Document:

EXHIBIT 10.1

                      CAPITAL SECURITIES PURCHASE AGREEMENT

                                  July 13, 2005

     THIS CAPITAL SECURITIES PURCHASE AGREEMENT (this "Purchase Agreement") is
made among PNBC Capital Trust I, a statutory trust created under the laws of the
State of Delaware (the "Trust"), Princeton National Bancorp, Inc. (the "Company"
and, collectively with the Trust, the "Offerors") and Merrill Lynch
International (the "Purchaser").

                                    RECITALS:

     A. The Trust desires to issue $25,000,000 of its TP Securities (the
"Capital Securities"), with a liquidation amount of $1,000 per Capital Security,
representing undivided beneficial interests in the assets of the Trust (the
"Offering"), to be issued pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), by the Company as Sponsor, LaSalle Bank National
Association, as Institutional Trustee, and Christiana Bank & Trust Company, as
Delaware Trustee, the Administrators named therein, and the holders, from time
to time, of the Capital Securities, which Capital Securities are to be
guaranteed by the Company with respect to distributions and payments upon
liquidation, redemption and otherwise to the extent provided in and pursuant to
the terms of a Guarantee Agreement between the Company and LaSalle Bank National
Association, as Guarantee Trustee (the "Guarantee"); and

     B. The proceeds from the sale of the Capital Securities will be combined
with the proceeds from the sale of the Common Securities by the Trust to the
Company and will be used by the Trust to purchase an equivalent aggregate
principal amount of Junior Subordinated Debentures due July 15, 2035 of the
Company (the "Debentures"), to be issued by the Company pursuant to an Indenture
to be executed by the Company, as Issuer, and LaSalle Bank National Association,
as Debenture Trustee (the "Indenture"); and

     C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE 1

                     PURCHASE AND SALE OF CAPITAL SECURITIES

     1.1 Upon the execution of this Purchase Agreement, the Purchaser hereby
agrees to purchase from the Trust 25,000 Capital Securities at a price equal to
$1,000 per Capital Security (the "Purchase Price") and the Trust agrees to sell
such number of Capital Securities with a liquidation amount of $1,000 per
Capital Security to the Purchaser for the Purchase Price. The rights and
preferences of the Capital Securities will be set forth in the Declaration in
form and substance reasonably acceptable to the Purchaser. The Purchase Price is
payable by the Purchaser on the Closing Date in immediately available funds to
the account designated by LaSalle Bank National Association.

     1.2 The certificate for the Capital Securities shall be delivered in
definitive form by the Trust on the Closing Date to the Purchaser or its
designee, and shall be registered in the name

<PAGE>

of the Purchaser and shall represent the aggregate liquidation amount of the
Capital Securities being purchased by the Purchaser.

     1.3 The Purchaser acknowledges and the Offerors agree that they will not
register any transfer of the Capital Securities not made in accordance with
Regulation S, pursuant to registration under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to an available exemption from
registration.

     1.4 The Placement Agreement, dated July 13, 2005 (the "Placement
Agreement"), among the Offerors and the Placement Agent identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the issuance and sale of the Capital
Securities by the Trust to the Purchaser. Each of the provisions of the
Placement Agreement, including the definitions therein, are hereby incorporated
by reference into this Purchase Agreement. In addition, to the extent provided
for in the Placement Agreement, the Purchaser shall be entitled to the benefits
of the Placement Agreement and shall be entitled to enforce such obligations of
the Offerors under the Placement Agreement as fully as if the Purchaser were a
party to such Placement Agreement, it being agreed between the parties that any
and all representations made by the Offerors to the Placement Agent in the
Placement Agreement shall be deemed to have also been made to the Purchaser.

     1.5 If any condition specified herein or in the Placement Agreement shall
not have been fulfilled when and as required to be fulfilled by, on behalf of or
in respect of the Offerors or the Capital Securities, this Purchase Agreement
may be terminated by the Purchaser by notice to the Offerors at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except that Sections 3, 4, 7, 9, 10 and 15 of the
Placement Agreement shall survive any such termination and remain in full force
and effect.

                                    ARTICLE 2

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     2.1 The Purchaser understands and acknowledges that none of the Capital
Securities, the Debentures or the Guarantee have been registered under the
Securities Act, or any other applicable securities laws, and are being offered
for sale by the Trust in a transaction not requiring registration under the
Securities Act, and the Capital Securities may not be offered, sold, pledged or
otherwise transferred by the Purchaser except in compliance with the
registration requirements of the Securities Act, or any other applicable
securities laws, pursuant to an exemption therefrom or in a transaction not
subject thereto.

     2.2 The Purchaser represents and warrants that it is purchasing the Capital
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Capital Securities pursuant to an
effective registration statement under the Securities Act or under Rules 144A
and 902 under the Securities Act or any other exemption from registration
available under the Securities Act, and the Purchaser agrees to the legends and
transfer restrictions applicable to the Capital Securities

                                       -2-

<PAGE>

contained in the Declaration. The Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act. The
Purchaser represents and warrants that the office or offices of the Purchaser in
which its investment decision was made is located at the address set forth in
Section 3.1 hereof.

     2.3 The Purchaser has full power and authority to execute and deliver this
Purchase Agreement, to make the representations and warranties specified herein,
and to consummate the transactions contemplated herein and it has full right and
power to subscribe for the Capital Securities and perform its obligations
pursuant to this Purchase Agreement.

     2.4 The Purchaser believes it has received all the information it considers
necessary or appropriate for deciding whether to purchase the Capital
Securities. The Purchaser further represents that it has had an opportunity to
ask questions and receive answers from the Offerors regarding the terms and
conditions of the offering of the Capital Securities and the business,
properties, prospects and financial condition of the Offerors.

     2.5 No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any governmental body, agency or court
having jurisdiction over the Purchaser, other than those that have been made or
obtained, is necessary or required for the performance by the Purchaser of its
obligations under this Purchase Agreement or to consummate the transactions
contemplated herein.

     2.6 This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser.

     2.7 The Purchaser is not in violation of or default under any term of its
Memorandum of Association or Articles of Association, of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is
a party or by which it is bound or of any judgment, decree, order, writ or, any
statute, rule or regulation applicable to the Purchaser which would prevent the
Purchaser from performing any material obligation set forth in this Purchase
Agreement. The execution, delivery and performance of and compliance with this
Purchase Agreement, and the consummation of the transactions contemplated
herein, will not, with or without the passage of time or giving of notice,
result in any such material violation, or be in conflict with or constitute a
default under any such term, or the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, authorization or approval
applicable to the Purchaser, its business or operations or any of its assets or
properties which would prevent the Purchaser from performing any material
obligations set forth in this Purchase Agreement.

     2.8 The Purchaser understands and acknowledges that the Company will rely
upon the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agrees that, if any of the acknowledgments,
representations, warranties or agreements deemed to have been made by it by its
purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.

     2.9 The Purchaser understands that no public market exists for any of the
Capital Securities, and that it is unlikely that a public market will ever exist
for the Capital Securities.

                                       -3-

<PAGE>

                                    ARTICLE 3

                                  MISCELLANEOUS

     3.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier, or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:

     To the Offerors:  Princeton National Bancorp, Inc.
                       606 South Main Street
                       Princeton, Illinois 61356
                       Attention: Todd D. Fanning
                       Telephone: (815) 875-4444
                       Fax: (815) 872-8018

     To the Purchaser: Merrill Lynch International
                       c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
                       250 Vesey Street
                       New York, New York 10080
                       Attention: Phil Kostrowicki
                       Telephone: (212) 449-5113
                       Fax: (212) 449-3695

     Unless otherwise expressly provided herein, notices shall be deemed to have
been given when received.

     3.2 This Purchase Agreement shall not be changed, modified or amended
except by a writing signed by the parties to be charged.

     3.3 Upon the execution and delivery of this Purchase Agreement by the
parties hereto, this Purchase Agreement shall become a binding obligation of
each such party with respect to the matters covered herein, including those
incorporated by reference from the Placement Agreement.

     3.4 NOTWITHSTANDING THE PLACE WHERE THIS PURCHASE AGREEMENT MAY BE EXECUTED
BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. EACH OF THE TRUST, PURCHASER AND THE COMPANY, ON
BEHALF OF ITSELF AND ITS SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE
TRUST), HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING RELATED TO THIS PURCHASE AGREEMENT OR ANY OF THE
MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL

                                       -4-

<PAGE>

JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE
TRUST, PURCHASER AND THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES
(INCLUDING, WITHOUT LIMITATION, THE TRUST), IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

     3.5 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Purchase
Agreement.

     3.6 This Purchase Agreement may be executed in one or more counterparts
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument.

     3.7 This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. No course of
conduct or dealing shall be construed to modify, amend or otherwise affect any
of the provisions hereof.

                    Signatures appear on the following pages

                                       -5-

<PAGE>

     IN WITNESS WHEREOF, this Purchase Agreement is agreed to and accepted as of
the day and year first written above.

                                 PRINCETON NATIONAL BANCORP, INC.

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

                                 PNBC CAPITAL TRUST I
                                 BY PRINCETON NATIONAL BANCORP, INC., AS SPONSOR

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

                                       -6-

<PAGE>

     IN WITNESS WHEREOF, this Purchase Agreement is agreed to and accepted as of
the day and year first written above.

                                 MERRILL LYNCH INTERNATIONAL

                                 By:
                                    --------------------------------------------
                                 Print Name:
                                            ------------------------------------
                                 Title: Managing Director

                                      -7-EXHIBIT 10.2

                        AMENDED AND RESTATED DECLARATION

                                    OF TRUST

                              PNBC Capital Trust I

                           Dated as of July 15, 2005

<PAGE>

                               TABLE OF CONTENTS
                                                                            PAGE

                                   ARTICLE I
                         INTERPRETATION AND DEFINITIONS

SECTION 1.1. Definitions...................................................... 1

                                   ARTICLE II
                                  ORGANIZATION

SECTION 2.1. Name............................................................. 8

SECTION 2.2. Office........................................................... 8

SECTION 2.3. Purpose.......................................................... 8

SECTION 2.4. Authority........................................................ 9

SECTION 2.5. Title to Property of the Trust................................... 9

SECTION 2.6. Powers and Duties of the Trustees and the Administrators ........ 9

SECTION 2.7. Prohibition of Actions by the Trust and the Trustees ........... 14

SECTION 2.8. Powers and Duties of the Institutional Trustee.................. 15

SECTION 2.9. Certain Duties and Responsibilities of the Trustees and the
             Administrators ................................................. 16

SECTION 2.10. Certain Rights of Institutional Trustee........................ 18

SECTION 2.11. Delaware Trustee............................................... 20

SECTION 2.12. Execution of Documents......................................... 20

SECTION 2.13. Not Responsible for Recitals or Issuance of Securities ........ 21

SECTION 2.14. Duration of Trust.............................................. 21

SECTION 2.15. Mergers........................................................ 21

                                  ARTICLE III
                                    SPONSOR

SECTION 3.1. Sponsor's Purchase of Common Securities ........................ 23

SECTION 3.2. Responsibilities of the Sponsor ................................ 23

                                      -i-
<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
                                                                            PAGE

                                   ARTICLE IV
                          TRUSTEES AND ADMINISTRATORS

SECTION 4.1. Number of Trustees ............................................. 23

SECTION 4.2. Delaware Trustee................................................ 24

SECTION 4.3. Institutional Trustee; Eligibility.............................. 24

SECTION 4.4. Certain Qualifications of the Delaware Trustee Generally ....... 24

SECTION 4.5. Administrators.................................................. 25

SECTION 4.6. Initial Delaware Trustee........................................ 25

SECTION 4.7. Appointment, Removal and Resignation of the Trustees and the
             Administrators ................................................. 25

