust.  Except as provided in Section
2.8 with  respect to the  Debentures  and the  Property  Account or as otherwise
provided  in this  Declaration,  legal title to all

                                       7
<PAGE>

assets of the Trust  shall be vested in the Trust.  The  Holders  shall not have
legal title to any part of the assets of the Trust,  but shall have an undivided
beneficial interest in the assets of the Trust.

     Section 2.6.  Powers  and  Duties  of the  Institutional  Trustee  and the
Administrators.

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

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

                    (A) the issuance and sale of the Securities;

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

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

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

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

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

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

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

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

                    (J) to  establish a record date with  respect to all actions
               to be taken  hereunder that require a record date be established,
               including   Distributions,   voting   rights,   redemptions

                                       8
<PAGE>

               and exchanges,  and to issue  relevant  notices to the Holders of
               Capital  Securities  and Holders of Common  Securities as to such
               actions and applicable  record dates; and

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

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

                    (A) the establishment of the Property Account;

                    (B) the receipt of the Debentures;

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

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

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

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

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

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

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

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

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

                                       9
<PAGE>

          the action of the  Administrators  and the action of the Institutional
          Trustee, the action of the Institutional Trustee shall prevail.

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

     Section  2.7.  Prohibition  of Actions  by the Trust and the  Institutional
Trustee.

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

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

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

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

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

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

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

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

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

     Section 2.8. Powers and Duties of the Institutional Trustee.

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

                                       11
<PAGE>

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

     (c) The Institutional Trustee shall:

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

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

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

     (d)  The  Institutional   Trustee  may  bring  or  defend,   pay,  collect,
compromise,  arbitrate,  resort to legal  action with  respect to, or  otherwise
adjust claims or demands of or against,  the Trust ("Legal Action") which arises
out of or in connection with an Event of Default of which a Responsible  Officer
of  the  Institutional  Trustee  has  actual  knowledge  or  arises  out  of the
Institutional Trustee's duties and obligations under this Declaration; provided,
however,  that if an Event of Default has  occurred and is  continuing  and such
event is attributable to the failure of the Debenture  Issuer to pay interest or
principal on the  Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder of
the Capital  Securities may directly  institute a proceeding for  enforcement of
payment to such Holder of the principal of or interest on the Debentures  having
a principal  amount  equal to the  aggregate  liquidation  amount of the Capital
Securities  of such Holder (a "Direct  Action") on or after the  respective  due
date specified in the  Debentures.  In connection  with such Direct Action,  the
rights of the Holders of the Common  Securities will be subrogated to the rights
of such Holder of the Capital  Securities  to the extent of any payment  made by
the  Debenture  Issuer to such Holder of the Capital  Securities  in such Direct
Action; provided,  however, that no Holder of the Common Securities may exercise
such right of  subrogation  so long as an Event of Default  with  respect to the
Capital Securities has occurred and is continuing.

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

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

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

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

                                       12
<PAGE>

holder of the Debentures  subject to the rights of the Holders  pursuant to this
Declaration (including Annex I) and the terms of the Securities.

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

     Section  2.9.  Certain  Duties and  Responsibilities  of the  Institutional
Trustee and Administrators.

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

     (b) The duties and  responsibilities  of the Institutional  Trustee and the
Administrators  shall be as provided by this  Declaration.  Notwithstanding  the
foregoing,  no provision of this  Declaration  shall  require the  Institutional
Trustee or  Administrators  to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder,  or
in the  exercise  of any of their  rights or powers if it shall have  reasonable
grounds to believe that repayment of such funds or adequate  protection  against
such risk of liability is not  reasonably  assured to it. Whether or not therein
expressly  so provided,  every  provision  of this  Declaration  relating to the
conduct  or  affecting  the   liability  of  or  affording   protection  to  the
Institutional  Trustee or  Administrators  shall be subject to the provisions of
this  Article.  Nothing in this  Declaration  shall be  construed  to relieve an
Administrator or the Institutional  Trustee from liability for its own negligent
failure to act, or its own willful misconduct.  To the extent that, at law or in
equity, the Institutional Trustee or an Administrator has duties and liabilities
relating  to the Trust or to the  Holders,  the  Institutional  Trustee  or such
Administrator  shall  not be  liable  to the  Trust  or to any  Holder  for  the
Institutional  Trustee's  or such  Administrator's  good faith  reliance  on the
provisions  of this  Declaration.  The  provisions of this  Declaration,  to the
extent that they restrict the duties and  liabilities of the  Administrators  or
the Institutional  Trustee otherwise existing at law or in equity, are agreed by
the Sponsor and the Holders to replace such other duties and  liabilities of the
Administrators or the Institutional Trustee.

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

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

                                       13
<PAGE>

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

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

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

          (iv) the Institutional Trustee shall not be liable for any interest on
     any money  received by it except as it may otherwise  agree in writing with
     the  Sponsor;  and  money  held by the  Institutional  Trustee  need not be
     segregated  from other funds held by it except in relation to the  Property
     Account  maintained  by  the  Institutional  Trustee  pursuant  to  Section
     2.8(c)(i) and except to the extent otherwise required by law; and

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

     Section  2.10.  Certain  Rights of  Institutional  Trustee.  Subject to the
provisions of Section 2.9:

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

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

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

                                       14
<PAGE>

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

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

     (f) the  Institutional  Trustee may consult with  counsel of its  selection
(which counsel may be counsel to the Sponsor or any of its  Affiliates)  and the
advice of such counsel shall be full and complete  authorization  and protection
in respect of any action  taken,  suffered  or omitted by it  hereunder  in good
faith  and  in  reliance  thereon  and  in  accordance  with  such  advice;  the
Institutional  Trustee  shall  have the  right at any time to seek  instructions
concerning the  administration  of this  Declaration from any court of competent
jurisdiction;

     (g) the Institutional  Trustee shall be under no obligation to exercise any
of the  rights or powers  vested in it by this  Declaration  at the  request  or
direction  of any of the  Holders  pursuant  to this  Declaration,  unless  such
Holders shall have offered to the  Institutional  Trustee  security or indemnity
reasonably  satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;  provided,
that nothing  contained in this  Section  2.10(g)  shall be taken to relieve the
Institutional  Trustee,  subject to Section  2.9(b),  upon the  occurrence of an
Event of Default, to exercise such of the rights and powers vested in it by this
Declaration,  and use the same degree of care and skill in their exercise,  as a
prudent person would exercise or use under the  circumstances  in the conduct of
his or her own affairs;

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

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

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

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

     (l) when the  Institutional  Trustee incurs expenses or renders services in
connection  with a  Bankruptcy  Event,  such  expenses  (including  the fees and
expenses of its counsel) and the  compensation

                                       15
<PAGE>

for such services are intended to constitute  expenses of  administration  under
any bankruptcy law or law relating to creditors rights generally;

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

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

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

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

     Section 2.12. Not Responsible  for Recitals or Issuance of Securities.  The
recitals  contained in this Declaration and the Securities shall be taken as the
statements  of the Sponsor,  and the  Institutional  Trustee does not assume any
responsibility  for  their  correctness.  The  Institutional  Trustee  makes  no
representations as to the value or condition of the property of the Trust or any
part  thereof.  The  Institutional  Trustee makes no  representations  as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.

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

     Section 2.14. Mergers.

     (a) The Trust may not  consolidate,  amalgamate,  merge with or into, or be
replaced  by,  or  convey,   transfer  or  lease  its   properties   and  assets
substantially  as an  entirety  to any  corporation  or other  body,  except  as
described in this Section 2.14(b) and (c).

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

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

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

                                       16
<PAGE>

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

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

          (iii) such merger, consolidation, amalgamation or replacement does not
     adversely  affect the rights,  preferences and privileges of the Holders of
     the Securities (including any Successor Securities) in any material respect
     (other than with respect to any dilution of such Holders'  interests in the
     Successor Entity as a result of such merger, consolidation, amalgamation or
     replacement);

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

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

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

               (A) such merger, consolidation,  amalgamation or replacement does
          not adversely  affect the rights,  preferences  and  privileges of the
          Holders of the Securities  (including any Successor Securities) in any
          material  respect  (other  than with  respect to any  dilution  of the
          Holders' interest in the Successor Entity);

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

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

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

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

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

     (c) Notwithstanding  Section 2.14(b),  the Trust shall not, except with the
consent of Holders of 100% in aggregate  liquidation  amount of the  Securities,
consolidate,  amalgamate, merge with or into,

                                       17
<PAGE>

or be replaced by any other  entity or permit any other  entity to  consolidate,
amalgamate,   merge  with  or  into,  or  replace  it  if  such   consolidation,
amalgamation, merger or replacement would cause the Trust or Successor Entity to
be classified as other than a grantor trust for United States federal income tax
purposes.

