Document:

AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                             CASCADE CAPITAL TRUST I

                            Dated as of March 1, 2000

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                                TABLE OF CONTENTS
                                                                            Page

                                    ARTICLE I
                         INTERPRETATION AND DEFINITIONS
SECTION 1.1  Definitions......................................................2

                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1  Trust Indenture Act; Application................................10

SECTION 2.2  Lists of Holders of Securities..................................10

SECTION 2.3  Reports by the Property Trustee.................................11

SECTION 2.4  Periodic Reports to Property Trustee............................11

SECTION 2.5  Evidence of Compliance with Conditions Precedent................11

SECTION 2.6  Events of Default; Waiver.......................................11

SECTION 2.7  Default; Notice.................................................13

                                   ARTICLE III
                                  ORGANIZATION

SECTION 3.1  Name............................................................13

SECTION 3.2  Office..........................................................14

SECTION 3.3  Purpose.........................................................14

SECTION 3.4  Authority.......................................................14

SECTION 3.5  Title to Property of the Trust..................................14

SECTION 3.6  Powers and Duties of the Administrative Trustees................14

SECTION 3.7  Prohibition of Actions by the Trust and the Trustees............17

SECTION 3.8  Powers and Duties of the Property Trustee.......................18

SECTION 3.9  Certain Duties and Responsibilities of the Property Trustee.....20

SECTION 3.10 Certain Rights of Property Trustee..............................22

SECTION 3.11 Delaware Trustee................................................24

SECTION 3.12 Execution of Documents..........................................25

SECTION 3.13 Not Responsible for Recitals or Issuance of Securities..........25

SECTION 3.14 Duration of Trust...............................................25

SECTION 3.15 Mergers.........................................................25

                                   ARTICLE IV
                                     SPONSOR

SECTION 4.1  Sponsor's Purchase of Common Securities.........................27

SECTION 4.2  Responsibilities of the Sponsor.................................27

SECTION 4.3  Right to Proceed................................................28

SECTION 4.4  Right to Dissolve Trust.........................................28

                                        i

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                                    ARTICLE V
                                    TRUSTEES

SECTION 5.1  Number of Trustees; Appointment of Co-Trustee...................28

SECTION 5.2  Delaware Trustee................................................29

SECTION 5.3  Property Trustee; Eligibility...................................29

SECTION 5.4  Certain Qualifications of Administrative Trustees
                and Delaware Trustee Generally...............................30

SECTION 5.5  Administrative Trustees.........................................31

SECTION 5.6  Appointment, Removal and Resignation of Trustees................31

SECTION 5.7  Vacancies among Trustees........................................33

SECTION 5.8  Effect of Vacancies.............................................33

SECTION 5.9  Meetings........................................................33

SECTION 5.10 Delegation of Power.............................................34

SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.....34

                                   ARTICLE VI
                                  DISTRIBUTIONS

SECTION 6.1  Distributions...................................................34

                                   ARTICLE VII
                             ISSUANCE OF SECURITIES

SECTION 7.1  General Provisions Regarding Securities.........................35

SECTION 7.2  Execution and Authentication....................................35

SECTION 7.3  Form and Dating.................................................36

SECTION 7.4  Registrar, Paying Agent and Exchange Agent......................38

SECTION 7.5  Paying Agent to Hold Money in Trust.............................38

SECTION 7.6  Replacement Securities..........................................38

SECTION 7.7  Outstanding Capital Securities..................................39

SECTION 7.8  Capital Securities in Treasury..................................39

SECTION 7.9  Temporary Securities............................................39

SECTION 7.10 Cancellation....................................................40

SECTION 7.11 CUSIP Numbers...................................................40

                                  ARTICLE VIII
                              DISSOLUTION OF TRUST

SECTION 8.1  Dissolution of Trust............................................41

                                       ii

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                                   ARTICLE IX
                              TRANSFER OF INTERESTS

SECTION 9.1  Transfer of Securities..........................................42

SECTION 9.2  Transfer Procedures and Restrictions............................43

SECTION 9.3  Deemed Security Holders.........................................52

SECTION 9.4  Book-Entry Interests............................................52

SECTION 9.5  Notices to Clearing Agency......................................53

SECTION 9.6  Appointment of Successor Clearing Agency........................53

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

SECTION 10.1 Liability.......................................................53

SECTION 10.2 Exculpation.....................................................54

SECTION 10.3 Fiduciary Duty..................................................54

SECTION 10.4 Indemnification.................................................55

SECTION 10.5 Outside Businesses..............................................58

                                   ARTICLE XI
                                   ACCOUNTING

SECTION 11.1 Fiscal Year.....................................................58

SECTION 11.2 Certain Accounting Matters......................................58

SECTION 11.3 Banking.........................................................59

SECTION 11.4 Withholding.....................................................59

                                   ARTICLE XII
                             AMENDMENTS AND MEETINGS

SECTION 12.1 Amendments......................................................59

SECTION 12.2 Meetings of the Holders; Action by Written Consent..............61

                                  ARTICLE XIII
                       REPRESENTATIONS OF PROPERTY TRUSTEE
                              AND DELAWARE TRUSTEE

SECTION 13.1 Representations and Warranties of Property Trustee..............63

SECTION 13.2 Representations and Warranties of Delaware Trustee..............63

                                       iii

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                                   ARTICLE XIV
                               REGISTRATION RIGHTS

SECTION 14.1 Registration Rights Agreement; Liquidated Damages...............64

                                   ARTICLE XV
                                  MISCELLANEOUS

SECTION 15.1 Notices.........................................................64

SECTION 15.2 Governing Law...................................................66

SECTION 15.3 Intention of the Parties........................................66

SECTION 15.4 Headings........................................................66

SECTION 15.5 Successors and Assigns..........................................66

SECTION 15.6 Partial Enforceability..........................................66

SECTION 15.7 Counterparts....................................................66

TERMS OF 11.00% CAPITAL SECURITIES, SERIES A/SERIES B
         11.00% COMMON SECURITIES...........................................I-1

EXHIBIT A-1
         FORM OF CAPITAL SECURITY CERTIFICATE...............................A1-1

EXHIBIT A-2
         FORM OF COMMON SECURITY CERTIFICATE................................A2-1

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                             CROSS-REFERENCE TABLE*