SECTION 4.8. Vacancies Among Trustees........................................ 27

SECTION 4.9. Effect of Vacancies............................................. 27

SECTION 4.10. Meetings of the Trustees and the Administrators................ 27

SECTION 4.11. Delegation of Power ........................................... 28

SECTION 4.12. Merger, Conversion, Consolidation or Succession to Business.... 28

                                   ARTICLE V
                                 DISTRIBUTIONS

SECTION 5.1. Distributions................................................... 28

                                   ARTICLE VI
                             ISSUANCE OF SECURITIES

SECTION 6.1. General Provisions Regarding Securities......................... 29

SECTION 6.2. Paying Agent, Transfer Agent, Calculation Agent and Registrar .. 30

SECTION 6.3. Form and Dating................................................. 30

SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates .............. 31

SECTION 6.5. Temporary Securities ........................................... 31

SECTION 6.6. Cancellation.................................................... 31

                                       ii
<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

                                                                            PAGE

SECTION 6.7. Rights of Holders; Waivers of Past Defaults..................... 31

                                  ARTICLE VII
                      DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1. Dissolution and Termination of Trust............................ 33

                                  ARTICLE VIII
                             TRANSFER OF INTERESTS

SECTION 8.1. General......................................................... 34

SECTION 8.2. Transfer Procedures and Restrictions ........................... 35

SECTION 8.3. Deemed Security Holders......................................... 38

                                   ARTICLE IX
      LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 9.1. Liability....................................................... 38

SECTION 9.2. Exculpation..................................................... 39

SECTION 9.3. Fiduciary Duty.................................................. 39

SECTION 9.4. Indemnification................................................. 40

SECTION 9.5. Outside Businesses ............................................. 43

SECTION 9.6. Compensation; Fee .............................................. 43

                                   ARTICLE X
                                   ACCOUNTING

SECTION 10.1. Fiscal Year.................................................... 44

SECTION 10.2. Certain Accounting Matters..................................... 44

SECTION 10.3. Banking........................................................ 44

SECTION 10.4. Withholding.................................................... 45

                                   ARTICLE XI
                            AMENDMENTS AND MEETINGS

SECTION 11.1. Amendments..................................................... 45

                                      iii
<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
                                                                            PAGE

SECTION 11.2. Meetings of the Holders of the Securities; Action by Written
              Consent........................................................ 47

                                  ARTICLE XII
         REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE

SECTION 12.1. Representations and Warranties of Institutional Trustee ....... 49

SECTION 12.2. Representations and Warranties of Delaware Trustee............. 49

                                  ARTICLE XIII
                                 MISCELLANEOUS

SECTION 13.1. Notices........................................................ 50

SECTION 13.2. Governing Law ................................................. 52

SECTION 13.3. Submission to Jurisdiction .................................... 52

SECTION 13.4. Intention of the Parties ...................................... 52

SECTION 13.5. Headings....................................................... 52

SECTION 13.6. Successors and Assigns......................................... 52

SECTION 13.7. Partial Enforceability ........................................ 53

SECTION 13.8. Counterparts................................................... 53

                                       iv
<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
                                                                            PAGE

ANNEXES AND EXHIBITS

ANNEX I       Terms of TP Securities and Common Securities

EXHIBIT A-1   Form of Capital Security Certificate
EXHIBIT A-2   Form of Common Security Certificate

                                      -v-
<PAGE>

                   AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                              PNBC Capital Trust I

                                 July 15, 2005

     AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration"), dated and
effective as of July 15, 2005, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders from time to time of undivided beneficial interests in the assets of the
Trust (as defined herein) to be issued pursuant to this Declaration.

     WHEREAS, the Delaware Trustee and the Sponsor established PNBC Capital
Trust I (the "Trust"), a statutory trust under the Statutory Trust Act (as
defined herein), pursuant to a Declaration of Trust, dated as of July 13, 2005
(the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on July 13, 2005, 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 the Debentures (as defined herein) of the Debenture Issuer (as
defined herein) in connection with the issuance of the Capital Securities (as
defined herein);

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

     WHEREAS, all of the Trustees, the Administrators and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration. NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
and 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, and, in consideration of the
mutual covenants contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties, intending to be legally
bound hereby, amend and restate in its entirety the Original Declaration and
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 or elsewhere herein have the respective meanings assigned to them
in this Section 1.1 or, if not defined in this Section 1.1 or elsewhere herein,
in the Indenture;

<PAGE>

     (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;

     (e) a term defined in the Trust Indenture Act (as defined herein) has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and

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

     "Additional Interest" has the meaning set forth in Section 3.06 of the
Indenture.

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

     "Administrators" means each of Tony J. Sorcic and Todd D. Fanning, solely
in such Person's capacity as Administrator of the Trust 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 enters 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
appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of such Person or for any substantial part of its property, or
orders the winding-up or liquidation of its affairs, and such decree,
appointment or order remains unstayed and in effect for a period of 90
consecutive days; or

     (b) such Person commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, consents to the
entry of an order for relief in an involuntary case under any such law, or
consents 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 makes any general assignment
for the benefit of creditors, or fails generally to pay its debts as they become
due.

                                      -2-
<PAGE>

     "Business Day" means any day other than Saturday, Sunday or any other day
on which banking institutions in Wilmington, Delaware or New York City or the
city of the Corporate Trust Office are permitted or required by any applicable
law or executive order to close.

     "Calculation Agent" has the meaning set forth in Section 1.01 of the
Indenture.

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

     "Capital Securities Purchase Agreement" means the Capital Securities
Purchase Agreement dated as of July 13, 2005 among the Trust, the Sponsor and
Merrill Lynch International.

     "Capital Security Certificate" means a definitive Certificate registered in
the name of the Holder 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.

     "Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended and restated from time to time.

     "Closing Date" means the date of execution and delivery of this
Declaration.

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

     "Commission" means the United States Securities and Exchange Commission.

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

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

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

     "Corporate Trust Office" means the office of the Institutional Trustee at
which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office shall at all times be
located in the United States and at the date of execution of this Declaration is
located at 135 S. LaSalle Street, Suite 1511, Chicago, Illinois 60603, Attn: CDO
Trust Services Group - PNBC Capital Trust I.

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

                                      -3-
<PAGE>

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

     "Debenture Issuer" means Princeton National Bancorp, Inc., a bank holding
company incorporated in Delaware, in its capacity as issuer of the Debentures
under the Indenture.

     "Debenture Trustee" means LaSalle Bank National Association, not in its
individual capacity but solely as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.

     "Debentures" means the Junior Subordinated Debt Securities due July 15,
2035 to be issued by the Debenture Issuer under the Indenture.

     "Deferred Interest" means any interest on the Debentures that would have
been overdue and unpaid for more than one Distribution Payment Date but for the
imposition of an Extension Period, and the interest that shall accrue (to the
extent that the payment of such interest is legally enforceable) on such
interest at the Coupon Rate applicable during such Extension Period, compounded
quarterly from the date on which such Deferred Interest would otherwise have
been due and payable until paid or made available for payment.

     "Definitive Capital Securities" means any Capital Securities in definitive
form issued by the Trust.

     "Delaware Trustee" has the meaning set forth in Section 4.2.

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

     "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(e) of
Annex I.

     "Distribution Payment Period" means the period from and including a
Distribution Payment Date, or in the case of the first Distribution Payment
Period, the original date of issuance of the Securities, to, but excluding, the
next succeeding Distribution Payment Date or, in the case of the last
Distribution Payment Period, the Redemption Date, Special Redemption Date or
Maturity Date (each as defined in the Indenture), as the case may be, for the
related Debentures.

     "Event of Default" means the occurrence of an Indenture Event of Default.

     "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(e) of Annex I.

                                      -4-
<PAGE>

     "Fiduciary Indemnified Person" shall mean each of the Institutional Trustee
(including in its individual capacity), the Delaware Trustee (including in its
individual capacity), any Affiliate of the Institutional Trustee or the Delaware
Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or the Delaware Trustee.

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

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

     "Guarantee" means the Guarantee Agreement, dated as of the Closing Date, of
the Sponsor (the "Guarantor") in respect of the Capital Securities.

     "Holder" means a Person in whose name a Certificate representing a Security
is registered on the register maintained by or on behalf of the Registrar, 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.

     "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 4.3.

     "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(e).

     "LIBOR" means the London Interbank Offered Rate for U.S. Dollar deposits in
Europe as determined by the Calculation Agent according to paragraph 2(b) of
Annex I.

     "LIBOR Banking Day" has the meaning set forth in paragraph 2(b)(1) of Annex
I.

     "LIBOR Business Day" has the meaning set forth in paragraph 2(b)(1) of
Annex I.

     "LIBOR Determination Date" has the meaning set forth in paragraph 2(b)(1)
of Annex I.

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

                                      -5-
<PAGE>

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

     "Majority in liquidation amount of the Securities" means Holders 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.

     "Notice" has the meaning set forth in Section 2.11 of the Indenture.

     "Officers' Certificate" 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 provided for
in this Declaration shall include:

     (a) a statement that each officer signing the Officers' 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 Officers' Certificate;

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

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

     "Paying Agent" has the meaning set forth 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.

     "PORTAL" has the meaning set forth in Section 2.6(a)(i)(E).

     "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.

     "QIB" means a "qualified institutional buyer" as defined under Rule 144A.

                                      -6-
<PAGE>

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

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

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

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

     "Relevant Trustee" has the meaning set forth in Section 4.7(a).

     "Responsible Officer" means, with respect to the Institutional Trustee, any
officer within the Corporate Trust Office of the Institutional Trustee with
direct responsibility for the administration of this Declaration, including any
vice-president, any assistant vice-president, any secretary, 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(c).

     "Rule 144A" means Rule 144A under the Securities Act.

     "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, as
applicable.

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

     "Sponsor" means Princeton National Bancorp, Inc., a bank holding company
that is a U.S. Person incorporated in Delaware, or any successor entity in a
merger, consolidation or amalgamation that is a U.S. Person, in its capacity as
sponsor of the Trust.

     "Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss. 3801 et seq., as it may be amended from time to time, or any
successor legislation.

     "Successor Delaware Trustee" has the meaning set forth in Section 4.7(e).

     "Successor Entity" has the meaning set forth in Section 2.15(b).

     "Successor Institutional Trustee" has the meaning set forth in Section
4.7(b).

     "Successor Securities" has the meaning set forth in Section 2.15(b).

                                      -7-
<PAGE>

     "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 Holders 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.

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

     "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time-to-time, or any successor legislation.

     "Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.

     "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.

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

                                   ARTICLE II
                                  ORGANIZATION

     SECTION 2.1. Name. The Trust is continued hereby and shall be known as
"PNBC Capital Trust I," as such name may be modified from time to time by the
Administrators following written notice to the Institutional Trustee and 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,
which shall be in a state of the United States or the District of Columbia, is
606 South Main Street, Princeton, Illinois 61356. On ten Business Days' written
notice to the Institutional Trustee and the Holders of the Securities, the
Administrators may designate another principal office, which shall be in a state
of the United States or the District of Columbia.

                                      -8-
<PAGE>

     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
incidental thereto that are deemed necessary or advisable by the Institutional
Trustee, including, without limitation, those activities specified in this
Declaration. 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 a Trustee
on behalf of the Trust and in accordance with such Trustee's powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees 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
2.6(g) and Section 2.8 with respect to the Debentures and the Property Account
or as otherwise provided in this Declaration, legal title to all assets of the
Trust shall be vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.

     SECTION 2.6. Powers and Duties of the Trustees and the Administrators.