                                  ARTICLE III

                                     SPONSOR

     Section 3.1. Sponsor's Purchase of Common Securities.  On the Closing Date,
the Sponsor will purchase all of the Common Securities issued by the Trust in an
amount at least equal to 3% of the capital of the Trust, at the same time as the
Capital Securities are sold.

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

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

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

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

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

     (b) be responsible for and shall pay all debts and obligations  (other than
with  respect  to the  Securities)  and all  costs  and  expenses  of the  Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance  and dissolution of the Trust),  the offering,  sale and issuance of
the Securities (including fees to the placement agents in connection therewith),
the fees and expenses  (including  reasonable  counsel fees and expenses) of the
Institutional Trustee and the Administrators, the costs and expenses relating to
the operation of the Trust, including, without limitation, costs and expenses of
accountants,  attorneys,  statistical  or  bookkeeping  services,  expenses  for
printing and engraving and computing or  accounting  equipment,  Paying  Agents,
Registrars,  Transfer  Agents,  duplicating,  travel  and  telephone  and  other
telecommunications  expenses and costs and expenses  incurred in connection with
the acquisition,  financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders; and

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

     The Sponsor's  obligations  under this Section 3.3 shall be for the benefit
of, and shall be  enforceable  by, any Person to whom such  debts,  obligations,
costs,  expenses and taxes are owed (a "Creditor")  whether or not such Creditor
has  received  notice  hereof.  Any such  Creditor  may  enforce  the  Sponsor's
obligations  under this Section 3.3 directly against the Sponsor and the Sponsor
irrevocably

                                       18
<PAGE>

waives any right or remedy to  require  that any such  Creditor  take any action
against the Trust or any other Person before proceeding against the Sponsor. The
Sponsor  agrees to execute  such  additional  agreements  as may be necessary or
desirable in order to give full effect to the provisions of this Section 3.3.

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

                                   ARTICLE IV

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

     Section 4.1. Institutional Trustee; Eligibility.

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

          (i) not be an Affiliate of the Sponsor;

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

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

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

     (c) The initial  Institutional Trustee shall be State Street Bank and Trust
Company of Connecticut, National Association.

     Section 4.2. Administrators.  Each Administrator shall be a U.S. Person, 21
years  of age  or  older  and  authorized  to  bind  the  Sponsor.  The  initial
Administrators  shall be Patrick W.  Kilkenny,  James E. Beckwith and Gregory J.
Smith.  There shall at all times be at least one  Administrator.  Except where a
requirement for action by a specific number of  Administrators  is expressly set
forth in this  Declaration  and except with  respect to any action the taking of
which is the subject of a meeting of the Administrators,  any action required or
permitted  to be taken by the  Administrators  may be taken by, and any power of
the  Administrators  may be  exercised  by, or with the consent of, any one such
Administrator.

     Section 4.3. Appointment,  Removal and Resignation of Institutional Trustee
and Administrators.

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

                                       19
<PAGE>

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

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

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

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

                                       20
<PAGE>

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

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

     Section 4.4. Institutional Trustee Vacancies.  If the Institutional Trustee
ceases  to hold  office  for any  reason a vacancy  shall  occur.  A  resolution
certifying the existence of such vacancy by the  Institutional  Trustee shall be
conclusive  evidence of the  existence  of such  vacancy.  The vacancy  shall be
filled with a Trustee appointed in accordance with Section 4.3.

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

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

     Section 4.7. Delegation of Power.

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

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

     Section 4.8.  Conversion,  Consolidation  or  Succession  to Business.  Any
Person into which the  Institutional  Trustee may be merged or converted or with
which  it  may be  consolidated,  or  any  Person

                                       21
<PAGE>

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

                                   ARTICLE V

                                  DISTRIBUTIONS

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

                                   ARTICLE VI

                             ISSUANCE OF SECURITIES

     Section 6.1. General Provisions Regarding Securities.

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

     (b) The Certificates  shall be signed on behalf of the Trust by one or more
Administrators. Such signature shall be the facsimile or manual signature of any
Administrator.  In case any Administrator of the Trust who shall have signed any
of the Securities shall cease to be such  Administrator  before the Certificates
so signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Administrator,  and any Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Security,  shall be an
Administrator  of the Trust,  although at the date of the execution and delivery
of the  Declaration  any such  person was not such an  Administrator.  A Capital
Security  shall not be valid  until  authenticated  by the  facsimile  or manual
signature of an Authorized Officer of the Institutional  Trustee. Such signature
shall be conclusive  evidence that the Capital  Security has been  authenticated
under  this  Declaration.  Upon  written  order  of  the  Trust  signed  by  one
Administrator,   the  Institutional   Trustee  shall  authenticate  the  Capital
Securities  for  original  issue.  The  Institutional  Trustee  may  appoint  an
authenticating  agent  that  is  a  U.S.  Person  acceptable  to  the  Trust  to
authenticate  the  Capital  Securities.   A  Common  Security  need  not  be  so
authenticated.

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

                                       22
<PAGE>

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

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

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

     Section 6.3. Form and Dating.  The Capital Securities and the Institutional
Trustee's  certificate of  authentication  thereon shall be substantially in the
form of Exhibit A-1, and the Common  Securities  shall be  substantially  in the
form of Exhibit A-2, each of which is hereby  incorporated in and expressly made
a part of this Declaration.  Certificates may be typed, printed, lithographed or
engraved or may be produced in any other manner as is  reasonably  acceptable to
the Administrators,  as conclusively  evidenced by their execution thereof.  The
Securities may have letters, numbers, notations or other marks of identification
or designation and such legends or endorsements  required by law, stock exchange
rule,  agreements to which the Trust is subject if any, or usage  (provided that
any  such  notation,  legend  or  endorsement  is in a  form  acceptable  to the
Sponsor).  The Trust at the  direction  of the  Sponsor  shall  furnish any such
legend not  contained  in Exhibit A-1 to the  Institutional  Trustee in writing.
Each   Capital   Security   shall  be  dated  on  or  before  the  date  of  its
authentication.  The terms and provisions of the Securities set forth in Annex I
and the forms of  Securities  set forth in Exhibits  A-1 and A-2 are part of the
terms  of this  Declaration  and to the  extent  applicable,  the  Institutional
Trustee,  the Administrators and the Sponsor, by their execution and delivery of
this  Declaration,  expressly agree to such terms and provisions and to be bound
thereby.  Capital  Securities  will be  issued  only in  blocks  having a stated
liquidation  amount  of not less than  $500,000  and any  multiple  of $1,000 in
excess thereof.

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

     Section 6.4. Mutilated, Destroyed, Lost or Stolen Certificates.

If:

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

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

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<PAGE>

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

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

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

     Section 6.7. Rights of Holders; Waivers of Past Defaults.

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

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

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

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

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

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<PAGE>

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

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

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

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

     The  Holders of at least a majority  in  liquidation  amount of the Capital
Securities  may, on behalf of the Holders of all the Capital  Securities,  waive
any past default or Event of Default  under the  Indenture,  except a default or
Event of Default in the payment of principal or interest (unless such default or
Event  of  Default  has  been  cured  and a sum  sufficient  to pay all  matured
installments  of interest and principal due otherwise than by  acceleration  has
been deposited  with the Debenture  Trustee) or a default or Event of Default in
respect of a covenant or provision  that under the Indenture  cannot be modified
or amended without the consent of the holder of each outstanding  Debenture.  No
such  rescission  shall  affect  any  subsequent  default  or  impair  any right
consequent thereon.

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

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

                                       25
<PAGE>

                                  ARTICLE VII

                      DISSOLUTION AND TERMINATION OF TRUST

     Section 7.1. Dissolution and Termination of Trust.

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

          (i) unless earlier dissolved,  on February 22, 2036, the expiration of
     the term of the Trust;

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

          (iii)  (other  than in  connection  with a  merger,  consolidation  or
     similar  transaction not prohibited by the Indenture,  this  Declaration or
     the  Guarantee,  as the case may be) upon the  filing of a  certificate  of
     dissolution or its equivalent with respect to the Sponsor, upon the consent
     of Holders of a Majority in  liquidation  amount of the  Securities  voting
     together  as a single  class to file a  certificate  of  cancellation  with
     respect to the Trust or upon the  revocation  of the charter of the Sponsor
     and the  expiration  of 90 days  after  the date of  revocation  without  a
     reinstatement thereof;

          (iv) upon the  distribution  of the  Debentures  to the Holders of the
     Securities;

          (v) upon exercise of the right of the Holder of all of the outstanding
     Common Securities to dissolve the Trust as provided in Annex I hereto;

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

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

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

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

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

                                  ARTICLE VIII

                              TRANSFER OF INTERESTS

     Section 8.1. General.