Section of
Trust Indenture
Act of 1939, as                                                 Section of
amended                                                        Declaration
        310(a)          ......................................     5.3
        310(b)          ......................................5.3(c); 5.3(d)
        311(a)          ......................................    2.2(b)
        311(b)          ......................................    2.2(b)
        312(a)          ......................................    2.2(a)
        312(b)          ......................................    2.2(b)
         313            ......................................     2.3
        314(a)          ...................................... 2.4, 2.7(c);
                                                                  3.6(j)
        314(c)          ......................................     2.5
        315(a)          ...................................... 3.6(j); 3.9
        315(b)          ......................................    2.7(a)
        315(c)          ......................................    3.9(a)
        315(d)          ......................................    3.9(b)
        316(a)          ......................................     2.6
        316(c)          ......................................    3.6(e)
        317(a)          ......................................3.8(e); 3.8(h)
        317(b)          ...................................... 3.8(i); 7.5
         318            ......................................     2.1

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

                                        v

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                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                             CASCADE CAPITAL TRUST I

                            Dated as of March 1, 2000

     AMENDED  AND  RESTATED  DECLARATION  OF  TRUST  ("Declaration")  dated  and
effective as of March 1, 2000,  by and among the  Trustees (as defined  herein),
the Sponsor (as defined herein) and the Holders (as defined  herein),  from time
to time,  of  undivided  beneficial  interests  in the assets of the Trust to be
issued pursuant to this Declaration;

     WHEREAS,   the  Delaware  Trustee  (as  defined  herein)  and  the  Sponsor
established  Cascade  Capital Trust I (the  "Trust"),  a trust created under the
Delaware  Business  Trust Act pursuant to a Declaration  dated as of February 4,
2000 (the  "Original  Declaration"),  and a Certificate  of Trust filed with the
Secretary  of State of the State of Delaware  on February 7, 2000,  for the sole
purpose  of  issuing  and  selling  certain  securities  representing  undivided
beneficial interests in the assets of the Trust,  investing the proceeds thereof
in certain Debentures of the Debenture Issuer (each as hereinafter defined), and
engaging in only those activities  necessary,  advisable or incidental  thereto;
and

     WHEREAS,  all of the Trustees and the Sponsor,  by this Declaration,  amend
and restate each and every term and provision of the Original Declaration;

     WHEREAS,  all of the Trustees and the Sponsor, by this Declaration,  ratify
the actions of each Trustee taken prior to the date hereof;

     NOW,  THEREFORE,  it being the intention of the parties  hereto to continue
the  Trust as a  business  trust  under  the  Business  Trust  Act and that this
Declaration  constitute  the governing  instrument of such business  trust,  the
Trustees declare 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, agree as follows:

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                                    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;

     (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   and  each  Annex  and  Exhibit   hereto,   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 has the same meaning when
          used in this Declaration  unless otherwise defined in this Declaration
          or unless the context otherwise requires;

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

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

     "Administrative Trustee" has the meaning set forth in Section 5.1.

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

     "Agent" means any Paying Agent, Registrar or Exchange Agent.

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

     "Book-Entry  Interest"  means a beneficial  interest in the Global  Capital
Security  registered in the name of a Clearing Agency or its nominee,  ownership
and  transfers of which shall be  maintained  and made through book entries by a
Clearing Agency as described in Section 9.4.

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

     "Business  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.

     "Capital Securities" means,  collectively,  the Series A Capital Securities
and the Series B Capital Securities.

     "Capital Securities  Guarantee" means,  collectively,  the Series A Capital
Securities Guarantee and the Series B Capital Securities Guarantee.

     "Capital  Security  Beneficial  Owner" means,  with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry  Interest,  as
reflected  on the  books of the  Clearing  Agency,  or on the  books of a Person
maintaining an account with such Clearing Agency  (directly as a Clearing Agency
Participant or as an indirect  participant,  in each case in accordance with the
rules of such Clearing Agency).

     "Capital Security Certificate" has the meaning set forth in Section 9.4.

     "Clearing  Agency" means an organization  registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Capital  Securities  and in  whose  name  or in the  name of a  nominee  of that
organization  shall be registered a global certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.

     "Clearing Agency Participant" means a broker, dealer, bank, other financial
institution  or other  Person  for whom  from time to time the  Clearing  Agency
effects  book entry  transfers  and  pledges of  securities  deposited  with the
Clearing Agency.

     "Closing  Time"  means  the  "Closing  Time"  as  defined  in the  Purchase
Agreement.

     "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 as
from time to time  constituted,  or if at any time after the  execution  of this
Declaration  such  Commission  is not  existing  and  performing  the duties now
assigned  to  it  under  applicable  federal  securities  laws,  then  the  body
performing such duties at such time.

     "Common Securities" has the meaning specified in Section 7.1(a).

     "Common Security  Certificate" means a certificate  evidencing ownership of
Common Securities, substantially in the form attached as Exhibit A-2.

                                        3

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     "Common  Securities   Guarantee"  means  the  Common  Securities  Guarantee
Agreement,  dated as of the  Closing  Time,  entered  into by Cascade  Financial
Corporation, with respect to the Common Securities.

     "Common  Securities  Subscription  Agreement"  means the Common  Securities
Subscription  Agreement,  dated as of the  Closing  Time,  between the Trust and
Cascade Financial Corporation relating to the Common Securities.

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

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

     "Covered Person" means: (a) any 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  Cascade  Financial   Corporation,   a  Delaware
corporation,   or  any  successor  entity  resulting  from  any   consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.

     "Debenture   Subscription   Agreement"  means  the  Debenture  Subscription
Agreement,  dated as of the Closing Time,  between the Debenture  Issuer and the
Trust in respect of the Series A Debentures.

     "Debenture  Trustee" means  Wilmington  Trust Company,  a Delaware  banking
corporation,  as trustee  under the  Indenture  until a successor  is  appointed
thereunder, and thereafter means such successor trustee.

     "Debentures" means, collectively,  the Series A Debentures and the Series B
Debentures.

     "Default"  means an event,  act or  condition  that with notice or lapse of
time, or both, would constitute an Event of Default.

     "Definitive  Capital  Securities"  has the  meaning  set  forth in  Section
7.3(c).

     "Delaware Trustee" has the meaning set forth in Section 5.1.

     "Direct Action" has the meaning set forth in Section 3.8(e).