     (a) The Trustees 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 Administrators and, at the direction
of the Administrators, the Trustees, shall have the authority to enter into all
transactions and agreements determined by the Administrators to be appropriate
in exercising the authority, express or implied, otherwise granted to the
Trustees 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, duty and authority, and
     is hereby authorized, to act on behalf of the Trust with respect to the
     following matters:

               (A) the issuance and sale of the Securities;

                                      -9-
<PAGE>

               (B) to acquire the Debentures with the proceeds of the sale of
          the Securities; provided, however, that the Administrators shall cause
          legal title to the Debentures to be held of record in the name of the
          Institutional Trustee for the benefit of the Holders;

               (C) to cause the Trust to enter into, and to execute, deliver and
          perform 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, a Debenture subscription
          agreement between the Trust and the Sponsor and a Common Securities
          subscription agreement between the Trust and the Sponsor;

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

               (E) if and at such time determined solely by the Sponsor at the
          request of the Holders, assisting in the designation of the Capital
          Securities for trading in the Private Offering, Resales and Trading
          through the Automatic Linkages ("PORTAL") system if available;

               (F) 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, including notice of any
          notice received from the Debenture Issuer of its election to defer
          payments of interest on the Debentures by extending the interest
          payment period under the Indenture;

               (G) the appointment of a Paying Agent, Transfer Agent and
          Registrar in accordance with this Declaration;

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

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

               (J) 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;

               (K) the taking of any action incidental to the foregoing as the
          Sponsor or an Administrator 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);

                                      -10-
<PAGE>

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

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

               (N) to negotiate the terms of, and the execution and delivery of,
          the Placement Agreement and the Capital Securities Purchase Agreement
          related thereto, providing for the sale of the Capital Securities;

               (O) to employ or otherwise engage employees, agents (who may be
          designated as officers with titles), managers, contractors, advisors,
          attorneys and consultants and pay reasonable compensation for such
          services;

               (P) to incur expenses that are necessary or incidental to carry
          out any of the purposes of the Trust;

               (Q) to give the certificate required by ss. 314(a)(4) of the
          Trust Indenture Act to the Institutional Trustee, which certificate
          may be executed by an Administrator; and

               (R) to take all action that may be necessary or appropriate for
          the preservation and the continuation of the Trust's valid existence,
          rights, franchises and privileges as a statutory trust under the laws
          of each jurisdiction (other than the State of Delaware) 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.

          (ii) As among the Trustees and the Administrators, the Institutional
     Trustee shall have the power, duty and authority, and is hereby authorized,
     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;

                                      -11-
<PAGE>

               (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;

               (I) after any Event of Default (of which the Institutional
          Trustee has knowledge (as provided in Section 2.10(m) hereof))
          (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);

               (J) to take all action that may be necessary or appropriate 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 Delaware 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; and

               (K) to undertake any actions set forth in ss. 317(a) of the Trust
          Indenture Act.

          (iii) The Institutional Trustee shall have the power and authority,
     and is hereby authorized, 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)(E) and (F) herein but shall not have a duty
     to do any such act unless specifically requested to do so in writing by the
     Sponsor, and shall then be fully protected in acting pursuant to such
     written request; and in the event of a conflict between the action of the
     Administrators and the action of the Institutional Trustee, the action of
     the Institutional Trustee shall prevail.

     (b) So long as this Declaration remains in effect, the Trust (or the
Trustees 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 Trustees 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 cause (or in the

                                      -12-
<PAGE>

case of the Institutional Trustee, to the actual knowledge of a Responsible
Officer would cause) the Trust to fail or cease to qualify as a "grantor trust"
for United States federal income tax purposes, (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 relating to 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
     advisement of and direction to the Trustees 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; and

          (iii) 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,
the Institutional Trustee 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 (i) the Trust will not be deemed to be an
Investment Company (in the case of the Institutional Trustee, to the actual
knowledge of a Responsible Officer), and (ii) the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes (in
the case of the Institutional Trustee, to the actual knowledge of a Responsible
Officer) and (iii) the Trust will 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 the case of the Institutional Trustee, to
the actual knowledge of a Responsible Officer). In this connection, the
Institutional Trustee, 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 or this Declaration, as amended from time
to time, that each of the Institutional Trustee, the Administrators and such
Holders determine in their discretion to be necessary or desirable for such
purposes, even if such action adversely affects the interests of the Holders of
the Capital Securities.

                                      -13-
<PAGE>

     (e) All expenses incurred by the Administrators or the Trustees pursuant to
this Section 2.6 shall be reimbursed by the Sponsor, and the Trustees 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.

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

     SECTION 2.7. Prohibition of Actions by the Trust and the Trustees. The
Trust shall not, and the Institutional Trustee and the Administrators shall not,
and the Administrators 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 and the Administrators shall not
cause the Trust to:

     (a) 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;

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

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

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

     (e) possess any power or otherwise act in such a way as to vary the Trust
Property or the terms of the Securities;

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

     (g) other than as provided in this Declaration (including Annex I), (i)
direct the time, method and place of exercising any trust or power conferred
upon the Debenture Trustee with respect to the Debentures, (ii) waive any past
default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul any declaration that the principal of all the Debentures shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received a written opinion of counsel
experienced in such matters to the effect

                                      -14-
<PAGE>

that such amendment, modification or termination 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.
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 4.7. Such vesting and cessation
of title shall be effective whether or not conveyancing documents with regard to
the Debentures have been executed and delivered.

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

     (c) The Institutional Trustee shall:

          (i) establish and maintain a segregated non-interest bearing trust
     account (the "Property Account") in the United States (as defined in
     Treasury Regulations ss. 301.7701-7), 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 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 shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities.

     (e) 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 (a "Legal Action") which arise
out of or in connection with an Event of Default of which a Responsible Officer
of the Institutional Trustee has actual knowledge or the Institutional Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
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 premium, if any, on or

                                      -15-
<PAGE>

principal of the Debentures on the date such interest, premium, if any, 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
premium, if any, 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 a Holder of the Common Securities may exercise such right of subrogation
only if no Event of Default with respect to the Capital Securities has occurred
and is continuing.

     (f) 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 (including Annex I) and the
     certificate of cancellation referenced in Section 7.1(b) has been filed; or

          (ii) a Successor Institutional Trustee has been appointed and has
     accepted that appointment in accordance with Section 4.7.

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

     (h) 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 Trustees and the
Administrators.

     (a) The Institutional Trustee, before the occurrence of any Event of
Default (of which the Institutional Trustee has knowledge (as provided in
Section 2.10(m) hereof)) and after the curing of all 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 (of
which the Institutional Trustee has knowledge (as provided in Section 2.10(m)
hereof)), has occurred (that has not been cured or waived pursuant to Section
6.8), 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.

                                      -16-
<PAGE>

     (b) The duties and responsibilities of the Trustees and the Administrators
shall be as provided by this Declaration and, in the case of the Institutional
Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Declaration shall require any Trustee or Administrator to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity satisfactory to it against such risk or 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 Trustees or the Administrators shall be
subject to the provisions of this Article. Nothing in this Declaration shall be
construed to release a Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct or bad faith.
Nothing in this Declaration shall be construed to release an Administrator from
liability for its own gross negligent action, its own gross negligent failure to
act, or its own willful misconduct or bad faith. To the extent that, at law or
in equity, a Trustee or an Administrator has duties and liabilities relating to
the Trust or to the Holders, such Trustee or Administrator shall not be liable
to the Trust or to any Holder for such Trustee's or 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 Trustees 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 Trustees.

     (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 Trustees 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 Trustees expressly set
forth elsewhere in this Declaration or, in the case of the Institutional
Trustee, in the Trust Indenture Act.

     (d) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct or bad faith with
respect to matters that are within the authority of the Institutional Trustee
under this Declaration, except that:

          (i) the Institutional Trustee shall not be liable for any error or
     judgment made in good faith by a Responsible 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,

                                      -17-
<PAGE>

     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, safe keeping 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 own account,
     subject to the protections and limitations on liability afforded to the
     Institutional Trustee under this Declaration and the Trust Indenture Act;

          (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,
written 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 opinion 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 in its sole discretion shall deem
advisable and in the best interests of the Holders, in which event the
Institutional Trustee shall have no liability except for its own negligence or
willful misconduct;

                                      -18-
<PAGE>

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

     (d) whenever in the administration of this Declaration, the Institutional
Trustee shall deem it desirable that a matter be proved or established before
undertaking, suffering or omitting any action hereunder, the Institutional
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall be promptly
delivered by the 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, upon the occurrence of an Event of Default (of which the
Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
that has not been cured or waived, of its obligation to exercise the rights and
powers vested in it by this Declaration;

     (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
Common Securities and the Capital Securities, which instructions may be given

                                      -19-
<PAGE>

only by the Holders of the same proportion in liquidation amount of the Common
Securities and the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of the Common Securities and the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;

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

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

     (m) the Institutional Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Institutional Trustee has
actual knowledge of such event or the Institutional Trustee receives written
notice of such event from any Holder, except with respect to an Event of Default
pursuant to Sections 5.01(a), 5.01(b) or 5.01(c) of the Indenture (other than an
Event of Default resulting from the default in the payment of Additional
Interest or premium, if any, if the Institutional Trustee does not have actual
knowledge or written notice that such payment is due and payable), of which the
Institutional Trustee shall be deemed to have knowledge;

     (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. Delaware Trustee. Notwithstanding any other provision of this
Declaration other than Section 4.2, the Delaware Trustee shall not be entitled
to exercise any powers, nor shall the Delaware Trustee have any of the duties
and responsibilities of any of the Trustees or the Administrators described in
this Declaration (except as may be required under the Statutory Trust Act).
Except as set forth in Section 4.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Statutory Trust Act.

                                      -20-
<PAGE>

     SECTION 2.12. 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 and deliver on
behalf of the Trust any documents, agreements, instruments or certificates that
the Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to Section 2.6.

     SECTION 2.13. 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 Trustees do not assume any responsibility for
their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.

     SECTION 2.14. Duration of Trust. The Trust, unless dissolved pursuant to
the provisions of Article VII hereof, shall have existence for thirty-five (35)
years from the Closing Date.

     SECTION 2.15. 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 Person, except as
described in this Section 2.15 and except with respect to the distribution of
Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of the
Declaration or Section 4 of Annex I.

     (b) The Trust may, with the consent of the Administrators and the
Institutional Trustee (which consent will not be unreasonably withheld) and
without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to a
trust organized as such under the laws of any state; provided, that:

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

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

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

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

                                      -21-
<PAGE>

          (iii) the Capital Securities or any Successor Securities (excluding
     any securities substituted for the Common Securities) are listed or quoted,
     or any Successor Securities will be listed or quoted upon notification of
     issuance, on any national securities exchange or with another organization
     on which the Capital Securities are then listed or quoted, if any;

          (iv) such merger, consolidation, amalgamation, replacement,
     conveyance, transfer or lease does not cause the Capital Securities
     (including any Successor Securities) to be downgraded by any nationally
     recognized statistical rating organization, if the Capital Securities are
     then rated;

          (v) such merger, consolidation, amalgamation, replacement, conveyance,
     transfer or lease 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);

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

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

               (A) such merger, consolidation, amalgamation, replacement,
          conveyance, transfer or lease 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' interests in the Successor
          Entity);

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

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

          (viii) the Sponsor guarantees the obligations of such Successor Entity
     under the Successor Securities to the same extent provided by the
     Guarantee, the Debentures and this Declaration; and

          (ix) prior to such merger, consolidation, amalgamation, replacement,
     conveyance, transfer or lease, the Institutional Trustee shall have
     received an

                                      -22-
<PAGE>

     Officers' Certificate of the Administrators and an opinion of counsel, each
     to the effect that all conditions precedent of this paragraph (b) to such
     transaction have been satisfied.

     (c) Notwithstanding Section 2.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to, any
other Person or permit any other Person to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease 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 and sole decision 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 of 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;

     (b) to prepare for filing and request the Administrators to cause the
filing by the Trust, as may be appropriate, of an application to the PORTAL
system, for listing or quotation upon notice of issuance of any Capital
Securities, as requested by the Holders of not less than a Majority in
liquidation amount of the Capital Securities; and

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

                                   ARTICLE IV
                          TRUSTEES AND ADMINISTRATORS

     SECTION 4.1. Number of Trustees. The number of Trustees initially shall be
two, and:

     (a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and

                                      -23-
<PAGE>

     (b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holder of a Majority in liquidation amount
of the Common Securities voting as a class at a meeting of the Holder of the
Common Securities; provided, however, that there shall be a Delaware Trustee if
required by Section 4.2; and there shall always be one Trustee who shall be the
Institutional Trustee, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements, in which case Section 2.11 shall have no
application to such entity in its capacity as Institutional Trustee.