     (a) Subject to Section  8.1(c),  where Capital  Securities are presented to
the  Registrar  or a  co-registrar  with a request to  register a transfer or to
exchange them for an equal number of Capital Securities represented by different
certificates,  the Registrar shall register the transfer or make the

                                       26
<PAGE>

exchange  if  its  requirements  for  such   transactions  are  met.  To  permit
registrations  of  transfer  and  exchanges,  the  Trust  shall  issue  and  the
Institutional  Trustee shall authenticate  Capital Securities at the Registrar's
request.

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

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

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

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

     Section 8.2. Transfer Procedures and Restrictions.

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

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

                                       27
<PAGE>

          THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF
     1933, AS AMENDED (THE  "SECURITIES  ACT"), ANY STATE SECURITIES LAWS OR ANY
     OTHER APPLICABLE  SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
     PARTICIPATION  HEREIN  MAY  BE  REOFFERED,  SOLD,  ASSIGNED,   TRANSFERRED,
     PLEDGED,  ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE  ABSENCE  OF  SUCH
     REGISTRATION OR UNLESS SUCH  TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
     THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES  ACT. THE HOLDER OF THIS
     SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR  OTHERWISE
     TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE  TRUST,  (B) TO A
     PERSON WHOM THE SELLER  REASONABLY  BELIEVES  IS A QUALIFIED  INSTITUTIONAL
     BUYER IN A  TRANSACTION  MEETING THE  REQUIREMENTS  OF RULE 144A SO LONG AS
     THIS  SECURITY IS ELIGIBLE FOR RESALE  PURSUANT TO RULE 144A IN  ACCORDANCE
     WITH RULE 144A,  (C) TO A NON-U.S.  PERSON IN AN  OFFSHORE  TRANSACTION  IN
     ACCORDANCE  WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
     THE SECURITIES ACT, (D) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR" WITHIN
     THE MEANING OF SUBPARAGRAPH  (A)(1),  (2), (3) OR (7) OF RULE 501 UNDER THE
     SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,
     OR FOR THE  ACCOUNT  OF  SUCH AN  INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR
     INVESTMENT  PURPOSES  AND  NOT  WITH A VIEW  TO,  OR FOR  OFFER  OR SALE IN
     CONNECTION  WITH, ANY  DISTRIBUTION  IN VIOLATION OF THE SECURITIES ACT, OR
     (E)  PURSUANT  TO ANY  OTHER  AVAILABLE  EXEMPTION  FROM  THE  REGISTRATION
     REQUIREMENTS  OF THE  SECURITIES  ACT,  SUBJECT  TO THE  SPONSOR'S  AND THE
     TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
     DELIVERY OF AN OPINION OF COUNSEL,  CERTIFICATION  AND/OR OTHER INFORMATION
     SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A
     COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST.  THE HOLDER OF
     THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

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

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

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

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

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<PAGE>

Person, whether or not the Trust, the Administrators, the Institutional Trustee,
the Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof

                                   ARTICLE IX

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

     Section 9.1. Liability.

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

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

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

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

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

     Section 9.2. Exculpation.

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

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

     Section 9.3. Fiduciary Duty.

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

                                       29
<PAGE>

they restrict the duties and  liabilities  of an  Indemnified  Person  otherwise
existing at law or in equity,  are agreed by the parties  hereto to replace such
other duties and liabilities of the Indemnified Person.

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

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

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

     Section 9.4. Indemnification.

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

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

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

                                       30
<PAGE>

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

     (e) To the fullest extent permitted by law, expenses (including  reasonable
attorneys' fees and expenses)  incurred by an Indemnified  Person in defending a
civil,  criminal,  administrative  or investigative  action,  suit or proceeding
referred to in  paragraphs  (a) and (b) of this Section 9.4 shall be paid by the
Sponsor in advance of the final  disposition of such action,  suit or proceeding
upon receipt of an  undertaking  by or on behalf of such  Indemnified  Person to
repay such amount if it shall  ultimately be determined  that he is not entitled
to  be   indemnified   by  the  Sponsor  as  authorized  in  this  Section  9.4.
Notwithstanding  the  foregoing,  no advance  shall be made by the  Sponsor if a
determination  is reasonably  and promptly made (i) by the  Administrators  by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum
is not  obtainable,  or,  even  if  obtainable,  if a  quorum  of  disinterested
Administrators so directs,  by independent legal counsel in a written opinion or
(iii) by the Common  Security  Holder of the Trust,  that,  based upon the facts
known to the  Administrators,  counsel or the Common Security Holder at the time
such  determination is made, such Indemnified  Person acted in bad faith or in a
manner  that such  Person did not  believe  to be in or not  opposed to the best
interests of the Trust, or, with respect to any criminal  proceeding,  that such
Indemnified  Person believed or had reasonable  cause to believe his conduct was
unlawful.  In no  event  shall  any  advance  be made  in  instances  where  the
Administrators,   independent  legal  counsel  or  the  Common  Security  Holder
reasonably determine that such Indemnified Person deliberately breached his duty
to the Trust or its Common or Capital Security Holders.

     (f) The Institutional Trustee, at the sole cost and expense of the Sponsor,
retains  the right to  representation  by  counsel  of its own  choosing  in any
action,  suit  or  any  other  proceeding  for  which  it is  indemnified  under
paragraphs  (a) and (b) of this  Section  9.4,  without  affecting  its right to
indemnification  hereunder  or  waiving  any  rights  afforded  to it under this
Declaration or applicable law.

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

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

     (i) For  purposes of this  Section  9.4,  references  to "the Trust"  shall
include,  in addition to the  resulting or  surviving  entity,  any  constituent
entity (including any constituent of a constituent)  absorbed in a consolidation
or  merger,  so that any Person who is or was a  director,  trustee,  officer or
employee of

                                       31
<PAGE>

such constituent entity, or is or was serving at the request of such constituent
entity as a director,  trustee,  officer,  employee or agent of another  entity,
shall stand in the same position  under the  provisions of this Section 9.4 with
respect to the  resulting or  surviving  entity as he would have with respect to
such constituent entity if its separate existence had continued.

     (j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 9.4 shall,  unless otherwise  provided when authorized
or  ratified,  (i)  continue as to a Person who has ceased to be an  Indemnified
Person and shall inure to the benefit of the heirs, executors and administrators
of such a  Person;  and (ii)  survive  the  termination  or  expiration  of this
Declaration or the earlier removal or resignation of an Indemnified Person.

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

     Section 9.6. Compensation; Fee. The Sponsor agrees:

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

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

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

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

                                   ARTICLE X

                                   ACCOUNTING

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

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<PAGE>

     Section 10.2. Certain Accounting Matters.

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

     (b)  The  Administrators,  at the  Sponsor's  expense,  shall  cause  to be
prepared at the principal  office of the Trust in the United States,  as defined
for purposes of Treasury  regulations section 301.7701-7,  and delivered to each
of the Holders of  Securities,  within 90 days after the end of each Fiscal Year
of the Trust,  annual  financial  statements  of the Trust,  including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss which  shall be  examined  by and  reported  upon by a firm of
independent certified public accountants selected by the Administrators.

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

     (d) The  Administrators,  at the Sponsor's expense,  shall cause to be duly
prepared at the principal  office of the Trust in the United States,  as defined
for purposes of Treasury  regulations  section  301.7701-7,  and filed an annual
United  States  federal  income  tax  return on a Form 1041 or such  other  form
required by United  States  federal  income tax law, and any other annual income
tax returns  required to be filed by the  Administrators  on behalf of the Trust
with any state or local taxing authority.

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

     Section 10.4.  Withholding.  The Institutional  Trustee or any Paying Agent
and the  Administrators  shall comply with all  withholding  requirements  under
United States  federal,  state and local law. The  Institutional  Trustee or any
Paying Agent shall request,  and each Holder shall provide to the  Institutional
Trustee or any Paying  Agent,  such forms or  certificates  as are  necessary to
establish  an exemption  from  withholding  with respect to the Holder,  and any
representations  and forms as shall reasonably be requested by the Institutional
Trustee or any Paying  Agent to assist it in  determining  the extent of, and in
fulfilling, its withholding obligations.  The Administrators shall file required
forms with applicable jurisdictions and, unless an exemption from withholding is
properly  established by a Holder,  shall remit amounts withheld with respect to
the Holder to  applicable  jurisdictions.  To the extent that the  Institutional
Trustee or any Paying  Agent is required to withhold and pay over any amounts to
any authority with respect to  distributions  or allocations to any Holder,  the
amount  withheld  shall be  deemed  to be a  Distribution  in the  amount of the
withholding to the Holder. In the event of any claimed overwithholding,  Holders
shall be limited to an action against the applicable jurisdiction. If the amount

                                       33
<PAGE>

required to be withheld was not withheld  from actual  Distributions  made,  the
Institutional Trustee or any Paying Agent may reduce subsequent Distributions by
the amount of such withholding.