                                        4

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     "Distribution"  means a distribution  payable to Holders in accordance with
Section 6.1.

     "DTC" means The Depository Trust Company, the initial Clearing Agency.

     "Event of Default" with respect to the Securities means an Event of Default
(as defined in the Indenture)  that has occurred and is continuing  with respect
to the Debentures.

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

     "Exchange Agent" has the meaning set forth in Section 7.4.

     "Exchange  Offer"  means  the  offer  that  may  be  made  pursuant  to the
Registration  Rights  Agreement  (i) by the Trust to  exchange  Series B Capital
Securities for Series A Capital  Securities and (ii) by the Debenture  Issuer to
exchange Series B Debentures for Series A Debentures and to execute the Series B
Capital Securities Guarantee in respect of the Series B Capital Securities.

     "Federal Reserve Board" means the Board of Governors of the Federal Reserve
System.

     "Fiduciary  Indemnified  Person"  has the  meaning  set  forth  in  Section
10.4(b).

     "Fiscal Year" has the meaning set forth in Section 11.1.

     "Global Capital Security" has the meaning set forth in Section 7.3(a).

     "Holder"  means a Person in whose name a Security or Successor  Security is
registered  on the register  maintained by or on behalf of the  Registrar,  such
Person being a beneficial  owner of the Trust within the meaning of the Business
Trust Act.

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

     "Indenture" means the Indenture,  dated as of the Closing Time, between the
Debenture Issuer and the Debenture Trustee, as amended from time to time.

     "Initial  Optional  Redemption  Date" has the  meaning set forth in Section
4(b) of Annex I hereto.

     "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.

                                        5

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     "Investment  Company  Event" has the meaning  set forth in Section  4(c) of
Annex I hereto.

     "Legal Action" has the meaning set forth in Section 3.6(g).

     "Like Amount" has the meaning set forth in Section 3 of Annex I hereto.

     "Liquidated  Damages  Agreement"  means the Liquidated  Damages  Agreement,
dated as of February 25, 2000, by and among the Debenture Issuer,  the Trust and
the Initial Purchaser named therein, as amended from time to time.

     "List of Holders" has the meaning set forth in Section 2.2(a).

     "Majority  in  Liquidation  Amount  "  means,  with  respect  to the  Trust
Securities,  except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holders of outstanding  Trust 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,  excluding the Trust and the Debenture Issuer and any Affiliate  thereof,
who are the record owners of more than 50% of the aggregate  liquidation  amount
(including  the  amount  that  would  be  paid  on  redemption,  liquidation  or
otherwise,  plus accumulated and unpaid  Distributions to but excluding the date
upon which the voting percentages are determined) of all outstanding  Securities
of the relevant class.

     "Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).

     "Officers'  Certificate"  means,  with respect to any Person, a certificate
signed by an  Authorized  Officer  of such  Person.  Any  Officers'  Certificate
delivered by the Trust shall be signed by at least one  Administrative  Trustee.
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  Certificate  has read the
          covenants or conditions and the definitions relating thereto;

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

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

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

     "Opinion of  Counsel"  means a written  opinion of  counsel,  who may be an
employee of the Sponsor, and who shall be acceptable to the Property Trustee.

                                        6

<PAGE>

     "Participants" has the meaning specified in Section 7.3(b).

     "Paying Agent" has the meaning specified in Section 7.4.

     "Payment Amount" has the meaning specified in Section 6.1.

     "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.

     "PORTAL" has the meaning set forth in Section 3.6(b)(iii).

     "Property Trustee" has the meaning set forth in Section 5.3(a).

     "Property Trustee Account" has the meaning set forth in Section 3.8(c)(i).

     "Purchase  Agreement" means the Purchase Agreement relating to the Series A
Capital  Securities,  dated  February  25,  2000,  by and among the  Trust,  the
Debenture Issuer and the Initial Purchaser named therein.

     "QIBs" shall mean qualified institutional buyers as defined in Rule 144A.

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

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

     "Registrar" has the meaning set forth in Section 7.4.

     "Registration  Rights  Agreement" means the Registration  Rights Agreement,
dated as of February 25, 2000, by and among the Trust,  the Debenture Issuer and
the Initial Purchaser named therein, as amended from time to time.

     "Registration  Statement"  has the  meaning  set forth in the  Registration
Rights Agreement.

     "Regulatory  Capital  Event" has the meaning  set forth in Section  4(c) of
Annex I hereto.

     "Related Party" means, with respect to the Sponsor,  any direct or indirect
wholly owned  subsidiary of the Sponsor or any other Person that owns,  directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.

     "Responsible  Officer" means any officer within the Corporate  Trust Office
of the Property Trustee with direct  responsibility  for the  administration  of
this Declaration and also means,

                                        7

<PAGE>

with respect to a particular  corporate  trust matter,  any other officer of the
Property  Trustee to whom such  matter is  referred  because  of such  officer's
knowledge of and familiarity with the particular subject.

     "Restricted  Capital Security" means a Capital Security required by Section
9.2 to contain a Restricted Securities Legend.

     "Restricted  Definitive  Capital  Securities"  has the meaning set forth in
Section 7.3(c).

     "Restricted Securities Legend" has the meaning set forth in Section 9.2(i).

     "Rule  3a-5"  means  Rule 3a-5 under the  Investment  Company  Act,  or any
successor rule or regulation.

     "Rule  144" means Rule 144 under the  Securities  Act,  as such rule may be
amended from time to time, or any similar rule or regulation  hereafter  adopted
by the Commission.

     "Rule 144A" means Rule 144A under the  Securities  Act, as such rule may be
amended from time to time, or any similar rule or regulation  hereafter  adopted
by the Commission.

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

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

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

     "Series A Capital Securities" has the meaning specified in Section 7.1(a).

     "Series  A  Capital  Securities  Guarantee"  means  the  Series  A  Capital
Securities  Guarantee  Agreement,  dated as of the  Closing  Time,  by,  Cascade
Financial Corporation in respect of the Series A Capital Securities.

     "Series A  Debentures"  means the  11.00%  Junior  Subordinated  Deferrable
Interest  Debentures due March 1, 2030, Series A, of the Debenture Issuer issued
pursuant to the Indenture.

     "Series B Capital Securities" has the meaning specified in Section 7.1(a).