     SECTION 4.2. Delaware Trustee. If required by the Statutory Trust Act, one
Trustee (the "Delaware Trustee") shall be:

     (a) a natural person who is a resident of the State of Delaware; or

     (b) if not a natural person, an entity which is organized under the laws of
the United States or any state thereof or the District of Columbia, has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, including ss.3807 of the Statutory Trust Act.

     SECTION 4.3. Institutional Trustee; Eligibility.

     (a) There shall at all times be one Trustee which shall act as
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 national association organized and
     doing business under the laws of the United States of America or any state
     thereof or of the District of Columbia and authorized under such laws to
     exercise corporate trust powers, having a combined capital and surplus of
     at least fifty million U.S. dollars ($50,000,000), and subject to
     supervision or examination by federal, state or District of Columbia
     authority. If such corporation or national association 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 4.3(a)(iii), the combined capital and surplus of such
     corporation or national association 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 4.3(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 4.7.

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

                                      -24-
<PAGE>

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

     SECTION 4.4. Certain Qualifications of the Delaware Trustee Generally. The
Delaware Trustee shall be a U.S. Person and either a natural person who is at
least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.

     SECTION 4.5. Administrators. Each Administrator shall be a U.S. Person.

     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 acting alone.

     SECTION 4.6. Initial Delaware Trustee. The initial Delaware Trustee shall
be Christiana Bank & Trust Company.

     SECTION 4.7. Appointment, Removal and Resignation of the Trustees and the
Administrators.

     (a) No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section 4.7.

     (b) Subject to Section 4.7(a), a Relevant Trustee may resign at any time by
giving written notice thereof to the Holders of the Securities and by appointing
a successor Relevant Trustee, except in the case of the Delaware Trustee's
successor which shall be appointed by Holders of a Majority in liquidation
amount of the Common Securities. 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 their 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 reasonable
expense and charges (the "Successor Institutional Trustee"). If the instrument
of acceptance by the successor Relevant Trustee required by this Section 4.7
shall not have been delivered to the Relevant Trustee within 60 days after the
giving of such notice of resignation or delivery of the instrument of removal,
the Relevant 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 Relevant Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Relevant
Trustee. The Institutional Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.7.

     (c) Unless an Event of Default shall have occurred and be continuing, any
Trustee may be removed at any time by an act of the Holders of a Majority in
liquidation amount of the Common Securities. If any Trustee shall be so removed,
the Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities

                                      -25-
<PAGE>

delivered to the Relevant Trustee, shall promptly appoint a successor Relevant
Trustee, and such successor Trustee shall comply with the applicable
requirements of this Section 4.7. If an Event of Default shall have occurred and
be continuing, the Institutional Trustee or the Delaware Trustee, or both of
them, may be removed by the act of the Holders of a Majority in liquidation
amount of the Capital Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). If any 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 Relevant Trustee, shall promptly appoint a successor Relevant Trustee or
Trustees, and such successor Trustee shall comply with the applicable
requirements of this Section 4.7. If no successor Relevant 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 4.7 within 30 days after delivery of an instrument of removal, the
Relevant Trustee or any Holder who has been a Holder of the Securities for at
least six 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 a successor Relevant Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a successor Relevant Trustee or Trustees.

     (d) The Institutional Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Holders and to the Sponsor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Institutional Trustee.

     (e) Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become incompetent or incapacitated, the vacancy
created by such death, incompetence or incapacity may be filled by the
Institutional Trustee (provided the Institutional Trustee satisfies the
requirements of a Delaware Trustee as set forth in Section 4.2) following the
procedures in this Section 4.7 (with the successor being a Person who satisfies
the eligibility requirement for a Delaware Trustee set forth in this
Declaration) (the "Successor Delaware Trustee").

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

                                       -26-
<PAGE>

Securities and the Trust subject to the payment of all unpaid fees, expenses and
indemnities of such retiring Relevant Trustee.

     (g) No Institutional Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.

     (h) 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 Holders of the Common Securities.

     (i) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.

     SECTION 4.8. Vacancies Among Trustees. If a Trustee ceases to hold office
for any reason and the number of Trustees is not reduced pursuant to Section
4.1, or if the number of Trustees is increased pursuant to Section 4.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 4.7.

     SECTION 4.9. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust or terminate this Declaration. Whenever a vacancy in the number
of Trustees shall occur, until such vacancy is filled by the appointment of a
Trustee in accordance with Section 4.7, the Institutional Trustee shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by this Declaration.

     SECTION 4.10. Meetings of the Trustees and the Administrators. Meetings of
the Trustees or the Administrators shall be held from time to time upon the call
of any Trustee or Administrator, as applicable. Regular meetings of the Trustees
and the Administrators, respectively, may be in person in the United States or
by telephone, at a place (if applicable) and time fixed by resolution of the
Trustees or the Administrators, as applicable. Notice of any in-person meetings
of the Trustees or 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 Trustees or 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 a Trustee or an
Administrator, as the case may be, at a meeting shall constitute a waiver of
notice of such meeting except where a 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 ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action of
the Trustees or the Administrators, as the case may be, may be taken at a
meeting by

                                       -27-
<PAGE>

vote of a majority of the Trustees or the Administrators present (whether in
person or by telephone) and eligible to vote with respect to such matter;
provided, that, in the case of the Administrators, a Quorum is present, or
without a meeting by the unanimous written consent of the Trustees or the
Administrators, as the case may be. Meetings of the Trustees and the
Administrators together shall be held from time to time upon the call of any
Trustee or Administrator.

     SECTION 4.11. Delegation of Power.

     (a) Any Trustee or any Administrator, as the case may be, 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, instruments or other writings contemplated in Section
2.6.

     (b) The Trustees shall have power to delegate from time to time to such of
their number or to any officer of the Trust that is a U.S. Person, the doing of
such things and the execution of such instruments or other writings either in
the name of the Trust or the names of the Trustees or otherwise as the Trustees
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 4.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Institutional Trustee or the Delaware Trustee, as the
case maybe, may be merged or converted or with which either may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Institutional Trustee or the Delaware Trustee, as the case may be, shall be
a party, or any Person succeeding to all or substantially all the corporate
trust business of the Institutional Trustee or the Delaware Trustee, as the case
may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided such
Person shall be otherwise qualified and eligible under this Article and,
provided, further, that such Person shall file an amendment to the Certificate
of Trust with the Secretary of State of the State of Delaware as contemplated in
Section 4.7(i).

                                   ARTICLE V
                                 DISTRIBUTIONS

     SECTION 5.1. Distributions.

     (a) 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 (including any Additional Interest or
Deferred Interest) or premium, if any, on and/or 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 in the Property Account for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders. For the
avoidance of doubt, funds in the Property Account shall not be distributed to
Holders to the extent of any taxes payable by the Trust, in the case of
withholding taxes, as

                                       -28-
<PAGE>

determined by the Institutional Trustee or any Paying Agent and, in the case of
taxes other than withholding tax taxes, as determined by the Administrators in a
written notice to the Institutional Trustee.

     (b) As a condition to the payment of any principal of or interest on the
Securities without the imposition of withholding tax, the Administrators shall
require the previous delivery of properly completed and signed applicable U.S.
federal income tax certifications (generally, an Internal Revenue Service Form
W-9 (or applicable successor form) in the case of a person that is a "United
States person" within the meaning of Section 7701(a)(30) of the Code or an
Internal Revenue Service Form W-8 (or applicable successor form) in the case of
a person that is not a "United States person" within the meaning of Section
7701(a)(30) of the Code, and any other certification acceptable to it to enable
the Institutional Trustee or any Paying Agent to determine their respective
duties and liabilities with respect to any taxes or other charges that they may
be required to pay, deduct or withhold in respect of such Securities.

                                   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, evidenced by a certificate substantially in the form of
Exhibit A-1, representing undivided beneficial interests in the assets of the
Trust and having such terms as are set forth in Annex I (the "Capital
Securities"), and one series of common securities, evidenced by a certificate
substantially in the form of Exhibit A-2, representing undivided beneficial
interests in the assets of the Trust and 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 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.

     (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. Any Certificate may be signed on behalf of the Trust by such
person 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 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

                                      -29-
<PAGE>

Securities. A Common Security need not be so authenticated and shall be valid
upon execution by one or more Administrators.

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

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

     (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, Calculation Agent and Registrar.

     (a) The Trust shall maintain an office or agency where the Securities may
be presented for payment (the "Paying Agent"), and an office or agency where
Securities may be presented for registration of transfer or exchange (the
"Transfer Agent"). The Trust hereby appoints the Institutional Trustee as Paying
Agent and Transfer Agent at LaSalle Bank National Association, 135 S. LaSalle
Street, Suite 1511, Chicago, Illinois 60603, Attn: CDO Trust Services Group -
PNBC Capital Trust I. The Trust shall also keep or cause to be kept a register
for the purpose of registering Securities and transfers and exchanges of
Securities, such register to be held by a registrar (the "Registrar"). The
Administrators may appoint the Paying Agent, the Registrar and the Transfer
Agent, and may appoint one or more additional Paying Agents, 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 or co-Transfer
Agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Registrar for the Capital Securities and the Common Securities at its Corporate
Trust Office. The Institutional Trustee or any of its Affiliates in the United
States may act as Paying Agent, Transfer Agent or Registrar.

     (b) The Trust shall also appoint a Calculation Agent, which shall determine
the Coupon Rate in accordance with the terms of the Securities. The Trust
initially appoints the Institutional Trustee as Calculation Agent.

     SECTION 6.3. Form and Dating.

     (a) 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

                                      -30-
<PAGE>

Administrators, as conclusively evidenced by their execution thereof. The
Certificates 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 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
Delaware Trustee, the Administrators and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby. Capital Securities will be issued only in blocks having a
stated liquidation amount of not less than $100,000 and multiples of $1,000 in
excess thereof.

     (b) The Capital Securities sold by the Trust to the initial purchasers
pursuant to the Placement Agreement and the Capital Securities Purchase
Agreement shall be issued in definitive form, registered in the name of the
Holder thereof, without coupons and with the Restricted Securities Legend.

     SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If: (a) any
mutilated Certificates should be surrendered to the Registrar, or if the
Registrar shall receive evidence to its satisfaction of the destruction, loss or
theft of any Certificate; and (b) there shall be delivered to the Registrar, the
Administrators and the Institutional Trustee such security or indemnity as may
be required by them to hold each of them harmless; then, in the absence of
notice that such Certificate shall have been acquired by a bona fide 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 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 Registrar 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 in accordance with
its

                                      -31-
<PAGE>

standard procedures or otherwise 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, and the
issuance of the Securities shall not be subject to, preemptive or other similar
rights and when issued and delivered to Holders against payment of the purchase
price therefor, the Securities will be fully paid and nonassessable by the
Trust.

     (b) For so long as any Capital Securities remain outstanding, if, upon an
Indenture Event of Default under Sections 5.01(c), (e) or (f) of the Indenture,
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 not less than 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.

     (c) Upon an Indenture Event of Default under Sections 5.01(c), (e) or (f)
at any time after a declaration of acceleration of maturity of the Debentures
has been made and before a judgment or decree for payment of the money due has
been obtained by the Debenture Trustee as provided in the Indenture, if the
Institutional Trustee, subject to the provisions hereof, fails to annul any such
declaration and waive such default, the Holders of not less than 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 Sponsor has paid or deposited with the Debenture Trustee a sum
     sufficient to pay

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

               (B) any accrued Deferred Interest on all of the Debentures;

               (C) all payments on any Debentures that have become due otherwise
          than by such declaration of acceleration and interest and Deferred
          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, documented expenses,
          disbursements and advances of the Debenture Trustee and the
          Institutional Trustee, their agents and counsel; and

                                      -32-
<PAGE>

          (ii) all Events of Default with respect to the Debentures, other than
     the non-payment of the principal of or premium, if any, on the Debentures
     that has become due solely by such acceleration, have been cured or waived
     as provided in Section 5.07 of the Indenture.

     (d) The Holders of not less than 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, 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.

     (e) 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.

     (f) Except as otherwise provided in this Section 6.7, the Holders of not
less than 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.