                                   ARTICLE XI

                             AMENDMENTS AND MEETINGS

     Section 11.1. Amendments.

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

     (b)  Notwithstanding  any other  provision of this Article XI, no amendment
shall be made, and any such purported amendment shall be void and ineffective:

          (i) unless the Institutional Trustee shall have first received

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

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

          (ii) if the result of such amendment would be to

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

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

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

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

     (e) Section 8.1 (b) and 8.1(c) and this  Section  11.1 shall not be amended
without the consent of all of the Holders of the Securities.

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

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<PAGE>

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

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

          (i) cure any ambiguity;

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

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

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

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

     Section  11.2.  Meetings  of the Holders of  Securities;  Action by Written
Consent.

     (a) Meetings of the Holders of any class of Securities may be called at any
time by the  Administrators  (or as provided in the terms of the  Securities) to
consider and act on any matter on which Holders of such class of Securities  are
entitled  to act  under  the  terms  of this  Declaration  or the  terms  of the
Securities. The Administrators shall call a meeting of the Holders of such class
if  directed to do so by the  Holders of at least 10% in  liquidation  amount of
such class of  Securities.  Such  direction  shall be given by delivering to the
Administrators  one or more calls in a writing  stating that the signing Holders
of the Securities  wish to call a meeting and indicating the general or specific
purpose  for which the meeting is to be called.  Any  Holders of the  Securities
calling a meeting shall specify in writing the Certificates  held by the Holders
of the  Securities  exercising  the  right  to call a  meeting  and  only  those
Securities  represented  by such  Certificates  shall be counted for purposes of
determining  whether the required percentage set forth in the second sentence of
this paragraph has been met.

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

          (i) notice of any such  meeting  shall be given to all the  Holders of
     the Securities  having a right to vote thereat at least 7 days and not more
     than 60 days before the date of such meeting.  Whenever a vote,  consent or
     approval of the Holders of the  Securities  is permitted or required  under
     this Declaration,  such vote, consent or approval may be given at a meeting
     of the Holders of the Securities. Any action that may be taken at a meeting
     of the  Holders  of the  Securities  may be taken  without a  meeting  if a
     consent  in  writing  setting  forth  the  action so taken is signed by the
     Holders  of the  Securities  owning  not less  than the  minimum  amount of
     Securities

                                       35
<PAGE>

     in  liquidation  amount that would be  necessary  to authorize or take such
     action at a meeting at which all Holders of the  Securities  having a right
     to vote  thereon were  present and voting.  Prompt  notice of the taking of
     action  without a meeting  shall be given to the Holders of the  Securities
     entitled to vote who have not consented in writing.  The Administrators may
     specify that any written ballot  submitted to the Holders of the Securities
     for the purpose of taking any action without a meeting shall be returned to
     the Trust within the time specified by the Administrators;

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

          (iii) unless the Statutory Trust Act, this  Declaration,  or the terms
     of the Securities  otherwise provides,  the  Administrators,  in their sole
     discretion,  shall establish all other  provisions  relating to meetings of
     Holders of Securities,  including  notice of the time,  place or purpose of
     any  meeting  at which any  matter is to be voted on by any  Holders of the
     Securities, waiver of any such notice, action by consent without a meeting,
     the establishment of a record date, quorum  requirements,  voting in person
     or by proxy or any other  matter with  respect to the  exercise of any such
     right to vote; provided,  however,  that each meeting shall be conducted in
     the United States (as that term is defined in Treasury  regulations section
     301.7701-7).

                                  ARTICLE XII

                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

     Section 12.1.  Representations and Warranties of Institutional Trustee. The
initial  Institutional  Trustee  represents and warrants to the Trust and to the
Sponsor  at the  date of this  Declaration,  and  each  Successor  Institutional
Trustee  represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:

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

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

                                       36
<PAGE>

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

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

                                  ARTICLE XIII

                                  MISCELLANEOUS

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

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

        Redwood  Statutory  Trust I
        c/o Redwood  Empire Bancorp
        111 Santa RosaAvenue
        Santa Rosa,  California  95404-4905
        Attn: James Beckwith
        Telecopier: 707-522-5784

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

        State Street Bank and Trust Company of Connecticut, National Association
        225 Asylum Street, Goodwin Square
        Hartford, Connecticut 06103
        Attention: Vice President, Corporate Trust Department
        Telecopy: 860-244-1889

        With a copy to:

        State Street Bank and Trust Company
        P.O. Box 778
        Boston, Massachusetts  02102-0778
        Attention:  Paul D. Allen, Corporate Trust Department
        Telecopy:  (617) 662-1462

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

        Redwood Empire Bancorp
        111 Santa Rosa Avenue
        Santa Rosa, California 95404-4905
        Attn: James Beckwith
        Telecopier: 707-522-5784

                                       37
<PAGE>

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

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

     Section 13.2. Governing Law. This Declaration and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the law of the
State of Connecticut  and all rights and remedies shall be governed by such laws
without regard to the principles of conflict of laws of the State of Connecticut
or any other  jurisdiction that would call for the application of the law of any
jurisdiction other than the State of Connecticut;  provided, however, that there
shall not be  applicable  to the Trust,  the  Trustees or this  Declaration  any
provision  of the  laws  (statutory  or  common)  of the  State  of  Connecticut
pertaining to trusts that relate to or regulate,  in a manner  inconsistent with
the terms hereof (a) the filing with any court or governmental body or agency of
trustee  accounts or  schedules of trustee  fees and  charges,  (b)  affirmative
requirements  to post bonds for  trustees,  officers,  agents or  employees of a
trust,  (c) the  necessity for obtaining  court or other  governmental  approval
concerning the acquisition, holding or disposition of real or personal property,
(d) fees or other sums payable to trustees,  officers,  agents or employees of a
trust,  (e) the allocation of receipts and  expenditures to income or principal,
or  (f)  restrictions  or  limitations  on the  permissible  nature,  amount  or
concentration  of trust  investments  or  requirements  relating to the titling,
storage or other manner of holding or investing trust assets.

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

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

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

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

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

                     Signatures appear on the following page

                                       38
<PAGE>

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

                                        STATE STREET BANK AND TRUST COMPANY
                                        OF  CONNECTICUT,  NATIONAL ASSOCIATION,
                                        as Institutional Trustee

                                        By.
                                           -------------------------------------
                                           Name:
                                           Title:

                                       REDWOOD EMPIRE BANCORP, as Sponsor

                                       By:      /s/ Patrick W. Kilkenny
                                          --------------------------------------
                                                Name:   Patrick W. Kilkenny
                                                Title:  President

                                       REDWOOD STATUTORY TRUST I

                                       By:      /s/ Patrick W. Kilkenny
                                          --------------------------------------
                                                Administrator

                                       By:      /s/ James E. Beckwith
                                          --------------------------------------
                                                Administrator

                                       By:      Gregory J. Smith
                                          --------------------------------------
                                                Administrator

                                       39
<PAGE>

                                     ANNEX I

                               TERMS OF SECURITIES

          Pursuant to Section 6.1 of the Amended  and  Restated  Declaration  of
Trust,  dated  as of  February  22,  2001 (as  amended  from  time to time,  the
"Declaration"), the designation, rights, privileges,  restrictions,  preferences
and  other  terms  and  provisions  of the  Capital  Securities  and the  Common
Securities are set out below (each  capitalized term used but not defined herein
has the meaning set forth in the Declaration):

     1. Designation and Number.

          (a)  10,000  Capital  Securities  of  Redwood  Statutory  Trust I (the
"Trust"), with an aggregate stated liquidation amount with respect to the assets
of the  Trust of Ten  Million  Dollars  ($10,000,000)  and a stated  liquidation
amount with  respect to the assets of the Trust of $1,000 per Capital  Security,
are hereby  designated for the purposes of  identification  only as the "Capital
Securities". The Capital Security Certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Declaration,  with such
changes  and  additions  thereto or  deletions  therefrom  as may be required by
ordinary usage, custom or practice.

          (b) 310 Common Securities of the Trust (the "Common  Securities") will
be  evidenced  by  Common  Security  Certificates  substantially  in the form of
Exhibit  A-2 to the  Declaration,  with such  changes and  additions  thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.