     "Series  B  Capital  Securities  Guarantee"  means  the  Series  B  Capital
Securities  Guarantee  Agreement  to be  entered  into in  connection  with  the
Exchange  Offer by  Cascade  Financial  Corporation,  in respect of the Series B
Capital Securities.

                                        8

<PAGE>

     "Series B  Debentures"  means the  11.00%  Junior  Subordinated  Deferrable
Interest  Debentures due March 1, 2030,  Series B, of the Debenture Issuer to be
issued pursuant to the Indenture in connection with the Exchange Offer.

     "Special  Event"  has the  meaning  set  forth in  Section  4(c) of Annex I
hereto.

     "Special Event Redemption  Price" has the meaning set forth in Section 4(c)
of Annex I hereto.

     "Sponsor" means Cascade Financial Corporation,  a Delaware corporation,  or
any successor entity resulting from any merger,  consolidation,  amalgamation or
other business combina tion, in its capacity as sponsor of the Trust.

     "Successor   Delaware  Trustee"  has  the  meaning  set  forth  in  Section
5.6(b)(ii).

     "Successor Entity" has the meaning set forth in Section 3.15(b)(i).

     "Successor   Property  Trustee"  has  the  meaning  set  forth  in  Section
3.8(f)(ii).

     "Successor Securities" has the meaning set forth in Section 3.15(b)(i).

     "Super Majority" has the meaning set forth in Section 2.6(a) (ii).

     "Tax Event" has the meaning set forth in Section 4(c) of Annex I hereto.

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

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

     "Trust  Property" means (a) the  Debentures,  (b) any cash on deposit in or
owing to the Property Trustee 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 Property Trustee pursuant to this Declaration.

     "Trustee" or "Trustees"  means each Person who has signed this  Declaration
as a trustee, so long as such Person shall continue as a trustee of the Trust 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.

     "20% in Liquidation  Amount" means,  with respect to the Trust  Securities,
except  as  provided  in the  terms of the  Capital  Securities  or by the Trust
Indenture Act, Holders of

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<PAGE>

outstanding  Trust  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,  excluding the Trust
and the Debenture Issuer and any Affiliate thereof, who are the record owners of
20% or more of the aggregate liquidation amount (including the amount that would
be paid on redemption,  liquidation or otherwise,  plus  accumulated  and unpaid
Distributions  to the date upon which the voting  percentages are determined) of
all outstanding Securities of the relevant class.

     "Unrestricted Global Capital Security" has the meaning set forth in Section
9.2(b).

                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1 Trust Indenture Act; Application.

     (a)  This  Declaration is subject to the provisions of the Trust  Indenture
          Act that are required to be part of this Declaration in order for this
          Declaration to be qualified  under the Trust  Indenture Act and shall,
          to the extent applicable, be governed by such provisions.

     (b)  The Property  Trustee shall be the only Trustee which is a trustee for
          the purposes of the Trust Indenture Act.

     (c)  If and to the extent that any  provision of this  Declaration  limits,
          qualifies or conflicts with the duties  imposed by ss.ss.  310 to 317,
          inclusive,  of the Trust  Indenture  Act,  such  imposed  duties shall
          control.

     (d)  The application of the Trust Indenture Act to this  Declaration  shall
          not  affect  the  nature  of  the  Securities  as  equity   securities
          representing  undivided  beneficial  interests  in the  assets  of the
          Trust.

SECTION 2.2 Lists of Holders of Securities.

     (a)  Each of the Sponsor and the  Administrative  Trustees on behalf of the
          Trust shall provide the Property Trustee,  unless the Property Trustee
          is Registrar for the Securities,  (i) within 14 days after each record
          date  for  payment  of  Distributions,  a list,  in  such  form as the
          Property Trustee may reasonably require, of the names and addresses of
          the Holders ("List of Holders") as of such record date, provided that,
          neither the Sponsor nor the  Administrative  Trustees on behalf of the
          Trust shall be  obligated  to provide such List of Holders at any time
          that the List of Holders  does not differ from the most recent List of
          Holders  given  to  the  Property  Trustee  by  the  Sponsor  and  the
          Administrative  Trustees on behalf of the Trust, and (ii) at any other
          time,  within 30 days of receipt by the Trust of a written request for
          a List of Holders as of a date no more than 14 days  before  such List
          of Holders is given to the  Property  Trustee.  The  Property  Trustee
          shall preserve, in as current a form as is reasonably practicable, all
          information  contained  in  Lists of  Holders  given to it or which it
          receives in the capacity as Paying Agent (if acting in such capacity),
          provided  that the  Property  Trustee  may destroy any List of Holders
          previously given to it on receipt of a new List of Holders.

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<PAGE>

     (b)  The Property  Trustee shall comply with its  obligations  under ss.ss.
          311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3 Reports by the Property Trustee.

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

SECTION 2.4 Periodic Reports to Property Trustee.

     Each of the Sponsor and the Administrative  Trustees on behalf of the Trust
shall provide to the Property Trustee and the Commission such documents, reports
and  information as are required by ss. 314 (if any) of the Trust  Indenture Act
and shall provide to the Property Trustee the compliance certificate required by
ss. 314 of the Trust  Indenture  Act in the form, in the manner and at the times
required by ss. 314 of the Trust Indenture Act.

SECTION 2.5 Evidence of Compliance with Conditions Precedent.

     Each of the Sponsor and the Administrative  Trustees on behalf of the Trust
shall  provide to the Property  Trustee  such  evidence of  compliance  with any
conditions  precedent provided for in this Declaration that relate to any of the
matters set forth in ss. 314(c) of the Trust  Indenture Act. Any  certificate or
opinion  required  to be given by an officer  pursuant to ss.  314(c)(1)  of the
Trust Indenture Act may be given in the form of an Officers' Certificate.

SECTION 2.6           Events of Default; Waiver.

     (a)  The Holders of a Majority in Liquidation  Amount of Capital Securities
          may,  by  vote,  on  behalf  of the  Holders  of  all  of the  Capital
          Securities,  waive any past Event of Default in respect of the Capital
          Securities  and its  consequences,  provided  that, if the  underlying
          Event of Default under the Indenture:

          (i)  is not waivable under the  Indenture,  the Event of Default under
               the Declaration shall also not be waivable; or

          (ii) requires  the  consent  or vote of  greater  than a  majority  in
               aggregate  principal  amount of the holders of the  Debentures (a
               "Super Majority") to be waived under the Indenture,  the Event of
               Default under the  Declaration  may only be waived by the vote of
               the Holders of at least the  proportion in aggregate  liquidation
               amount of the Capital Securities that the relevant Super Majority
               represents of the aggregate  principal  amount of the  Debentures
               outstanding.