                                      -33-
<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 July 15, 2040, the expiration of the
     term of the Trust;

          (ii) 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) the filing of a certificate of
     dissolution or its equivalent with respect to the Sponsor 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) the distribution of all of the Debentures to the Holders of the
     Securities, upon exercise of the right of the Holders of all of the
     outstanding Common Securities to dissolve the Trust as provided in Annex I
     hereto;

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

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

          (vii) before the issuance of any Securities, with the consent of all
     of the Trustees 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 Section 3808 of the Statutory
Trust Act, and subject to the terms set forth in Annex I, the Delaware Trustee,
when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at
the expense of the Sponsor, a certificate of cancellation with the Secretary of
State of the State of Delaware.

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

                                       -34-
<PAGE>

                                  ARTICLE VIII
                             TRANSFER OF INTERESTS

     SECTION 8.1. General.

     (a) Subject to Section 6.4 and Section 8.1(c), when Capital Securities are
presented to the Registrar with a request to register a transfer or to exchange
them for an equal number of Capital Securities represented by different
Certificates, the Registrar shall register the transfer or make the exchange if
the requirements provided for herein for such transactions are met. To permit
registrations of transfers 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 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 Capital 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 to be issued in the name of the designated
transferee or transferees. Any Security 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 Security surrendered upon such registration of transfer or exchange. 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) Neither the Trust nor the Registrar shall 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

                                      -35-
<PAGE>

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 (as
defined below), which shall not be removed unless there is delivered to the
Trust such satisfactory evidence, which may include an opinion of counsel
reasonably acceptable to the Administrators and the Institutional Trustee, as
may be reasonably required by the Trust or the Institutional Trustee, 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 or that such Securities are not "restricted" within the meaning
of Rule 144 under the Securities Act. Upon provision of such satisfactory
evidence, the Institutional Trustee, at the written direction of the
Administrators, shall authenticate and deliver Capital Securities that do not
bear the Restricted Securities Legend (other than the legend contemplated by
Section 8.2(d)).

     (b) When Capital Securities are presented to the Registrar (x) to register
the transfer of such Capital Securities, or (y) to exchange such Capital
Securities for an equal number of Capital Securities represented by different
Certificates, the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
however, that the Capital Securities surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Administrators, the
Institutional Trustee and the Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing.

     (c) Except as permitted by Section 8.2(a), each Capital Security shall bear
a legend (the "Restricted Securities Legend") in substantially the following
form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR 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 SUCH SECURITY ONLY
(A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON
U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE
SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE

                                       -36-
<PAGE>

REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN "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 ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND
WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY
UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTION RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.

                                      -37-
<PAGE>

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

     THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

     (d) Capital Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount (100 Capital Securities) and multiples of
$1,000 in excess thereof. Any attempted transfer of Capital Securities in a
block having an aggregate liquidation amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such purported
transferee shall be deemed not to be a Holder of such Capital Securities for any
purpose, including, but not limited to, the receipt of Distributions on such
Capital Securities, and such purported transferee shall be deemed to have no
interest whatsoever in such Capital Securities.

     (e) Each party hereto understands and hereby agrees that the Initial
Purchaser is intended solely to be an interim holder of the Capital Securities
and is purchasing such securities to facilitate consummation of the transactions
contemplated herein and in the documents ancillary hereto. Notwithstanding any
provision in this Declaration to the contrary, the Initial Purchaser shall have
the right upon notice (a "Transfer Notice") to the Institutional Trustee and the
Sponsor to transfer title in and to the Capital Securities; provided the Initial
Purchaser shall take reasonable steps to ensure that such transfer is exempt
from registration under the Securities Act of 1933, as amended, and rules
promulgated thereunder. Any Transfer Notice delivered to the Institutional
Trustee and Sponsor pursuant to the preceding sentence shall indicate the
aggregate liquidation amount of Capital Securities being transferred, the name
and address of the transferee thereof (the "Transferee") and the date of such
transfer. Notwithstanding any provision in this Declaration to the contrary, the
transfer by the Initial Purchaser of title in and to the Capital Securities
pursuant to a Transfer Notice shall not be subject to any requirement relating
to Opinions of Counsel, Certificates of Transfer or any other Opinion or
Certificate applicable to transfers hereunder and relating to Capital
Securities.

     (f) Neither the Institutional Trustee nor the Registrar shall be
responsible for ascertaining whether any transfer hereunder complies with the
registration provisions of or any exemptions from the Securities Act, applicable
state securities laws or the applicable laws of any other jurisdiction, ERISA,
the Code or the Investment Company Act.

                                      -38-
<PAGE>

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

          (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) Except to the extent provided in Section 9.1(b), and pursuant to ss.
3803(a) of the Statutory Trust Act, the Holders of the 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 Delaware, except as otherwise specifically set forth herein.

     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 (other than an Administrator) shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's negligence
or willful misconduct or bad faith with respect to such acts or omissions and
except that an Administrator shall be liable for any such loss, damage or claim
incurred by reason of such Administrator's gross negligence or willful
misconduct or bad faith with respect to such acts or omissions.

                                       -39-
<PAGE>

     (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.

     (c) It is expressly understood and agreed by the parties hereto that
insofar as any document, agreement or certificate is executed on behalf of the
Trust by any Trustee (i) such document, agreement or certificate is executed and
delivered by such Trustee, not in its individual capacity, but solely as Trustee
under this Declaration in the exercise of the powers and authority conferred and
vested in it, (ii) each of the representations, undertakings and agreements made
on the part of the Trust is made and intended not as representations,
warranties, covenants, undertakings and agreements by any Trustee in its
individual capacity, but is made and intended for the purpose of binding only
the Trust and (iii) under no circumstances shall any Trustee in its individual
capacity be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Declaration or any other document, agreement or certificate.

     SECTION 9.3. Fiduciary Duty.

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

                                      -40-
<PAGE>

          SECTION 9.4. Indemnification.

               (a) (i) The Sponsor shall indemnify, to the fullest 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)
          by reason of the fact that such Person is or was an Indemnified Person
          against expenses (including attorneys' fees and expenses), judgments,
          fines and amounts paid in settlement actually and reasonably incurred
          by such Person in connection with such action, suit or proceeding if
          such Person acted in good faith and in a manner such Person 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 such 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 such Person 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 such conduct was unlawful.

               (ii) The Sponsor shall indemnify, to the fullest 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 by reason of the fact that such Person is or was an Indemnified
          Person against expenses (including attorneys' fees and expenses)
          actually and reasonably incurred by such Person in connection with the
          defense or settlement of such action or suit if such Person acted in
          good faith and in a manner such Person reasonably believed to be in or
          not opposed to the best interests of the Trust and except 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 of
          Chancery of Delaware or 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 of Chancery or such other court shall
          deem proper.

               (iii) 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 (i) and (ii) of this Section 9.4(a), or in
          defense of any claim, issue or matter therein, such Person shall be
          indemnified, to the fullest extent permitted by law, against expenses
          (including attorneys' fees and expenses) actually and reasonably
          incurred by such Person in connection therewith.

                                       -41-
<PAGE>

               (iv) Any indemnification of an Administrator under paragraphs (i)
          and (ii) of this Section 9.4(a) (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 such Person has met the applicable
          standard of conduct set forth in paragraphs (i) and (ii). Such
          determination shall be made (A) by the Administrators by a majority
          vote of a Quorum consisting of such Administrators who were not
          parties to such action, suit or proceeding, (B) 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 (C) by the Common Security Holder of the Trust.

               (v) To the fullest extent permitted by law, expenses (including
          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 (i) and (ii) of this
          Section 9.4(a) 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 such Person is not
          entitled to be indemnified by the Sponsor as authorized in this
          Section 9.4(a). Notwithstanding the foregoing, no advance shall be
          made by the Sponsor if a determination is reasonably and promptly made
          (1) in the case of a Company Indemnified Person (A) by the
          Administrators by a majority vote of a Quorum of disinterested
          Administrators, (B) 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 (C) 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 either believed to be opposed to or did
          not believe to be in the best interests of the Trust, or, with respect
          to any criminal proceeding, that such Indemnified Person believed or
          had reasonable cause to believe such conduct was unlawful, or (2) in
          the case of a Fiduciary Indemnified Person, by independent legal
          counsel in a written opinion that, based upon the facts known to the
          counsel at the time such determination is made, such Indemnified
          Person acted in bad faith or in a manner that such Indemnified Person
          either believed to be opposed to or did not believe to be in the best
          interests of the Trust, or, with respect to any criminal proceeding,
          that such Indemnified Person believed or had reasonable cause to
          believe such conduct was unlawful. In no event shall any advance be
          made (i) to a Company Indemnified Person in instances where the
          Administrators, independent legal counsel or the Common Security
          Holder reasonably determine that such Person deliberately breached
          such Person's duty to the Trust or its Common or Capital Security
          Holders or (ii) to a Fiduciary Indemnified Person in instances where
          independent legal counsel promptly and reasonably determines in a
          written opinion that such Person deliberately breached such Person's
          duty to the Trust or its Common or Capital Security Holders.

                                      -42-
<PAGE>

     (b) The Sponsor shall indemnify, to the fullest extent permitted by
applicable law, each Indemnified Person from and against any and all loss,
damage, liability, tax (other than taxes based on the income of such Indemnified
Person), penalty, expense or claim of any kind or nature whatsoever incurred by
such Indemnified Person arising out of or in connection with or by reason of the
creation, administration or termination of the Trust, or any act or omission of
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 authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage, liability, tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence, willful misconduct or bad faith with respect to
such acts or omissions.

     (c) 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 such Person's 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.

     (d) 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 such Person and incurred by such Person in any such capacity, or arising
out of such Person's status as such, whether or not the Sponsor would have the
power to indemnify such Person against such liability under the provisions of
this Section 9.4.

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

     (f) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 9.4 shall, unless otherwise provided when authorized
or ratified, 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.

     (g) The provisions of this Section 9.4 shall survive the termination of
this Declaration or the earlier resignation or removal of the Institutional
Trustee. The obligations of the Sponsor under this Section 9.4 to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional

                                      -43-
<PAGE>

indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Securities upon all property and funds held or collected by
the Trustees as such, except funds held in trust for the benefit of the holders
of particular Capital Securities, provided, that the Sponsor is the holder of
the Common Securities.

     SECTION 9.5. Outside Businesses. Any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee (subject to Section 4.3(c)) 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, the Delaware Trustee 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, the Delaware Trustee 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, the Delaware Trustee 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.

     (a) Subject to the provisions set forth in the Fee Agreement between the
Institutional Trustee, Cohen Bros. & Company and the Company of even date
herewith, the Sponsor agrees:

          (i) to pay to the Trustees from time to time such compensation for all
     services rendered by them hereunder as the parties shall agree in writing
     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

          (ii) except as otherwise expressly provided herein, to reimburse the
     Trustees upon request for all reasonable, documented expenses,
     disbursements and advances incurred or made by the Trustees 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 attributable
     to their negligence or willful misconduct.

     (b) 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
any Trustee.

                                    ARTICLE X
                                   ACCOUNTING

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

                                       -44-
<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 ss. 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 on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied.

     (b) The Administrators shall either (i) cause each Form 10-K and Form 10-Q
prepared by the Sponsor and filed with the Commission in accordance with the
Exchange Act to be delivered to each Holder of Securities, within 90 days after
the filing of each Form 10-K and within 30 days after the filing of each Form
10-Q or (ii) cause to be prepared at the principal office of the Trust in the
United States, as defined for purposes of Treasury Regulations ss. 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.

     (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 shall cause to be duly prepared in the United
States, as defined for purposes of Treasury Regulations ss. 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.

     (e) The Administrators will cause the Sponsor's reports on Form FR Y-9C, FR
Y-9LP and Form 10-Q to be delivered to the Holder promptly following their
filing with the Federal Reserve.