     2. Distributions.

          (a)  Distributions  payable  on each  Security  will be  payable at an
annual rate equal to 10.20% (the "Coupon Rate") of the stated liquidation amount
of $1,000  per  Security,  such rate being the rate of  interest  payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more  than  one  semi-annual   period  will  bear  interest  thereon  compounded
semi-annually   at  the  Coupon  Rate  (to  the  extent  permitted  by  law).  A
Distribution  is payable only to the extent that payments are made in respect of
the  Debentures  held  by  the  Institutional  Trustee  and to  the  extent  the
Institutional Trustee has funds available therefor.  The amount of Distributions
payable for any period will be computed for any full  semi-annual  period on the
basis of a 360-day year of twelve 30-day months.

          (b)  Distributions  on the Securities will be cumulative,  will accrue
from the date of original issuance, and will be payable, subject to extension of
distribution  payment periods as described  herein,  semi-annually in arrears on
February  22 and August 22 of each year,  commencing  on August 22, 2001 (each a
"Distribution  Payment  Date")  when,  as  and if  available  for  payment.  The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures,  so long as no Indenture Event of Default has occurred and is
continuing,  by deferring the payment of interest on the Debentures for up to 10
consecutive  semi-annual  periods (each an  "Extension  Period") at any time and
from time to time,  subject to the  conditions  described  below,  although such
interest  would  continue  to  accrue  on  the  Debentures  at the  Coupon  Rate
compounded  semi-annually  (to the extent permitted by law) during any Extension
Period. No Extension Period may end on a date other than a Distribution  Payment
Date. At the end of any such Extension Period the Debenture Issuer shall pay all
interest then accrued and unpaid on the  Debentures  (together  with  Additional
Interest thereon); provided, however, that no Extension Period may extend beyond
the  Maturity  Date and provided  further,  however,  during any such  Extension
Period, the Debenture Issuer and its Affiliates 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  Debenture  Issuer's  or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the  Debenture

                                       I-1
<PAGE>

Issuer) or make any guarantee  payments with respect to the  foregoing,  or (ii)
make any payment of  principal  of or interest or premium,  if any, on or repay,
repurchase  or  redeem  any  debt  securities  of the  Debenture  Issuer  or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures  (other  than,  with  respect  to  clauses  (i) and (ii)  above,  (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Debenture  Issuer in connection  with any employment  contract,  benefit plan or
other  similar  arrangement  with or for the  benefit of one or more  employees,
officers,  directors or consultants,  in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer (or securities convertible into or exercisable for
such capital stock) as consideration in an acquisition  transaction entered into
prior to the  applicable  Extension  Period,  (b) as a result of any exchange or
conversion  of any class or series of the Debenture  Issuer's  capital stock (or
any capital  stock of a  subsidiary  of the  Debenture  Issuer) for any class or
series of the Debenture  Issuer's capital stock or of any class or series of the
Debenture  Issuer's  indebtedness  for any  class  or  series  of the  Debenture
Issuer's  capital stock,  (c) the purchase of fractional  interests in shares of
the  Debenture  Issuer's  capital stock  pursuant to the  conversion or exchange
provisions of such capital stock or the security  being  converted or exchanged,
(d) any  declaration of a dividend in connection with any  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, (e) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks pari passu with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (f) payments  under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Debenture  Issuer may further extend such period,  provided that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 10  consecutive  semi-annual  periods,  or extend beyond the Maturity
Date. Upon the  termination of any Extension  Period and upon the payment of all
accrued and unpaid interest and Additional  Interest,  the Debenture  Issuer may
commence a new  Extension  Period,  subject to the  foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest. If Distributions are deferred,  the Distributions due shall
be paid on the date that the related Extension Period terminates,  to Holders of
the  Securities  as they  appear on the books  and  records  of the Trust on the
record date  immediately  preceding such date.  Distributions  on the Securities
must be paid on the dates payable (after giving effect to any Extension  Period)
to the  extent  that the Trust  has  funds  available  for the  payment  of such
distributions  in the Property Account of the Trust. The Trust's funds available
for  Distribution  to the Holders of the Securities  will be limited to payments
received from the Debenture  Issuer.  The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

          (c)  Distributions  on the  Securities  will be payable to the Holders
thereof as they  appear on the books and  records  of the Trust on the  relevant
record  dates.  The  relevant  record dates shall be 15 days before the relevant
Distribution Payment Date.  Distributions payable on any Securities that are not
punctually paid on any  Distribution  Payment Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, as the case may be,
when due (taking into account any Extension Period), will cease to be payable to
the Person in whose name such  Securities are registered on the relevant  record
date, and such defaulted  Distribution  will instead be payable to the Person in
whose name such  Securities  are  registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which
Distributions  are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other  payment in respect of
any such delay)  except that,  if such  Business  Day is in the next  succeeding
calendar year, such payment shall be made on the immediately  preceding Business
Day,  in each case with the same  force  and  effect as if made on such  payment
date.

                                       I-2
<PAGE>

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

     3. Liquidation Distribution Upon Dissolution. In the event of the voluntary
or involuntary liquidation,  dissolution, winding-up or termination of the Trust
(each  a  "Liquidation")  other  than in  connection  with a  redemption  of the
Debentures, the Holders of the Securities will be entitled to receive out of the
assets of the Trust  available for  distribution  to Holders of the  Securities,
after  satisfaction  of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate of the stated  liquidation amount of $ 1,000 per Security plus accrued
and unpaid Distributions thereon to the date of payment, to the extent the Trust
shall have funds available therefor,  and (ii) the amount of assets of the Trust
remaining  available for  distribution  to Holders in  liquidation  of the Trust
(such amount being, in either case, the "Liquidation  Distribution"),  unless in
connection with such  Liquidation,  the Debentures in aggregate stated principal
amount equal to the aggregate stated liquidation amount of such Securities, with
an interest  rate equal to the Coupon  Rate of, and  bearing  accrued and unpaid
interest  in an amount  equal to the accrued  and unpaid  Distributions  on, and
having  the same  record  date as,  such  Securities,  after  paying  or  making
reasonable  provision  to  pay  all  claims  and  obligations  of the  Trust  in
accordance  with the Statutory  Trust Act,  shall be  distributed  on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

     The Sponsor,  as the Holder of all of the Common Securities,  has the right
at any time to  dissolve  the Trust  (including,  without  limitation,  upon the
occurrence of a Special Event),  subject to the receipt by the Debenture  Issuer
of prior approval from the Board of Governors of the Federal Reserve System (the
"Federal  Reserve"),  if then required under  applicable  capital  guidelines or
policies of the Federal  Reserve  and,  after  satisfaction  of  liabilities  to
creditors of the Trust, cause the Debentures to be distributed to the Holders of
the  Securities  on a Pro Rata basis in  accordance  with the  aggregate  stated
liquidation amount thereof.

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

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

     After the date for any  distribution of the Debentures upon  dissolution of
the  Trust  (i) the  Securities  of the  Trust  will be  deemed  to be no longer
outstanding,   (ii)  the  Holders  of  the  Capital   Securities   will  receive
certificates representing the Debentures to be delivered upon such distribution,
and (iii) any certificates representing the Capital Securities still outstanding
will be  deemed  to  represent  undivided  beneficial  interests  in such of the
Debentures as have an aggregate  principal  amount equal to

                                       I-3
<PAGE>

the aggregate stated  liquidation  amount with an interest rate identical to the
distribution  rate of, and bearing  accrued and unpaid interest equal to accrued
and  unpaid  distributions  on,  the  Securities  until  such  certificates  are
presented to the Debenture Issuer or its agent for transfer or reissuance.

     4. Redemption and Distribution.

          (a) The  Debentures  will mature on February 22, 2031.  The Debentures
may be redeemed  by the  Debenture  Issuer,  in whole or in part at any time and
from time to time on or after  February 22, 2011, at the  Redemption  Price.  In
addition,  the Debentures may be redeemed by the Debenture Issuer at the Special
Redemption Price, in whole but not in part, at any time, upon the occurrence and
continuation  of a Special Event within 90 days following the occurrence of such
Special Event at the Special  Redemption  Price,  upon not less than 30 nor more
than 60 days' notice to holders of such Debentures so long as such Special Event
is  continuing.  In each case,  the right of the Debenture  Issuer to redeem the
Debentures is subject to the Debenture  Issuer having  received  prior  approval
from the Federal Reserve,  if then required under applicable  capital guidelines
or policies of the Federal Reserve. The Sponsor shall appoint a Quotation Agent,
which initially shall be State Street Bank and Trust Company, for the purpose of
performing the services  contemplated  in, or by reference in, the definition of
Special Redemption Price. Any error in the calculation of the Special Redemption
Price by the Quotation  Agent or the  Debenture  Trustee may be corrected at any
time  by  notice  delivered  to the  Sponsor  and  the  holders  of the  Capital
Securities.  Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given,  expressed,  made or obtained for the purposes of the provisions relating
to the payment and calculation of the Special Redemption Price on the Debentures
or the Capital Securities by the Debenture  Trustee,  the Quotation Agent or the
Institutional  Trustee,  as the case may be,  shall (in the  absence  of willful
default,  bad faith or manifest  error) be final,  conclusive and binding on the
holders of the Debentures and the Capital Securities, the Trust and the Sponsor,
and no  liability  shall  attach  (except as  provided  above) to the  Debenture
Trustee, the Quotation Agent or the Institutional Trustee in connection with the
exercise or non-exercise by any of them of their respective  powers,  duties and
discretion.