The  foregoing  provisions  of  this  Section  2.6(a)  shall  be in  lieu of ss.
316(a)(1)(B) of the Trust  Indenture Act and such ss.  316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from

                                       11

<PAGE>

this  Declaration and the  Securities,  as permitted by the Trust Indenture Act.
Upon such  waiver,  any such  Default  shall  cease to  exist,  and any Event of
Default with respect to the Capital Securities 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 an Event of Default  with
respect to the Capital  Securities or impair any right consequent  thereon.  Any
waiver by the  Holders of the  Capital  Securities  of an Event of Default  with
respect to the Capital Securities shall also be deemed to constitute a waiver by
the Holders of the Common  Securities  of any such Event of Default with respect
to the Common  Securities  for all  purposes  of this  Declaration  without  any
further act, vote, or consent of the Holders of the Common Securities.

     (b)  The  Holders  of a  Majority  in  Liquidation  Amount  of  the  Common
          Securities may, by vote, on behalf of the Holders of all of the Common
          Securities, waive any past Event of Default with respect to the Common
          Securities  and its  consequences,  provided  that, if the  underlying
          Event of Default under the Indenture:

          (i)  is not waivable under the Indenture,  except where the Holders of
               the Common  Securities  are deemed to have  waived  such Event of
               Default under the  Declaration  as provided below in this Section
               2.6(b), the Event of Default under the Declaration shall also not
               be waivable; or

          (ii) requires  the  consent or vote of a Super  Majority to be waived,
               except where the Holders of the Common  Securities  are deemed to
               have  waived  such  Event of  Default  under the  Declaration  as
               provided below in this Section 2.6(b), the Event of Default under
               the  Declaration may only be waived by the vote of the Holders of
               at least the  proportion in aggregate  liquidation  amount of the
               Common Securities that the relevant Super Majority  represents of
               the aggregate principal amount of the Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default  with  respect to the Common
Securities and their  consequences  if all Events of Default with respect to the
Capital Securities have been cured,  waived or otherwise  eliminated,  and until
such Events of Default have been so cured, waived or otherwise  eliminated,  the
Property  Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital  Securities and only the Holders of the Capital Securities will have
the right to direct the  Property  Trustee in  accordance  with the terms of the
Securities.  The foregoing provisions of this Section 2.6(b) shall be in lieu of
ss.ss.  316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A)  and  316(a)(1)(B) of the Trust Indenture Act are hereby  expressly
excluded from this  Declaration  and the  Securities,  as permitted by the Trust
Indenture Act. Subject to the foregoing  provisions of this Section 2.6(b), upon
such waiver, any such Default shall cease to exist and any Event of Default with
respect to the Common Securities  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 with respect to the Common
Securities or impair any right consequent thereon.

     (c)  A waiver of an Event of Default  under the  Indenture  by the Property
          Trustee,  at the  direction of the Holders of the Capital  Securities,
          constitutes a waiver of the corresponding

                                       12

<PAGE>

          Event of Default under this Declaration.  The foregoing  provisions of
          this Section 2.6(c) shall be in lieu of ss.  316(a)(1)(B) of the Trust
          Indenture Act and such ss.  316(a)(1)(B) of the Trust Indenture Act is
          hereby expressly excluded from this Declaration and the Securities, as
          permitted by the Trust Indenture Act.

SECTION 2.7 Default; Notice.

     (a)  The Property Trustee shall, within 90 days after a Responsible Officer
          has actual  knowledge of the  occurrence  of a Default with respect to
          the Securities,  transmit by mail, first class postage prepaid, to the
          Holders, notices of all such Defaults,  unless such Defaults have been
          cured before the giving of such notice or previously waived; provided,
          however,  that  except  in the  case of a  Default  arising  from  the
          nonpayment of principal of (or premium, if any) or interest (including
          Compounded  Interest and Additional Sums (as such terms are defined in
          the Indenture),  if any) or Liquidated  Damages, if any (as defined in
          the  Registration  Rights  Agreement),  on any of the Debentures,  the
          Property  Trustee shall be protected in withholding such notice if and
          so long as a  Responsible  Officer in good faith  determines  that the
          withholding of such notice is in the interests of the Holders.

     (b)  The  Property  Trustee  shall not be deemed to have  knowledge  of any
          Default or Event of Default except:

          (i)  a Default or Event of Default under Sections  5.01(a) (other than
               the payment or nonpayment of Compounded Interest, Additional Sums
               and Liquidated Damages) and 5.01(b) of the Indenture; or

          (ii) any Default or Event of Default as to which the Property  Trustee
               shall  have  received  written  notice or of which a  Responsible
               Officer charged with the  administration of the Declaration shall
               have actual knowledge.

     (c)  Within  ten  Business  Days  after a  Responsible  Officer  has actual
          knowledge  of the  occurrence  of any Event of Default,  the  Property
          Trustee shall transmit  notice of such Event of Default to the Holders
          of  the  Capital  Securities,  the  Administrative  Trustees  and  the
          Sponsor, unless such Event of Default shall have been cured or waived.
          The Sponsor and the  Administrative  Trustees shall file annually with
          the Property  Trustee a certification as to whether or not they are in
          compliance  with all the conditions  and covenants  applicable to them
          under this Declaration.

                                   ARTICLE III
                                  ORGANIZATION

SECTION 3.1 Name.

     The Trust is named  Cascade  Capital  Trust I as such name may be  modified
from time to time by the Administrative Trustees following written notice to the
Delaware Trustee,  the Property Trustee and the Holders.  The Trust's activities
may be conducted under the name of the Trust or any other name deemed  advisable
by the Administrative Trustees.

                                       13

<PAGE>

SECTION 3.2 Office.

     The address of the principal  office of the Trust is c/o Cascade  Financial
Corporation at 2828 Colby Avenue,  Everett,  Washington  98201.  On ten Business
Days' prior written notice to the Delaware Trustee, the Property Trustee and the
Holders  of  Securities,  the  Administrative  Trustees  may  designate  another
principal office.