     SECTION 10.3. Banking. The Trust shall maintain one or more bank accounts
in the United States, as defined for purposes of Treasury Regulations ss.
301.7701-7, 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. As a condition to the payment of any
principal of or interest on any Debt Security without the imposition of
withholding tax, the Institutional Trustee or any Paying Agent shall

                                      -45-
<PAGE>

require the previous delivery of properly completed and signed applicable U.S.
federal income tax certifications (generally, an Internal Revenue Service Form
W-9 (or applicable successor form) in the case of a person that is a "United
States person" within the meaning of Section 7701(a)(30) of the Code or an
Internal Revenue Service Form W-8 (or applicable successor form) in the case of
a person that is not a "United States person" within the meaning of Section
7701(a)(30) of the Code) and any other certification acceptable to it to enable
the Institutional Trustee or any Paying Agent and the Trustee to determine their
respective duties and liabilities with respect to any taxes or other charges
that they may be required to pay, deduct or withhold in respect of such Debt
Security or the holder of such Debt Security under any present or future law or
regulation of the United States or any political subdivision thereof or taxing
authority therein or to comply with any reporting or other requirements under
any such law or regulation. 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 to the Holder in the amount of the
withholding. In the event of any claimed overwithholding, Holders shall be
limited to an action against the applicable jurisdiction. If the amount required
to be withheld was not withheld from actual Distributions made, the
Institutional Trustee or any Paying Agent may reduce subsequent Distributions by
the amount of such withholding.

                                   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:

          (i) the Institutional Trustee,

          (ii) if the amendment affects the rights, powers, duties, obligations
     or immunities of the Delaware Trustee, the Delaware Trustee,

          (iii) if the amendment affects the rights, powers, duties, obligations
     or immunities of the Administrators, the Administrators, and

          (iv) the Holders of a Majority in liquidation amount of the Common
     Securities.

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

                                      -46-
<PAGE>

          (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
          that all conditions precedent to the execution and delivery of such
          amendment have been satisfied; or

          (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;

               (B) reduce or otherwise adversely affect the powers of the
          Institutional Trustee in contravention of the Trust Indenture Act;

               (C) cause the Trust to be deemed to be an Investment Company
          required to be registered under the Investment Company Act; or

               (D) cause the Debenture Issuer to be unable to treat an amount
          equal to the Liquidation Amount of the Capital Securities as "Tier 1
          Capital" for purposes of the capital adequacy guidelines of (x) the
          Federal Reserve (or, if the Debenture Issuer is not a bank holding
          company, such guidelines or policies applied to the Debenture Issuer
          as if the Debenture Issuer were subject to such guidelines of
          policies) or of (y) any other regulatory authority having jurisdiction
          over the Debenture Issuer.

     (c) Except as provided in Section 11.1(d), (e) or (g), 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 any redemption or liquidation provisions applicable to 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 (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.

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

                                      -47-
<PAGE>

     (f) The rights of the Holders of the Capital Securities and Common
Securities, as applicable, under Article IV to increase or decrease the number
of, and appoint and remove, Trustees shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the Capital Securities or
Common Securities, as applicable.

     (g) Subject to Section 11.1(a), this Declaration may be amended by the
Institutional Trustee and the Holder 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 or desirable, including, without
     limitation, 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 right, preferences or
     privileges of the Holders of Securities;

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

     SECTION 11.2. Meetings of the Holders of the 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, the terms of the Securities
or the rules of any stock exchange on which the Capital Securities are listed or
admitted for trading, if any. The Administrators shall call a meeting of the
Holders of such class if directed to do so by the Holders of not less than 10%
in liquidation amount of such class of Securities. Such direction shall be given
by delivering to the Administrators one or more notices 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.

                                      -48-
<PAGE>

     (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 or the rules of any stock exchange on which the Capital
     Securities are listed or admitted for trading, if any, 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 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 Delaware relating to proxies,
     and judicial interpretations thereunder, as if the Trust were a Delaware
     corporation and the Holders of the Securities were stockholders of a
     Delaware 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, the terms of
     the Securities, the Trust Indenture Act or the listing rules of any stock
     exchange on which the Capital Securities are then listed for trading, if
     any, 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 ss. 301.7701-7).

                                      -49-
<PAGE>

                                   ARTICLE XII
                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
                              AND DELAWARE TRUSTEE

     SECTION 12.1. Representations and Warranties of Institutional Trustee. The
Trustee that acts as 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 banking corporation or national
association with trust powers, duly organized, validly existing and in good
standing under the laws of the State of New York or the United States of
America, respectively, 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 Institutional Trustee has a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000);

     (c) the Institutional Trustee is not an affiliate of the Sponsor, nor does
the Institutional Trustee offer or provide credit or credit enhancement to the
Trust;

     (d) the execution, delivery and performance by the Institutional Trustee of
this Declaration has been duly authorized by all necessary action on the part of
the Institutional Trustee. This Declaration has been duly executed and delivered
by the Institutional Trustee, and under Delaware law (excluding any securities
laws) 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
and the discretion of the court (regardless of whether considered in a
proceeding in equity or at law);

     (e) 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

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

     SECTION 12.2. Representations and Warranties of Delaware Trustee. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:

     (a) if it is not a natural person, the Delaware Trustee is duly organized,
validly existing and has its principal place of business in the State of
Delaware;

                                      -50-
<PAGE>

     (b) if it is not a natural person, the execution, delivery and performance
by the Delaware Trustee of this Declaration has been duly authorized by all
necessary corporate action on the part of the Delaware Trustee. This Declaration
has been duly executed and delivered by the Delaware Trustee, and under Delaware
law (excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware 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 and the discretion of the court (regardless of
whether considered in a proceeding in equity or at law);

     (c) if it is not a natural person, the execution, delivery and performance
of this Declaration by the Delaware Trustee does not conflict with or constitute
a breach of the articles of association or by-laws of the Delaware Trustee;

     (d) it has trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration;

     (e) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority governing the trust powers of
the Delaware Trustee is required for the execution, delivery or performance by
the Delaware Trustee of this Declaration; and

     (f) if the Delaware Trustee is a natural person, he or she is a resident of
the State of Delaware.

                                  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):

         PNBC Capital Trust I
         c/o Princeton National Bancorp, Inc.
         606 South Main Street
         Princeton, Illinois 61356
         Attention: Todd D. Fanning
         Telecopy: (815) 872-8018
         Telephone: (815) 875-4444

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

                                      -51-
<PAGE>

         Christiana Bank & Trust Company
         1314 King Street
         Wilmington, Delaware 19801
         Attn: CDO Trust Services
         Telecopy: 302-421-9015
         Telephone: 302-888-7424

     (c) 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):

         LaSalle Bank National Association
         135 S. LaSalle Street, Suite 1511
         Chicago, Illinois 60603
         Attention:  CDO Trust Services Group
         PNBC Capital Trust I
         Telecopy: 312-904-0524
         Telephone: 312-904-0283

     (d) 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):

         Princeton National Bancorp, Inc.
         606 South Main Street
         Princeton, Illinois 61356
         Attention: Todd D. Fanning
         Telecopy: (815) 872-8018
         Telephone: (815) 875-4444

     (e) 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 and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the law of the State of Delaware and all rights, obligations and
remedies shall be governed by such laws without regard to the principles of
conflict of laws of the State of Delaware or any other jurisdiction that would
call for the application of the law of any jurisdiction other than the State of
Delaware.

                                      -52-
<PAGE>

     SECTION 13.3. Submission to Jurisdiction.

     (a) Each of the parties hereto agrees that any suit, action or proceeding
arising out of or based upon this Declaration, or the transactions contemplated
hereby, may be instituted in any of the courts of the State of New York located
in the Borough of Manhattan, City and State of New York, and further agrees to
submit to the jurisdiction of Delaware, and to any actions that are instituted
in state or Federal court in Wilmington, Delaware and any competent court in the
place of its corporate domicile in respect of actions brought against it as a
defendant. In addition, each such party irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of such suit, action or proceeding brought in any such court
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum and
irrevocably waives any right to which it may be entitled on account of its place
of corporate domicile. Each such party hereby irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of or relating to
this Declaration or the transactions contemplated hereby. Each such party agrees
that final judgment in any proceedings brought in such a court shall be
conclusive and binding upon it and may be enforced in any court to the
jurisdiction of which it is subject by a suit upon such judgment.

     (b) Each of the Sponsor, the Trustees, the Administrators and the Holder of
the Common Securities irrevocably consents to the service of process on it in
any such suit, action or proceeding by the mailing thereof by registered or
certified mail, postage prepaid, to it at its address given in or pursuant to
Section 13.1 hereof.

     (c) To the extent permitted by law, nothing herein contained shall preclude
any party from effecting service of process in any lawful manner or from
bringing any suit, action or proceeding in respect of this Declaration in any
other state, country or place.

     SECTION 13.4. 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 13.5. 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 13.6. 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 Trustees shall bind and inure to the benefit
of their respective successors and assigns, whether or not so expressed.

     SECTION 13.7. 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.

                                      -53-
<PAGE>

     SECTION 13.8. 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 Trustees 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.

                                      -54-
<PAGE>

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

                                  CHRISTIANA BANK & TRUST COMPANY,
                                     as Delaware Trustee

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

                                  LASALLE BANK NATIONAL ASSOCIATION,
                                     as Institutional Trustee

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

                                  Princeton National Bancorp, Inc.,
                                      as Sponsor

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

                                  By:
                                     -------------------------------------------
                                     Administrator

                                  By:
                                     -------------------------------------------
                                     Administrator

                                      -55-
<PAGE>

                                     ANNEX I

                                    TERMS OF
                             CAPITAL SECURITIES AND
                                COMMON SECURITIES

     Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust,
dated as of July 15, 2005 (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) Capital Securities. 25,000 Capital Securities of PNBC Capital Trust I
(the "Trust"), with an aggregate stated liquidation amount with respect to the
assets of the Trust of Twenty Five Million Dollars ($25,000,000) 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
"TP Securities" (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 or to conform
to the rules of any stock exchange on which the Capital Securities are listed,
if any.

     (b) Common Securities. 774 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. In the absence of an Event of Default, the Common Securities will have
an aggregate stated liquidation amount with respect to the assets of the Trust
of Seven Hundred Seventy Four Thousand Dollars ($774,000) and a stated
liquidation amount with respect to the assets of the Trust of $1,000 per Common
Security.

     2. Distributions.

     (a) Distributions payable on each Security will be payable at a fixed rate
of 5.68% (the "Fixed Rate") per annum from July 15, 2005 until September 15,
2010 (the "Fixed Rate Period") and thereafter at a variable per annum rate of
interest, reset quarterly, equal to LIBOR, as determined on the LIBOR
Determination Date for such Distribution Payment Period, plus 1.54% (the
"Variable Rate" and together with the Fixed Rate, the "Coupon Rate") of the
stated liquidation amount of $1,000 per Security (provided, however, that the
Coupon Rate for any Distribution Payment Period may not exceed the highest rate
permitted by New York law, as the same may be modified by United States law of
general applicability), such Coupon Rate being the rate of interest payable on
the Debentures to be held by the Institutional Trustee. Except as set forth
below in respect of an Extension Period, Distributions in arrears for more than
one quarterly period will bear interest thereon compounded quarterly at the
applicable Coupon Rate for each such quarterly period (to the extent permitted
by applicable law). The term "Distributions" as used herein includes cash
distributions, any such compounded distributions

                                      A-I-1
<PAGE>

and any Additional 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 legally available in the Property Account
therefor. During the Fixed Rate Period, the amount of Distributions payable for
any Distribution Payment Period will be computed for any full quarterly
Distribution Payment Period on the basis of a 360-day year of twelve 30-day
months and the amount payable for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day months.
Upon expiration of the Fixed Rate Period, Distributions will be computed on the
basis of a 360-day year and the actual number of days elapsed in the relevant
Distribution period; provided, however, that upon the occurrence of a Special
Event redemption pursuant to paragraph 4(a) below the amounts payable pursuant
to this Declaration shall be calculated as set forth in the definition of
Special Redemption Price.