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

     "Investment  Company  Event" means the receipt by the Debenture  Issuer and
the Trust of an  opinion of counsel  experienced  in such  matters to the effect
that, as a result of the  occurrence of a change in law or regulation or written
change  (including  any  announced  prospective  change)  in  interpretation  or
application of law or regulation by any legislative  body,  court,  governmental
agency or regulatory

                                       I-4
<PAGE>

authority, there is more than an insubstantial risk that the Trust is or will be
considered an "Investment  Company" that is required to be registered  under the
Investment  Company Act of 1940, as amended which change or  prospective  change
becomes effective or would become effective, as the case may be, on or after the
date of the  issuance of the  Debentures.

     "Capital Treatment Event" means the receipt by the Debenture Issuer and the
Trust of an  opinion  of  counsel  that,  as a result of the  occurrence  of any
amendment to, or change  (including  any announced  prospective  change) in, the
laws of the United States or any political subdivision thereof or therein, or as
the result of any official or administrative pronouncement or action or decision
interpreting  or applying such laws,  rules or  regulations,  which amendment or
change is effective or which  pronouncement,  action or decision is announced on
or  after  the  date of  issuance  of the  Debentures,  there  is  more  than an
insubstantial  risk that the  Sponsor  will not be  entitled  to treat an amount
equal to the aggregate  liquidation amount of the Debentures as "Tier 1 Capital"
(or its then equivalent) for purposes of the capital adequacy  guidelines of the
Federal  Reserve,  as then in effect and  applicable  to the Sponsor;  provided,
however,  that the  inability  of the Sponsor to treat all or any portion of the
liquidation  amount of the Debentures as Tier l Capital shall not constitute the
basis for a Capital  Treatment Event, if such inability results from the Sponsor
having   cumulative   preferred  stock,   minority   interests  in  consolidated
subsidiaries,  or any other  class of  security  or  interest  which the Federal
Reserve may now or  hereafter  accord Tier 1 Capital  treatment in excess of the
amount  which may  qualify  for  treatment  as Tier 1 Capital  under  applicable
capital adequacy guidelines for the Federal Reserve;  provided further, however,
that the  distribution  of Debentures in connection  with the Liquidation of the
Trust shall not in and of itself  constitute  a Capital  Treatment  Event unless
such  Liquidation  shall  have  occurred  in  connection  with a Tax Event or an
Investment Company Event.

     "Special Event" means a Tax Event, an Investment Company Event or a Capital
Treatment Event.

     "Redemption Price" means the price set forth in the following table for any
Redemption  Date that occurs  within the  twelve-month  period  beginning in the
relevant  year  indicated  below,  expressed as the  percentage of the principal
amount of the Debentures being redeemed:

      Year Beginning on                               Percentage
      -----------------                               ----------
    February 22, 2011                                   105.10%
    February 22, 2012                                   104.59%
    February 22, 2013                                   104.08%
    February 22, 2014                                   103.57%
    February 22, 2015                                   103.06%
    February 22, 2016                                   102.55%
    February 22, 2017                                   102.04%
    February 22, 2018                                   101.53%
    February 22, 2019                                   101.02%
    February 22, 2020                                   100.51%
    February 22, 2021 and after                         100.00%

plus accrued and unpaid interest on such Debentures to the Redemption Date.

                                       I-5
<PAGE>

     "Special  Redemption Date" means a Redemption Date on which a Special Event
redemption occurs.

     "Special  Redemption  Price"  means (a) if the Special  Redemption  Date is
before February 22, 2011, the greater of (i) 100% of the principal amount of the
Debentures,  plus accrued and unpaid  interest on the Debentures to such Special
Redemption  Date, or (ii) as determined by a Quotation Agent, the sum of (A) the
present value of the principal  amount of the  Debentures set forth in the above
Redemption Price table for the February 22, 2011 Redemption Date and the present
value of interest payable on the Debentures from such Special Redemption Date to
February  22,  2011,  each  discounted  to  the  Special  Redemption  Date  on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months at
the Treasury  Rate),  plus (B) accrued and unpaid  interest on the Debentures to
such Special  Redemption  Date, or (b) if the Special  Redemption  Date is on or
after  February 22, 2011,  the price for the  Debentures  set forth in the above
Redemption Price table for such Special Redemption Date.

     "Comparable  Treasury  Issue" means with respect to any Special  Redemption
Date the United States  Treasury  security  selected by the  Quotation  Agent as
having a maturity  comparable to the Remaining  Life that would be utilized,  at
the time of selection and in accordance with customary  financial  practice,  in
pricing new issues of corporate  debt  securities of comparable  maturity to the
Remaining  Life. If no United States  Treasury  security has a maturity which is
within a period from 3 months  before to 3 months after  February 22, 2011,  the
two most closely  corresponding United States Treasury securities as selected by
the Quotation  Agent shall be used as the  Comparable  Treasury  Issue,  and the
Treasury Rate shall be interpolated  or  extrapolated on a straight-line  basis,
rounding to the nearest month using such securities.

     "Comparable  Treasury Price" means (a) the average of 5 Reference  Treasury
Dealer Quotations for such Special  Redemption Date, after excluding the highest
and lowest such Reference  Treasury Dealer  Quotations,  or (b) if the Quotation
Agent  obtains  fewer than 5 such  Reference  Treasury  Dealer  Quotations,  the
average of all such Quotations.

     "Primary  Treasury  Dealer"  shall  mean  either a  primary  United  States
Government  securities dealer or an entity of nationally  recognized standing in
matters  pertaining to the quotation of treasury  securities  that is reasonably
acceptable to the Sponsor and the Institutional Trustee.

     "Quotation  Agent"  means  State  Street  Bank and  Trust  Company,  or its
designee,  and its successors;  provided,  however,  that if the foregoing shall
cease to be a Primary  Treasury Dealer,  the Sponsor shall  substitute  therefor
another Primary Treasury Dealer.

     "Redemption  Date" shall mean the date fixed for the  redemption of Capital
Securities,  which  shall be February 22 or August 22  commencing  February  22,
2011.

     "Reference  Treasury  Dealer"  means (i) the  Quotation  Agent and (ii) any
other  Primary   Treasury  Dealer  selected  by  the  Debenture   Trustee  after
consultation with the Debenture Issuer.

         "Reference  Treasury  Dealer  Quotations"  means,  with respect to each
Reference  Treasury  Dealer and any Special  Redemption  Date,  the average,  as
determined  by the  Quotation  Agent,  of the  bid  and  asked  prices  for  the
Comparable  Treasury  Issue  (expressed  in  each  case as a  percentage  of its
principal  amount) quoted in writing to the Debenture  Trustee by such Reference
Treasury  Dealer at 5:00 p.m.,  New York City time,  on the third  Business  Day
preceding such Redemption Date.

     "Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the date of calculation,  appearing in
the most recently  published  statistical  release  designated  H.15(519) or any
successor publication which is published weekly by the Federal Reserve and

                                       I-6
<PAGE>

which  establishes  yields on actively traded United States Treasury  securities
adjusted to constant maturity under the caption "Treasury Constant  Maturities",
for the maturity corresponding to the Remaining Life (if no maturity is within 3
months before or after the Remaining Life, yields for the 2 published maturities
most closely  corresponding  to the Remaining  Life shall be determined  and the
Treasury  Rate  shall be  interpolated  or  extrapolated  from such  yields on a
straight-line basis,  rounding to the nearest month) or (ii) if such release (or
any  successor   release)  is  not  published  during  the  week  preceding  the
calculation  date or does not contain such  yields,  the rate per annum equal to
the semi-annual  equivalent yield to maturity of the Comparable  Treasury Issue,
calculated  using a price for the  Comparable  Treasury  Issue  (expressed  as a
percentage of its principal  amount) equal to the Comparable  Treasury Price for
such Special  Redemption  Date.  The Treasury  Rate shall be  calculated  by the
Quotation Agent on the third Business Day preceding the Special Redemption Date.