SECTION 3.3 Purpose.

     The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities,  (b) use the proceeds from the sale of the Securities to acquire the
Debentures,  and (c) except as otherwise limited herein, to engage in only those
other activities necessary,  advisable or incidental thereto,  including without
limitation,  those  activities  specified in Sections 3.6, 3.8, 3.9, 3.10,  3.11
and/or 3.12. The Trust shall not borrow money,  issue debt or reinvest  proceeds
derived  from  investments,  mortgage or 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 3.4 Authority.

     Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Administrative Trustees shall have exclusive
and complete  authority to carry out the purposes of the Trust.  An action taken
by one or more of the  Administrative  Trustees in accordance  with their powers
shall  constitute  the act of and serve to bind the Trust and an action taken by
the Property  Trustee on behalf of the Trust in accordance with its 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.

SECTION 3.5 Title to Property of the Trust.

     Except as provided in Section 3.8 with  respect to the  Debentures  and the
Property  Trustee 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 3.6 Powers and Duties of the Administrative Trustees.

     Subject to Section 5.5, the Administrative  Trustees acting individually or
together shall have the exclusive  right,  power,  duty and  authority,  and are
hereby  authorized  and directed,  to cause the Trust to engage in the following
activities:

     (a)  to execute, enter into and deliver the Common Securities  Subscription
          Agreement and to execute,  deliver,  issue and sell the  Securities in
          accordance with this Declaration;  provided,  however,  that except as
          contemplated in Section 7.1(a), (i) the Trust may issue no more

                                       14

<PAGE>

          than one series of Capital  Securities  and no more than one series of
          Common Securities, (ii) there shall be no interests in the Trust other
          than the  Securities,  and (iii) the issuance of  Securities  shall be
          limited to a  simultaneous  issuance of both  Capital  Securities  and
          Common Securities at the Closing Time;

     (b)  in connection  with the issue and sale of the Capital  Securities  and
          the  consummation  of the  Exchange  Offer,  at the  direction  of the
          Sponsor, to:

          (i)  prepare and execute,  if necessary,  an offering  memorandum (the
               "Offering  Memorandum") in preliminary and final form prepared by
               the  Sponsor,  in relation to the  offering  and sale of Series A
               Capital  Securities  to QIBs in  reliance  on  Rule  144A  and to
               institutional   "accredited   investors"   (as  defined  in  Rule
               501(a)(1),  (2),  (3) or (7) under the  Securities  Act),  and to
               execute  and  file  with  the  Commission,  at  such  time  as is
               determined by the Sponsor, any Registration Statement,  including
               any  amendments  thereto,  as  contemplated  by the  Registration
               Rights Agreement;

          (ii) execute and file any documents  prepared by the Sponsor,  or take
               any acts as determined by the Sponsor to be necessary in order to
               qualify or register all or part of the Capital  Securities in any
               State in which the Sponsor has  determined to qualify or register
               such Capital Securities for sale;

          (iii)execute  and file an  application,  prepared by the  Sponsor,  to
               permit the Capital  Securities to trade or be quoted or listed in
               or  on  the  Private  Offerings,   Resales  and  Trading  through
               Automated  Linkages  ("PORTAL")  Market or any  other  securities
               exchange,  quotation system or the Nasdaq Stock Market's National
               Market;

          (iv) execute,  enter into,  deliver and perform the Common  Securities
               Subscription Agreement,  the Purchase Agreement, the Registration
               Rights Agreement,  the Liquidated  Damages Agreement and letters,
               documents or  instruments  with DTC and other  Clearing  Agencies
               relating to the Capital Securities; and

          (v)  if required,  execute and file with the Commission a registration
               statement on Form 8-A, including any amendments thereto, prepared
               by the  Sponsor,  relating  to the  registration  of the  Capital
               Securities  under  Section 12(b) or 12(g) of the Exchange Act, as
               the case may be.

     (c)  to  execute,   enter  into  and  deliver  the  Debenture  Subscription
          Agreement, to acquire the Series A Debentures with the proceeds of the
          sale of the Series A Capital  Securities and the Common Securities and
          to exchange the Series A  Debentures  for a like  principal  amount of
          Series  B  Debentures,  pursuant  to  the  Exchange  Offer;  provided,
          however,  that the Administrative  Trustees shall cause legal title to
          the  Debentures  to be  held of  record  in the  name of the  Property
          Trustee for the benefit of the Holders;

                                       15

<PAGE>

     (d)  to give the Sponsor and the Property  Trustee prompt written notice of
          the occurrence of a Special Event;

     (e)  to  establish  a record  date with  respect to all actions to be taken
          hereunder that require a record date to be established,  including and
          with respect to, for the purposes of ss. 316(c) of the Trust Indenture
          Act, Distributions,  voting rights,  redemptions and exchanges, and to
          issue relevant notices to the Holders with respect to such actions and
          applicable record dates;

     (f)  to take all actions and perform  such duties as may be required of the
          Administrative Trustees pursuant to the terms of the Securities;

     (g)  to the  fullest  extent  permitted  by law,  to bring or defend,  pay,
          collect,  compromise,  arbitrate, resort to legal action, or otherwise
          adjust  claims or demands of or against  the Trust  ("Legal  Action"),
          unless  pursuant  to Section  3.8(e),  the  Property  Trustee  has the
          exclusive power to bring such Legal Action;

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

     (i)  to cause the Trust to comply  with the Trust's  obligations  under the
          Trust Indenture Act;

     (j)  to  give  the  certificate  required  by ss.  314(a)(4)  of the  Trust
          Indenture  Act to  the  Property  Trustee,  which  certificate  may be
          executed by any Administrative Trustee;

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

     (l)  to act as, or appoint another Person to act as, Registrar and Exchange
          Agent  for  the  Securities  or to  appoint  a  Paying  Agent  for the
          Securities  as  provided  in Section  7.4 except for such time as such
          power to appoint a Paying Agent is vested in the Property Trustee;

     (m)  to give  prompt  written  notice to the  Property  Trustee  and to the
          Holders  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;

     (n)  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 business trust under
          the laws of the State of Delaware  and of each other  jurisdiction  in
          which such existence is necessary to protect the limited  liability of
          the  Holders or to enable the Trust to effect the  purposes  for which
          the Trust was created;