     (b) Upon expiration of the Fixed Rate Period, LIBOR shall be determined by
the Calculation Agent in accordance with the following provisions:

          (1) On the second LIBOR Business Day (provided, that on such day
     commercial banks are open for business (including dealings in foreign
     currency deposits) in London (a "LIBOR Banking Day"), and otherwise the
     next preceding LIBOR Business Day that is also a LIBOR Banking Day) prior
     to March 15, June 15, September 15 and December 15 (or, with respect to the
     first Distribution Payment Period after the expiration of the Fixed Rate
     Period, on July 15, 2010), (each such day, a "LIBOR Determination Date")
     for such Distribution Payment Period), the Calculation Agent shall obtain
     the rate for three-month U.S. Dollar deposits in Europe, which appears on
     Telerate Page 3750 (as defined in the International Swaps and Derivatives
     Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) or
     such other page as may replace such Telerate Page 3750 on the Moneyline
     Telerate, Inc. service (or such other service or services as may be
     nominated by the British Banker's Association as the information vendor for
     the purpose of displaying London interbank offered rates for U.S. dollar
     deposits), as of 11:00 a.m. (London time) on such LIBOR Determination Date,
     and the rate so obtained shall be LIBOR for such Distribution Payment
     Period. "LIBOR Business Day" means any day that is not a Saturday, Sunday
     or other day on which commercial banking institutions in The City of New
     York or Wilmington, Delaware are authorized or obligated by law or
     executive order to be closed. If such rate is superseded on Telerate Page
     3750 by a corrected rate before 12:00 noon (London time) on the same LIBOR
     Determination Date, the corrected rate as so substituted will be the
     applicable LIBOR for that Distribution Payment Period.

          (2) If, on any LIBOR Determination Date, such rate does not appear on
     Telerate Page 3750 or such other page as may replace such Telerate Page
     3750 on the Moneyline Telerate, Inc. service (or such other service or
     services as may be nominated by the British Banker's Association as the
     information vendor for the purpose of displaying London interbank offered
     rates for U.S. dollar deposits), the Calculation Agent shall determine the
     arithmetic mean of the offered quotations of the Reference Banks (as
     defined below) to leading banks in the

                                      A-I-2
<PAGE>

     London Interbank market for three-month U.S. Dollar deposits in Europe (in
     an amount determined by the Calculation Agent) by reference to requests for
     quotations as of approximately 11:00 a.m. (London time) on the LIBOR
     Determination Date made by the Calculation Agent to the Reference Banks.
     If, on any LIBOR Determination Date, at least two of the Reference Banks
     provide such quotations, LIBOR shall equal the arithmetic mean of such
     quotations. If, on any LIBOR Determination Date, only one or none of the
     Reference Banks provide such a quotation, LIBOR shall be deemed to be the
     arithmetic mean of the offered quotations that at least two leading banks
     in the City of New York (as selected by the Calculation Agent) are quoting
     on the relevant LIBOR Determination Date for three-month U.S. Dollar
     deposits in Europe at approximately 11:00 a.m. (London time) (in an amount
     determined by the Calculation Agent). As used herein, "Reference Banks"
     means four major banks in the London Interbank market selected by the
     Calculation Agent.

          (3) If the Calculation Agent is required but is unable to determine a
     rate in accordance with at least one of the procedures provided above,
     LIBOR for the applicable Distribution Payment Period shall be LIBOR in
     effect for the immediately preceding Distribution Payment Period.

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

     (d) On each LIBOR Determination Date, the Calculation Agent shall notify,
in writing, the Sponsor and the Paying Agent of the applicable Coupon Rate in
effect for the related Distribution Payment Period. The Calculation Agent shall,
upon the request of the Holder of any Securities, provide the Coupon Rate then
in effect. All calculations made by the Calculation Agent in the absence of
manifest error shall be conclusive for all purposes and binding on the Sponsor
and the Holders of the Securities. The Paying Agent shall be entitled to rely on
information received from the Calculation Agent or the Sponsor as to the Coupon
Rate. The Sponsor shall, from time to time, provide any necessary information to
the Paying Agent relating to any original issue discount and interest on the
Securities that is included in any payment and reportable for taxable income
calculation purposes.

     (e) Distributions on the Securities will be cumulative, will accrue from
the date of original issuance, and will be payable, subject to extension of
Distribution payment periods as described herein, quarterly in arrears on March
15, June 15, September 15 and December 15 of each year, commencing September 15,
2005 (each, a "Distribution Payment Date"). Subject to prior submission of
Notice (as defined in the Indenture), and so long as no Event of Default
pursuant to paragraphs (c), (e) or (f) of Section 5.01 of the Indenture has
occurred and is continuing the Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures by extending the
interest distribution period for up to 20 consecutive quarterly periods (each,
an "Extension Period") at any time and from time to time on the Debentures,
subject to the conditions described below, during which Extension Period no
interest shall be due

                                      A-I-3
<PAGE>

and payable (except any Additional Interest that may be due and payable). During
any Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest (such accrued interest and interest thereon
referred to herein as "Deferred Interest") will accrue at an annual rate equal
to the Coupon Rate in effect for each such Extension Period, compounded
quarterly from the date such Deferred Interest would have been payable were it
not for the Extension Period, to the extent permitted by law. 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 Deferred Interest
then accrued and unpaid on the Debentures; provided, however, that no Extension
Period may extend beyond the Maturity Date, Redemption Date (to the extent
redeemed) or Special Redemption Date; and provided, further, that, during any
such Extension Period, the Debenture Issuer may 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 capital stock
or (ii) make any payment of principal or premium or interest on or repay,
repurchase or redeem any debt securities of the Debenture Issuer that rank PARI
PASSU in all respects with or junior in interest to the Debentures or (iii) make
any payment under any guarantees of the Debenture Issuer that rank in all
respects PARI PASSU with or junior in interest to the Guarantee (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Debenture Issuer (A) in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, (B) in connection with a dividend
reinvestment or stockholder stock purchase plan or (C) in connection with the
issuance of capital stock of the 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, reclassification, combination 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, or (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). Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period; provided, that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable during an Extension Period, except at the end thereof, but
Deferred Interest shall accrue upon each installment of interest that would
otherwise have been due and payable during such Extension Period until such
installment is paid. If Distributions are deferred, the Distributions due shall
be paid on the date that the related Extension Period terminates, or, if such
date is not a Distribution Payment Date, on the immediately following
Distribution Payment Date, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately

                                      A-I-4
<PAGE>

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 legally 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.

     (f) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Registrar on the relevant record
dates. The relevant record dates shall be selected by the Administrators, which
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. Notwithstanding anything to the
contrary contained herein, if any Distribution Payment Date, other than on the
Maturity Date, any Redemption Date or the Special Redemption Date, falls on a
day that is not a Business Day, then any Distributions payable will be paid on,
and such Distribution Payment Date will be moved to, the next succeeding
Business Day, and additional Distributions will accrue for each day that such
payment is delayed as a result thereof. If the Maturity Date, any Redemption
Date or the Special Redemption Date falls on a day that is not a Business Day,
then the principal, premium, if any, and/or Distributions payable on such date
will be paid on the next succeeding Business Day, and no additional
Distributions will accrue in respect of such payment made on such next
succeeding Business Day.

     (g) 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 aggregate of the
stated liquidation amount of $1,000 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless in connection with such Liquidation, the Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the 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 Section 3808(e) of the Statutory Trust Act, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.

                                      A-I-5
<PAGE>

     The Sponsor, as the Holder of all of the Common Securities, has the right
at any time to, upon receipt of an opinion of nationally recognized tax counsel
that Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the distribution Debentures, dissolve the
Trust (including without limitation upon the occurrence of a Tax Event, an
Investment Company Event or a Capital Treatment Event), subject to the receipt
by the Debenture Issuer of prior approval from any regulatory authority having
jurisdiction over the Sponsor that is primarily responsible for regulating the
activities of the Sponsor if such approval is then required under applicable
capital guidelines or policies of such regulatory authority, 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.

     The Trust shall dissolve on the first to occur of (i) July 15, 2040, the
expiration of the term of the Trust, (ii) 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) the filing of a
certificate of dissolution or its equivalent with respect to the Sponsor 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) the distribution to
the Holders of the Securities of the Debentures, upon exercise of the right of
the Holder of all of the outstanding Common Securities to dissolve the Trust as
described above, (v) the entry of a decree of a judicial dissolution of the
Sponsor or the Trust, or (vi) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities. As soon as
practicable after the dissolution of the Trust and upon completion of the
winding up of the Trust, the Trust shall terminate upon the filing of a
certificate of cancellation with the Secretary of State of the State of
Delaware.

     If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Institutional Trustee of the Trust as expeditiously as such
Trustee determines to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, 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 to 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 the
immediately preceding paragraph 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 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.

                                      A-I-6
<PAGE>

     Upon any such Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization, the
Debenture Issuer will use its reasonable best efforts to obtain from at least
one such or other rating organization a rating for the Debentures.

     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) any certificates representing the Capital Securities will be
deemed to represent undivided beneficial interests in such of the Debentures as
have an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
bearing accrued and unpaid interest equal to accrued and unpaid distributions
on, the Securities until such certificates are presented to the Debenture Issuer
or its agent for transfer or reissuance (and until such certificates are so
surrendered, no payments of interest or principal shall be made to Holders of
Securities in respect of any payments due and payable under the Debentures) and
(iii) all rights of Holders of Securities under the Capital Securities or the
Common Securities, as applicable, shall cease, except the right of such Holders
to receive Debentures upon surrender of certificates representing such
Securities.

     4. Redemption and Distribution.

     (a) The Debentures will mature on July 15, 2035. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, on any March 15, June 15,
September 15 or December 15 on or after September 15, 2010 at the Redemption
Price, upon not less than 30 nor more than 60 days' notice to Holders of such
Debentures. In addition, upon the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, the Debentures may be
redeemed by the Debenture Issuer in whole or in part, at any time within 90 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event, as the case may be (the "Special Redemption Date"), at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
Holders of the Debentures so long as such Tax Event, Investment Company Event or
Capital Treatment Event, as the case may be, 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 any regulatory authority
having jurisdiction over the Debenture Issuer, if such approval is then required
under applicable capital guidelines or policies of such regulatory authority.

     "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, regulatory procedure, notice or announcement) (an
"Administrative Action") or judicial decision interpreting or applying such laws
or regulations, regardless of whether such Administrative Action or judicial
decision is issued to or in connection with a proceeding involving the Debenture
Issuer or the Trust and whether or not subject to review or appeal, which
amendment, clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original issuance
of the Debentures, there is more than an insubstantial risk that: (i) the Trust
is, or will be within 90 days

                                      A-I-7
<PAGE>

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 (including withholding taxes), duties, assessments
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 a change in law or regulation or written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be, considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the original issuance of the Debentures.

     "Capital Treatment Event" means, if the Debenture Issuer is organized and
existing under the laws of the United States or any state thereof or the
District of Columbia, 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 (a) any amendment to, or change in, the laws, rules or regulations of the
United States or any political subdivision thereof or therein, or any rules,
guidelines or policies of any applicable regulatory authority for the Debenture
Issuer or (b) 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 original issuance of the Debentures, there is more than an
insubstantial risk that, within 90 days of the receipt of such opinion, the
aggregate Liquidation Amount of the Capital Securities will not be eligible to
be treated by the Debenture Issuer as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the capital adequacy guidelines of the Federal Reserve
(or any successor regulatory authority with jurisdiction over bank or financial
holding companies), as then in effect and applicable to the Debenture Issuer (or
if the Debenture Issuer is not a bank holding company, such guidelines applied
to the Debenture Issuer as if the Debenture Issuer were subject to such
guidelines); provided, however, that the inability of the Debenture Issuer to
treat all or any portion of the aggregate Liquidation Amount of the Capital
Securities as Tier 1 Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Debenture Issuer having
cumulative preferred stock, minority interests in consolidated subsidiaries, or
any other class of security or interest which the Federal Reserve or OTS, as
applicable, may now or hereafter accord Tier 1 Capital treatment in excess of
the amount which may now or hereafter qualify for treatment as Tier 1 Capital
under applicable capital adequacy guidelines; provided further, however, that
the distribution of the Debentures in connection with the liquidation of the
Trust by the Debenture Issuer 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 any of a Capital Treatment Event, a Tax Event or an
Investment Company Event.