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

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

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

          (e) Redemption or Distribution Procedures.

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

               (ii) If the  Securities  are to be redeemed and the Trust gives a
     Redemption/  Distribution  Notice,  which  notice may only be issued if the
     Debentures  are redeemed as set out in this  paragraph 4 (which notice will
     be  irrevocable),  then,  provided  that the  Institutional  Trustee  has a
     sufficient  amount of cash in  connection  with the related  redemption  or
     maturity of the Debentures, the Institutional Trustee will pay the relevant
     Redemption Price or Special Redemption Price, as applicable, to the Holders
     of such  Securities  by check  mailed to the  address  of each such  Holder
     appearing on the books and records of the Trust on the redemption  date. If
     a Redemption/Distribution  Notice shall have been given and funds deposited
     as required then

                                       I-7
<PAGE>

     immediately  prior to the  close of  business  on the date of such  deposit
     Distributions  will  cease  to  accrue  on the  Securities  so  called  for
     redemption  and all  rights of  Holders  of such  Securities  so called for
     redemption  will cease,  except the right of the Holders of such Securities
     to receive the  applicable  Redemption  Price or Special  Redemption  Price
     specified in paragraph 4(a), but without  interest on such Redemption Price
     or Special Redemption Price. If any date fixed for redemption of Securities
     is not a Business Day, then payment of any such Redemption Price or Special
     Redemption  Price payable on such date will be made on the next  succeeding
     day that is a Business Day (and  without any  interest or other  payment in
     respect of any such delay)  except that,  if such Business Day falls in the
     next calendar year, such payment will be made on the immediately  preceding
     Business  Day,  in each case with the same  force and  effect as if made on
     such date  fixed for  redemption.  If payment  of the  Redemption  Price or
     Special  Redemption  Price  in  respect  of any  Securities  is  improperly
     withheld or refused  and not paid  either by the Trust or by the  Debenture
     Issuer  as  guarantor  pursuant  to the  Guarantee,  Distributions  on such
     Securities  will  continue to accrue at the Coupon  Rate from the  original
     redemption  date to the actual  date of  payment,  in which case the actual
     payment date will be considered  the date fixed for redemption for purposes
     of calculating  the Redemption  Price or Special  Redemption  Price. In the
     event of any  redemption of the Capital  Securities  issued by the Trust in
     part,  the Trust shall not be required to (i) issue,  register the transfer
     of or exchange  any  Security  during a period  beginning at the opening of
     business  15 days  before  any  selection  for  redemption  of the  Capital
     Securities  and ending at the close of  business  on the  earliest  date on
     which the relevant notice of redemption is deemed to have been given to all
     Holders of the Capital  Securities  to be so redeemed or (ii)  register the
     transfer of or exchange any Capital  Securities so selected for redemption,
     in  whole or in part  except  for the  unredeemed  portion  of any  Capital
     Securities being redeemed in part.

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

     5. Voting Rights - Capital Securities.

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

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

                                       I-8
<PAGE>

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

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

     A waiver of an Indenture  Event of Default will  constitute a waiver of the
corresponding Event of Default hereunder.  Any required approval or direction of
Holders of the Capital  Securities may be given at a separate meeting of Holders
of the Capital Securities  convened for such purpose, at a meeting of all of the
Holders of the  Securities  in the Trust or  pursuant  to written  consent.  The
Institutional Trustee will cause a notice of any meeting at which Holders of the
Capital  Securities  are entitled to vote, or of any matter upon which action by
written  consent of such Holders is to be taken,  to be mailed to each Holder of
record of the Capital  Securities.  Each such  notice  will  include a statement
setting forth the following information (i) the date of such meeting or the date
by which  such  action  is to be taken,  (ii) a  description  of any  resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which  written  consent is sought and (iii)  instructions
for the  delivery of proxies or  consents.  No vote or consent of the Holders of
the  Capital  Securities  will be  required  for the Trust to redeem  and cancel
Capital  Securities or to  distribute  the  Debentures  in  accordance  with the
Declaration and the terms of the Securities.

     Notwithstanding that Holders of the Capital Securities are entitled to vote
or consent under any of the  circumstances  described  above, any of the Capital
Securities  that are owned by the Sponsor or any

                                       I-9
<PAGE>

Affiliate of the Sponsor shall not entitle the Holder thereof to vote or consent
and shall,  for purposes of such vote or consent,  be treated as if such Capital
Securities were not outstanding.

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

     6. Voting Rights - Common Securities.

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

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

          (c)  Subject to  Section  6.7 of the  Declaration  and only after each
Event of Default (if any) with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common  Securities,  voting  separately as a class,  may direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including (i) directing the time,
method,  place of  conducting  any  proceeding  for any remedy  available to the
Debenture  Trustee,  or exercising any trust or power conferred on the Debenture
Trustee  with  respect to the  Debentures,  (ii) waive any past  default and its
consequences  that is waivable under the Indenture,  or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable; provided, however, that, where a consent or action under the
Indenture would require a Super  Majority,  the  Institutional  Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant  Super  Majority  represents of the aggregate  principal  amount of the
Debentures  outstanding.  Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously  authorized or approved by a vote
or consent of the Holders of the Capital Securities.  Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the  Institutional  Trustee or the  Debenture  Trustee as set forth
above,  the  Institutional  Trustee shall not take any action  described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States  federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional  Trustee fails to enforce its rights under the
Declaration  to the fullest  extent  permitted  by law, any Holder of the Common
Securities  may  institute  a legal  proceeding  directly  against any Person to
enforce the Institutional Trustee's rights under the Declaration,  without first
instituting a legal proceeding  against the  Institutional  Trustee or any other
Person.

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

                                       I-10
<PAGE>

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

     7. Amendments to Declaration and Indenture.

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

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

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

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

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

                                       I-11
<PAGE>

liquidation  amount  of the  Capital  Securities  held  by the  relevant  Holder
relative  to  the  aggregate   liquidation  amount  of  all  Capital  Securities
outstanding,  and only after  satisfaction of all amounts owed to the Holders of
the  Capital  Securities,  to each  Holder  of the  Common  Securities  Pro Rata
according to the aggregate  liquidation  amount of the Common Securities held by
the relevant Holder relative to the aggregate  liquidation  amount of all Common
Securities outstanding.

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

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

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

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

                                       I-12
<PAGE>

                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

     THIS SECURITY HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED  (THE  "SECURITIES  ACT"),  ANY  STATE  SECURITIES  LAWS  OR  ANY  OTHER
APPLICABLE   SECURITIES  LAWS.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT.  THE  HOLDER  OF  THIS  SECURITY  BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY
(A) TO THE  SPONSOR OR THE  TRUST,  (B) TO A PERSON  WHOM THE SELLER  REASONABLY
BELIEVES  IS A  QUALIFIED  INSTITUTIONAL  BUYER  IN A  TRANSACTION  MEETING  THE
REQUIREMENTS  OF RULE  144A SO LONG AS THIS  SECURITY  IS  ELIGIBLE  FOR  RESALE
PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (C) TO A NON-U.S.  PERSON IN
AN OFFSHORE  TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE)
OF REGULATION S UNDER THE SECURITIES  ACT, (D) TO AN  INSTITUTIONAL  "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE  SECURITIES  ACT THAT IS ACQUIRING  THIS CAPITAL  SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR
INVESTMENT  PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN  CONNECTION
WITH, ANY  DISTRIBUTION  IN VIOLATION OF THE SECURITIES  ACT, OR (E) PURSUANT TO
ANY  OTHER  AVAILABLE  EXEMPTION  FROM  THE  REGISTRATION  REQUIREMENTS  OF  THE
SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH
OFFER,  SALE OR  TRANSFER  TO REQUIRE  THE  DELIVERY  OF AN OPINION OF  COUNSEL,
CERTIFICATION  AND/OR  OTHER  INFORMATION   SATISFACTORY  TO  EACH  OF  THEM  IN
ACCORDANCE  WITH THE  DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM
THE SPONSOR OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.