     (o)  to take any action,  not  inconsistent  with this  Declaration or with
          applicable law, that the  Administrative  Trustees  determine in their
          discretion to be necessary or desirable in carrying out the activities
          of the  Trust  as set  out in this  Section  3.6,  including,  but not
          limited to:

                                       16

<PAGE>

          (i)  causing  the Trust not to be deemed to be an  Investment  Company
               required to be registered under the Investment Company Act;

          (ii) causing the Trust to continue to be classified  for United States
               federal income tax purposes as a grantor trust; and

          (iii)cooperating   with  the  Debenture  Issuer  to  ensure  that  the
               Debentures  will be  treated  as  indebtedness  of the  Debenture
               Issuer for United States federal income tax purposes;

     (p)  to take all action  necessary  to  consummate  the  Exchange  Offer or
          otherwise cause the Capital Securities to be registered pursuant to an
          effective  registration statement in accordance with the provisions of
          the Registration Rights Agreement;

     (q)  to take all action  necessary to cause all  applicable tax returns and
          tax information  reports that are required to be filed with respect to
          the  Trust  to be  duly  prepared  and  filed  by  the  Administrative
          Trustees, on behalf of the Trust; and

     (r)  to execute and deliver all  documents,  agreements,  certificates  and
          instruments, exercise all rights and powers, perform all duties and do
          all  things for and on behalf of the Trust in all  matters  necessary,
          advisable  or  incidental   to  the  foregoing  or  the   transactions
          contemplated thereby.

     The  Administrative  Trustees  must  exercise  the powers set forth in this
Section 3.6 in a manner that is  consistent  with the purposes and  functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.

     Subject to this Section 3.6, the Administrative Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.

     Any  expenses  incurred  by the  Administrative  Trustees  pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.

SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.

     The Trust shall not, and the Trustees  (including the Property  Trustee and
the Delaware Trustee) shall not, and the Administrative Trustees shall cause the
Trust not to,  engage in any activity  other than as required or  authorized  by
this  Declaration.  Notwithstanding  any  provision in this  Declaration  to the
contrary, the Trust shall not:

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

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

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<PAGE>

          (iii)possess Trust  Property for other than a Trust purpose or execute
               any mortgage in respect of, or pledge, any Trust Property;

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

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

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

          (vii)other than as  provided  in this  Declaration  or Annex I hereto,
               (A)  direct  the  time,   method  and  place  of  conducting  any
               proceeding with respect to any remedy  available to the Debenture
               Trustee,  or  exercising  any trust or power  conferred  upon the
               Debenture  Trustee with respect to the Debentures,  (B) waive any
               past  default  that  is  waivable  under  the  Indenture,  or (C)
               exercise any right to rescind or annul any  declaration  that the
               principal of all the Debentures shall be due and payable; or

          (viii) consent to any  amendment,  modification  or termination of the
               Indenture or the Debentures  where such consent shall be required
               unless the Trust shall have  received  an opinion of  independent
               tax counsel  experienced  in such matters to the effect that such
               amendment,  modification or termination  will not cause more than
               an insubstantial  risk that the Trust will not be classified as a
               grantor trust for United States federal income tax purposes.

SECTION 3.8 Powers and Duties of the Property Trustee.

     (a)  The legal title to the Debentures shall be owned by and held of record
          in the name of the  Property  Trustee in trust for the  benefit of the
          Trust and the Holders.  The right,  title and interest of the Property
          Trustee to the Debentures shall vest  automatically in each Person who
          may  hereafter  be appointed as Property  Trustee in  accordance  with
          Section 5.6.  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 Property Trustee shall not transfer its right,  title and interest
          in the  Debentures to the  Administrative  Trustees or to the Delaware
          Trustee  (if the  Property  Trustee  does  not  also  act as  Delaware
          Trustee).

     (c)  The Property Trustee shall:

          (i)  Subject  to  Section   3.9(b)(vii),   establish  and  maintain  a
               segregated  non-interest  bearing  trust  account (the  "Property
               Trustee  Account") in the name of and under the exclusive control
               of the Property  Trustee on behalf of the Holders  and,  upon the
               receipt of payments of funds made in respect of the

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<PAGE>

               Debentures held by the Property Trustee,  deposit such funds into
               the  Property  Trustee  Account  and make  payments  or cause the
               Paying  Agent to make  payments to the Holders  from the Property
               Trustee  Account in  accordance  with Section  6.1;  funds in the
               Property Trustee Account shall be held uninvested until disbursed
               in accordance  with this  Declaration;  and the Property  Trustee
               Account  shall be an account  that is  maintained  with a banking
               institution the rating on whose long-term unsecured  indebtedness
               by a "nationally  recognized statistical rating organization," as
               that term is defined  for  purposes of Rule  436(g)(2)  under the
               Securities  Act, is at least equal to the rating  assigned to the
               Capital Securities,  unless the Capital Securities are not rated,
               in  which  case the  banking  institution's  long-term  unsecured
               indebtedness  shall  be  rated  at  least  investment  grade by a
               "nationally recognized statistical rating organization;"

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

          (iii)upon written notice of distribution  issued by the Administrative
               Trustees 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 upon the occurrence of certain events.

     (d)  The Property Trustee shall take all actions and perform such duties as
          may be specifically  required of the Property  Trustee pursuant to the
          terms of this Declaration and the Securities.

     (e)  Subject to Section 3.9(a),  the Property  Trustee shall take any Legal
          Action which arises out of or in  connection  with an Event of Default
          of which a  Responsible  Officer has actual  knowledge or the Property
          Trustee's  duties and obligations  under this Declaration or the Trust
          Indenture  Act; and if the Property  Trustee shall have failed to take
          such Legal Action  following a written  request from the Holders,  the
          Holders of the Capital Securities may, to the fullest extent permitted
          by law, take such Legal Action,  to the same extent as if such Holders
          of Capital Securities held an aggregate principal amount of Debentures
          equal to the aggregate  liquidation amount of such Capital Securities,
          without first  proceeding  against the Property  Trustee or the Trust;
          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 the  principal  of or  premium,  if any,  or
          interest  (including  Compounded Interest and Additional Sums, if any)
          or  Liquidated  Damages,  if any, on the  Debentures  on the date such
          principal, premium, if any, or interest (including Compounded Interest
          and  Additional  Sums,  if  any) or  Liquidated  Damages,  if any,  is
          otherwise  payable (or in the case of  redemption,  on the  redemption
          date),  then a Holder of Capital  Securities may directly  institute a
          proceeding for  enforcement of payment to such Holder of the principal
          of or premium, if any, or interest (including  Compounded Interest and
          Additional  Sums,  if  any) or  Liquidated  Damages,  if  any,  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 Holders of the
          Common  Securities  will be subrogated to the rights of such Holder of
          Capital Securities to the extent of any payment made

                                       19

<PAGE>

          by the Debenture  Issuer to such Holder of Capital  Securities in such
          Direct  Action.  Except as provided in the  preceding  sentences,  the
          Holders of Capital  Securities  will not be able to exercise  directly
          any other remedy available to the holders of the Debentures.