                                      A-I-8
<PAGE>

     "Special Redemption Price" means, with respect to the redemption of any
Debentures following a Special Event, an amount in cash equal to 103.525% of the
principal amount of Debentures to be redeemed prior to September 15, 2006 and
thereafter equal to the percentage of the principal amount of the Debentures
that is specified below for the Special Redemption Date plus, in each case,
unpaid interest accrued thereon to the Special Redemption Date:

     Special Redemption During the
       12-Month Period Beginning
              September 15               Percentage of Principal Amount
     -----------------------------       -------------------------------
                  2006                              103.140%
                  2007                              102.355%
                  2008                              101.570%
                  2009                              100.785%
          2010 and thereafter                       100.000%

     "Redemption Date" means the date fixed for the redemption of Capital
Securities, which shall be any March 15, June 15, September 15 or December 15 on
or after September 15, 2010.

     "Redemption Price" means 100% of the principal amount of the Debentures
being redeemed plus accrued and unpaid interest on such Debentures to the
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, 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 as described in Section 4(e)(ii)
below.

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

     (e) Redemption or Distribution Procedures.

          (i) Notice of any redemption of, or notice of distribution of the
     Debentures in exchange for, the Securities (a "Redemption/Distribution
     Notice") will be given by the Trust by mail to each Holder of Securities to
     be redeemed or exchanged not fewer than 30 nor more than 60 days before the
     date fixed for redemption or exchange thereof which, in the case of a
     redemption, will be the date fixed for redemption of the Debentures. For
     purposes of the calculation of the date of redemption or exchange and the
     dates on which notices are given pursuant

                                      A-I-9
<PAGE>

     to this Section 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 Registrar. 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) In the event that fewer than all the outstanding Securities are
     to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
     from each Holder of Capital Securities.

          (iii) 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 Section 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, with respect to
     Book-Entry Capital Securities, on the Redemption Date, irrevocably deposit
     with the Depositary for such Book-Entry Capital Securities, to the extent
     available therefore, funds sufficient to pay the relevant Redemption Price
     and will give such Depositary irrevocable instructions and authority to pay
     the Redemption Price to the Owners of the Capital Securities. With respect
     to Capital Securities that are not Book-Entry Capital Securities, the
     Institutional Trustee will pay, to the extent available therefore, the
     relevant Redemption Price 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 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 specified in Section 4(a). If any date fixed for
     redemption of Securities is not a Business Day, then payment of any such
     Redemption Price payable on such date will be made on the next succeeding
     day that is a Business Day 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 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
     then applicable 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.
     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

                                     A-I-10
<PAGE>

     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.

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

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

     5. Voting Rights - Capital Securities.

     (a) Except as provided under Sections 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 not less than 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 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 not less
than the proportion in liquidation amount of the Capital Securities outstanding
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding. If the Institutional Trustee fails to enforce its
rights under the Debentures after the Holders of a Majority or Super Majority,
as the case may be, 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

                                     A-I-11
<PAGE>

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
premium, if any, on or principal of the Debentures on the date such interest,
premium, if any, on 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 premium, if any, 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 clause (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 may
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 the consent of a Super
Majority, the Institutional Trustee may only give such consent at the written
direction of the Holders of not less than the proportion in liquidation amount
of such 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 written 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

                                     A-I-12
<PAGE>

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

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

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

     6. Voting Rights - Common Securities.

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

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

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

                                     A-I-13
<PAGE>

under the Declaration, to the fullest extent permitted by law any Holder of the
Common Securities may institute a legal proceeding directly against any Person
to enforce the Institutional Trustee's rights under the Declaration, without
first instituting a legal proceeding against the Institutional Trustee or any
other Person.

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

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

     7. Amendments to Declaration and Indenture.

     (a) In addition to any requirements under Section 11.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Trustees
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 not less than 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
written direction of the Holders of not less than the proportion in liquidation
amount of the Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.

                                     A-I-14
<PAGE>

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

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

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

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

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

                                     A-I-15
<PAGE>

     11. No Preemptive Rights. The Holders of the Securities shall have no, and
the issuance of the Securities is not subject to, 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.

                                       A-I-16
<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"), OR 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 SUCH SECURITY ONLY
(A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON
U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE
SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
"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 ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND
WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY
UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,

                                       A-1-1
<PAGE>

INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTION RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

     THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

                                     A-1-2
<PAGE>

Certificate Number  [P-001]               Number of Capital Securities:  25,000

                    Certificate Evidencing Capital Securities

                                       of

                              PNBC Capital Trust I

                                  TP Securities

                (liquidation amount $1,000 per Capital Security)

     PNBC Capital Trust I, a statutory trust created under the laws of the State
of Delaware (the "Trust"), hereby certifies that Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Holder"), is the registered owner of 25,000 capital
securities of the Trust representing undivided beneficial interests in the
assets of the Trust, designated the TP Securities (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 Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust, dated as of July 15,
2005, among Tony J. Sorcic and Todd D. Fanning, as Administrators, Christiana
Bank & Trust Company, as Delaware Trustee, LaSalle Bank National Association, as
Institutional Trustee, Princeton National Bancorp, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the Capital Securities as set
forth in Annex I to 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.

     By acceptance 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 shall be construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.

                                     A-1-3
<PAGE>

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

                                  PNBC Capital Trust I

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

                                  Dated:
                                        ----------------------------------------

                          CERTIFICATE OF AUTHENTICATION

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

                                  LASALLE BANK NATIONAL
                                  ASSOCIATION, not in its individual capacity
                                  but solely as Institutional Trustee

                                  By:
                                     -------------------------------------------
                                      Authorized Signatory

                                  Dated:
                                        ----------------------------------------

                                     A-1-4
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

     Distributions payable on each Capital Security will be payable at a fixed
rate of 5.68% (the "Fixed Rate") per annum from July 15, 2005 until September
15, 2010 (the "Fixed Rate Period") and thereafter at a variable per annum rate
of interest, reset quarterly, equal to LIBOR (as defined in the Declaration)
plus 1.54% (the "Variable Rate" and together with the Fixed Rate, the "Coupon
Rate") of the stated liquidation amount of $1,000 per Capital Security
(provided, however, that the Coupon Rate for any Distribution Payment Period may
not exceed the highest rate permitted by New York law, as the same may be
modified by United States law of general applicability), such Coupon Rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears for more than one quarterly period will bear
interest thereon compounded quarterly at the then applicable Coupon Rate for
each such quarterly period (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions, any such compounded
distributions and any Additional 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 legally available in the Property
Account therefor. During the Fixed Rate Period, the amount of Distributions
payable for any Distribution Payment Period will be computed for any full
quarterly Distribution Payment Period on the basis of a 360-day year of twelve
30-day months and the amount payable for any partial period shall be computed on
the basis of the number of days elapsed in a 360-day year of twelve 30-day
months. Upon expiration of the Fixed Rate Period, distributions will be computed
on the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution Payment Period.

     Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year, commencing on September 15, 2005 (each, a
"Distribution Payment Date"). Upon submission of Notice, and so long as no Event
of Default pursuant to paragraphs (c), (e) or (f) of Section 5.01 of the
Indenture has occurred and is continuing the Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest distribution period for up to 20 consecutive quarterly periods
(each, an "Extension Period") at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable (except any Additional Interest that
may be due and payable). During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest (such accrued
interest and interest thereon referred to herein as "Deferred Interest") will
accrue at an annual rate equal to the Coupon Rate in effect for each such
Extension Period, compounded quarterly from the date such Deferred Interest
would have been payable were it not for the Extension Period, to the extent
permitted by law. 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 Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that no Extension Period may extend beyond the
Maturity Date. Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period; provided, that such period together with
all such previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date, Redemption
Date (to the extent redeemed) or Special Redemption Date. Upon the

                                      A-1-5
<PAGE>

termination of any Extension Period and upon the payment of all Deferred
Interest, the Debenture Issuer may commence a new Extension Period, subject to
the foregoing requirements. No interest or Deferred Interest (except any
Additional Amounts that may be due and payable) shall be due and payable during
an Extension Period, except at the end thereof, but Deferred Interest shall
accrue upon each installment of interest that would otherwise have been due and
payable during such Extension Period until such installment is paid. 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 legally 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-1-6
<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
                        --------------------------------------------------------
as agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for it, 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-1-7
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

     EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS DEFINED
BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.

                                     A-2-1
<PAGE>

Certificate Number  [C-001]                   Number of Common Securities:  774

                    Certificate Evidencing Common Securities
                                       of
                              PNBC Capital Trust I

     PNBC Capital Trust I, a statutory trust created under the laws of the State
of Delaware (the "Trust"), hereby certifies that Princeton National Bancorp,
Inc. (the "Holder") is the registered owner of 774 common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
(liquidation amount $1,000 per Common Security) (the "Common Securities"). The
Common Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of July 15, 2005, among Tony J. Sorcic and Todd D. Fanning, as
Administrators, Christiana Bank & Trust Company, as Delaware Trustee, LaSalle
Bank National Association, as Institutional Trustee, the Holder, 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 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 Sponsor will provide a copy
of the Declaration and the Indenture to the Holder without charge upon written
request to the Sponsor at its principal place of business.

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

     By acceptance 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 shall be construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.

                                     A-2-2
<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate July 15, 2005.

                                  PNBC Capital Trust I

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

                                     A-2-3
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

     Distributions payable on each Common Security will be payable at a fixed
rate of 5.68% (the "Fixed Rate") per annum from July 15, 2005 until September
15, 2010 (the "Fixed Rate Period") and thereafter at a variable per annum rate
of interest, reset quarterly, equal to LIBOR (as defined in the Declaration)
plus 1.54% (the "Variable Rate" and together with the Fixed Rate, the "Coupon
Rate") of the stated liquidation amount of $1,000 per Capital Security
(provided, however, that the Coupon Rate for any Distribution Payment Period may
not exceed the highest rate permitted by New York law, as the same may be
modified by United States law of general applicability), such Coupon Rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears for more than one quarterly period will bear
interest thereon compounded quarterly at the then applicable Coupon Rate for
each such quarterly period (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions, any such compounded
distributions and any Additional 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 legally available in the Property
Account therefor. During the Fixed Rate Period, the amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months and the amount
payable for any partial period shall be computed on the basis of the number of
days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the
Fixed Rate Period, distribution will be computed on the basis of a 360-day year
and the actual number of days elapsed in the relevant Distribution Payment
Period.

     Except as otherwise described below, Distributions on the Common Securities
will be cumulative, will accrue from the date of original issuance and will be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year, commencing on September 15, 2005 (each, a "Distribution Payment
Date"). Upon submission of Notice, and so long as no Event of Default pursuant
to paragraphs (c), (e) or (f) of Section 5.01 of the Indenture has occurred and
is continuing the Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest distribution
period for up to 20 consecutive quarterly periods (each, an "Extension Period")
at any time and from time to time on the Debentures, subject to the conditions
described below, during which Extension Period no interest shall be due and
payable (except any Additional Interest that may be due and payable). During any
Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest (such accrued interest and interest thereon
referred to herein as "Deferred Interest") will accrue at an annual rate equal
to the Coupon Rate in effect for each such Extension Period, compounded
quarterly from the date such Deferred Interest would have been payable were it
not for the Extension Period, to the extent permitted by law. 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 Deferred Interest
then accrued and unpaid on the Debentures; provided, however, that no Extension
Period may extend beyond the Maturity Date, Redemption Date (to the extent
redeemed) or Special Redemption Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided, that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date, Redemption Date (to the extent redeemed), or Special Redemption
Date. Upon the termination of any Extension

                                      A-2-4
<PAGE>

Period and upon the payment of all Deferred Interest, the Debenture Issuer may
commence a new Extension Period, subject to the foregoing requirements. No
interest or Deferred Interest (except any Additional Interest that may be due
and payable) shall be due and payable during an Extension Period, except at the
end thereof, but Deferred Interest shall accrue upon each installment of
interest that would otherwise have been due and payable during such Extension
Period until such installment is paid. 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
legally available for the payment of such distributions in the Property Account
of the Trust. The Trust's funds legally 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-2-5
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

(Insert address and zip code of assignee),

and irrevocably appoints ________ as 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 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-2-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]