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

            Certificate Number          Number of Capital Securities

                                February 22, 2001

                  Certificate Evidencing Capital Securities of

                                       of

                            REDWOOD STATUTORY TRUST I

                (liquidation amount $ 1,000 per Capital Security)

     Redwood  Statutory Trust I, a statutory trust created under the laws of the
State of  Connecticut  (the  "Trust"),  hereby  certifies  that  Preferred  Term
Securities II, Ltd. (the "Holder") is the registered  owner of securities of the
Trust representing  undivided  beneficial  interests in the assets of the Trust,

                                       A-1-1
<PAGE>

(liquidation  amount $1,000 per capital  security)  (the "Capital  Securities").
Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The designation,  rights,  privileges,  restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are issued  pursuant  to, and shall in all  respects  be subject  to, the
provisions of the Amended and Restated  Declaration  of Trust of the Trust dated
as of February  22,  2001,  among  Patrick W.  Kilkenny,  James E.  Beckwith and
Gregory J.  Smith as  Administrators,  State  Street  Bank and Trust  Company of
Connecticut,  National  Association,  as Institutional  Trustee,  Redwood Empire
Bancorp, as Sponsor,  and the holders from time to time of undivided  beneficial
interests in the assets of the Trust,  including the designation of the terms of
the Capital Securities as set forth in Annex I to the Declaration of Trust dated
February  22,  2001  as  the  same  may  be  amended  from  time  to  time  (the
"Declaration").  Capitalized  terms used herein but not  defined  shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration,  the Guarantee,  and the Indenture to the Holder without charge
upon written request to the Trust at its principal place of business.

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

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

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

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

                            REDWOOD STATUTORY TRUST I

                            By:         /s/ Patrick W. Kilkenny
                               -------------------------------------------------
                               Name:    Patrick W. Kilkenny
                               Title:  Administrator

                          CERTIFICATE OF AUTHENTICATION

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

                            STATE STREET BANK AND TRUST COMPANY
                            OF  CONNECTICUT,  NATIONAL ASSOCIATION,
                            as the Institutional Trustee

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

                                     A-1-2
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

     Distributions payable on each Capital Security will be payable at an annual
rate of 10.20% (the "Coupon  Rate") of the stated  liquidation  amount of $1,000
per  Capital  Security,  such rate  being the rate of  interest  payable  on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more  than  a  semi-annual   period  will  bear  interest   thereon   compounded
semi-annually  at the Coupon Rate (to the extent  permitted by applicable  law).
The term  "Distributions"  as used herein includes interest payments  (including
Additional  Interest and principal on the Debentures  held by the  Institutional
Trustee)  and any such  compounded  interest  payable on the  Debentures  unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the  Institutional  Trustee and to the
extent the  Institutional  Trustee has funds available  therefor.  The amount of
Distributions  payable for any period will be computed for any full  semi-annual
Distribution period on the basis of a 360-day year of twelve 30-day months.

     Except  as  otherwise   described  below,   Distributions  on  the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  semi-annually  in arrears on  February  22 and August 22 of
each year,  commencing on August 22, 2001.  The  Debenture  Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest payment period for up to 10 consecutive  semi-annual  periods (each
an "Extension  Period") on the Debentures,  subject to the conditions  described
below,  although such interest  would continue to accrue on the Debentures at an
annual  rate equal to the Coupon  Rate  compounded  semi-annually  to the extent
permitted by law during any Extension  Period.  No Extension Period may end on a
date other  than an  interest  Payment  Date.  At the end of any such  Extension
Period  the  Sponsor  shall pay all  interest  then  accrued  and  unpaid on the
Debentures (together with Additional Interest thereon);  provided, however, that
no  Extension  Period  may  extend  beyond  the  Maturity  Date.  Prior  to  the
termination of any Extension Period, the Sponsor may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall not  exceed 10  consecutive  semi-annual
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Sponsor may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension  Period shall bear  Additional  Interest.  If  Distributions  are
deferred,  the  Distributions  due  shall be paid on the date  that the  related
Extension Period terminates,  to Holders of the Securities as they appear on the
books and records of the Trust on the record  date  immediately  preceding  such
date.  Distributions  on the Securities must be paid on the dates payable (after
giving  effect to any  Extension  Period) to the extent that the Trust has funds
available for the payment of such  distributions  in the Property Account of the
Trust.  The  Trust's  funds  available  for  Distribution  to the Holders of the
Securities will be limited to payments received from the Debenture  Issuer.  The
payment of  Distributions  out of moneys held by the Trust is  guaranteed by the
Guarantor pursuant to the Guarantee.

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

                                     A-1-3
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

         Signature Guarantee:1

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

                                     A-1-4
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

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

                 Certificate Number Number of Common Securities

                                February 22, 2001

                    Certificate Evidencing Common Securities

                                       of

                            REDWOOD STATUTORY TRUST I

     Redwood  Statutory Trust I, a statutory trust created under the laws of the
State of Connecticut (the "Trust"), hereby certifies that Redwood Empire Bancorp
(the  "Holder")  is the  registered  owner of  common  securities  of the  Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common  Securities").  The  designation,   rights,  privileges,   restrictions,
preferences and other terms and provisions of the Common Securities  represented
hereby are issued  pursuant  to, and shall in all  respects  be subject  to, the
provisions of the Amended and Restated  Declaration  of Trust of the Trust dated
as of February  22,  2001,  among  Patrick W.  Kilkenny,  James E.  Beckwith and
Gregory J. Smith,  as  Administrators,  State  Street Bank and Trust  Company of
Connecticut,  National  Association,  as Institutional  Trustee,  Redwood Empire
Bancorp as Sponsor and the  holders  from time to time of  undivided  beneficial
interest in the assets of the Trust  including the  designation  of the terms of
the Common  Securities as set forth in Annex I to the  Declaration,  as the same
may be amended  from time to time (the  "Declaration").  Capitalized  terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder is  entitled  to the  benefits of the  Guarantee  to the extent  provided
therein.  The Sponsor will provide a copy of the Declaration,  the Guarantee and
the Indenture to the Holder without  charge upon written  request to the Sponsor
at its principal place of business.

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

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

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

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

                                      A-2-1
<PAGE>

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

                            REDWOOD STATUTORY TRUST I

                            By:         /s/ Patrick W. Kilkenny
                               -------------------------------------------------
                               Name:    Patrick W. Kilkenny
                               Title:   Administrator

                                     A-2-2
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

     Distributions  payable on each Common  Security will be identical in amount
to the  Distributions  payable on each Capital  Security,  which is at an annual
rate of 10.20% (the "Coupon  Rate") of the stated  liquidation  amount of $1,000
per  Capital  Security,  such rate  being the rate of  interest  payable  on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one period will bear  interest  thereon  compounded at the Coupon Rate
(to the extent  permitted by applicable law). The term  "Distributions"  as used
herein includes interest payments  (including  Additional Interest and principal
on the Debentures  held by the  Institutional  Trustee) and any such  compounded
interest payable on the Debentures  unless  otherwise  stated. A Distribution is
payable only to the extent that  payments are made in respect of the  Debentures
held by the Institutional  Trustee and to the extent the  Institutional  Trustee
has funds available therefor. The amount of Distributions payable for any period
will be computed for any full semi-annual Distribution period on 360-day year of
twelve 30-day months.

     Except as otherwise described below, Distributions on the Common Securities
will be cumulative,  will accrue from the date of original  issuance and will be
payable  semi-annually  in  arrears on  February  22 and August 22 of each year,
commencing  on August 22,  2001.  The  Debenture  Issuer has the right under the
Indenture  to defer  payments of interest on the  Debentures  by  extending  the
interest  payment period for up to 10 consecutive  semi-annual  periods (each an
"Extension  Period")  on the  Debentures,  subject to the  conditions  described
below,  although such interest  would continue to accrue on the Debentures at an
annual  rate equal to the Coupon  Rate  compounded  semi-annually  to the extent
permitted by law during any Extension  Period.  No Extension Period may end on a
date other  than an  Interest  Payment  Date.  At the end of any such  Extension
Period  the  Sponsor  shall pay all  interest  then  accrued  and  unpaid on the
Debentures (together with Additional Interest thereon);  provided, however, that
no  Extension  Period  may  extend  beyond  the  Maturity  Date.  Prior  to  the
termination of any Extension Period, the Sponsor may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall not  exceed 10  consecutive  semi-annual
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Sponsor may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment  of interest that would  otherwise  have been due and payable during
such Extension  Period shall bear  Additional  Interest.  If  Distributions  are
deferred,  the  Distributions  due  shall be paid on the date  that the  related
Extension Period terminates,  to Holders of the Securities as they appear on the
books and records of the Trust on the record  date  immediately  preceding  such
date.  Distributions  on the Securities must be paid on the dates payable (after
giving  effect to any  Extension  Period) to the extent that the Trust has funds
available for the payment of such  distributions  in the Property Account of the
Trust.  The  Trust's  funds  available  for  Distribution  to the Holders of the
Securities will be limited to payments received from the Debenture  Issuer.  The
payment of  Distributions  out of moneys held by the Trust is  guaranteed by the
Guarantor pursuant to the Guarantee.

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

                                     A-2-3
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

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

         Signature Guarantee2

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

                                     A-2-4
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

                                       B-1
<PAGE>

                                    EXHIBIT C

                               PLACEMENT AGREEMENT

                                       C-1

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