     (f)  The  Property  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  pursuant to the terms of
               the Securities and this Declaration; or

          (ii) a successor  Property Trustee has been appointed and has accepted
               that  appointment  in  accordance  with Section 5.6 (a "Successor
               Property Trustee").

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

     (h)  The Property  Trustee shall be authorized to undertake any actions set
          forth in ss. 317(a) of the Trust Indenture Act.

     (i)  For  such  time as the  Property  Trustee  is the  Paying  Agent,  the
          Property  Trustee  may  authorize  one  or  more  Persons  to  act  as
          additional Paying Agents and to pay Distributions, redemption payments
          or  liquidation  payments  on behalf of the Trust with  respect to all
          Securities  and any such Paying Agent shall comply with ss.  317(b) of
          the Trust  Indenture  Act.  Any such  additional  Paying  Agent may be
          removed  by the  Property  Trustee  at any time the  Property  Trustee
          remains as Paying  Agent and a successor  Paying  Agent or  additional
          Paying  Agents may be (but are not  required to be)  appointed  at any
          time by the Property  Trustee while the Property  Trustee is acting as
          Paying Agent.

     (j)  Subject to this Section 3.8, the Property  Trustee  shall have none of
          the duties, liabilities, powers or the authority of the Administrative
          Trustees set forth in Section 3.6.

     Notwithstanding  anything  expressed  or  implied to the  contrary  in this
Declaration  or any Annex or  Exhibit  hereto,  (i) the  Property  Trustee  must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the  purposes  and  functions of the Trust set out in Section 3.3, and (ii)
the Property  Trustee  shall not take any action that is  inconsistent  with the
purposes and functions of the Trust set out in Section 3.3.

SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.

     (a)  The Property  Trustee,  before the  occurrence of any Event of Default
          (of which,  other than in the case of Events of Default under Sections
          5.01(a) and 5.01(b) of the  Indenture,  which the Property  Trustee is
          deemed to have knowledge of as provided in Section  2.7(b)  hereof,  a
          Responsible  Officer of the Property Trustee has actual knowledge) and
          after the curing or

                                       20

<PAGE>

          waiving of all such Events of Default  that may have  occurred,  shall
          undertake to perform only such duties as are specifically set forth in
          this Declaration and in the Securities and no implied  covenants shall
          be read into this Declaration against the Property Trustee. In case an
          Event of  Default  has  occurred  (that  has not been  cured or waived
          pursuant  to Section  2.6) of which a  Responsible  Officer has actual
          knowledge,  the Property Trustee shall exercise such of the rights and
          powers  vested in it by this  Declaration,  and use the same degree of
          care and skill in their  exercise,  as a prudent person would exercise
          or use  under  the  circumstances  in the  conduct  of his or her  own
          affairs.

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

          (i)  prior to the  occurrence of an Event of Default (of which,  other
               than in the case of Events of Default under Sections  5.01(a) and
               5.01(b) of the Indenture, which the Property Trustee is deemed to
               have  knowledge  of as  provided  in  Section  2.7(b)  hereof,  a
               Responsible Officer of the Property Trustee has actual knowledge)
               and after the  curing or  waiving  of all such  Events of Default
               that may have occurred:

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

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

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

          (iii)the  Property  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 a Majority in
               Liquidation Amount of the Securities relating to the time, method
               and place of conducting any  proceeding for any remedy  available
               to the  Property  Trustee,  or  exercising  any  trust  or  power
               conferred upon the Property Trustee under this Declaration;

                                       21

<PAGE>

          (iv) no  provision  of this  Declaration  shall  require the  Property
               Trustee  to  expend  or risk  its own  funds or  otherwise  incur
               personal  financial  liability in the  performance  of any of its
               duties or in the exercise of any of its rights or powers;

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

          (vi) the Property  Trustee shall have no duty or liability for or with
               respect to the value,  genuineness,  existence or  sufficiency of
               the Debentures or the payment of any taxes or assessments  levied
               thereon or in connection therewith;

          (vii)the Property  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.  Money held by the Property Trustee need not be
               segregated  from other funds held by it except in relation to the
               Property  Trustee  Account  maintained  by the  Property  Trustee
               pursuant to Section  3.8(c)(i) and except to the extent otherwise
               required by law; and

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

SECTION 3.10 Certain Rights of Property Trustee.

     (a)  Subject to the provisions of Section 3.9:

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

          (ii) any  direction  or  act  of the  Sponsor  or  the  Administrative
               Trustees  contemplated  by this  Declaration  may be sufficiently
               evidenced by an Officers' Certificate;

          (iii)whenever in the administration of this Declaration,  the Property
               Trustee  shall  deem it  desirable  that a matter  be  proved  or
               established  before  taking,  suffering  or  omitting  any action
               hereunder,  the Property Trustee (unless other evidence is herein
               specifically prescribed) may, in the absence of bad faith

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<PAGE>

               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 Administrative Trustees;

          (iv) the Property  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 registration thereof;

          (v)  the Property Trustee may consult with counsel or other experts of
               its  selection,  and the advice or opinion  of such  counsel  and
               experts with respect to legal  matters or advice within the scope
               of such  experts'  area of  expertise  shall be full and complete
               authorization  and  protection  in respect  of any action  taken,
               suffered  or  omitted  by it  hereunder  in  good  faith  and  in
               accordance  with such  advice or  opinion;  such  counsel  may be
               counsel to the Sponsor or any of its Affiliates,  and may include
               any of its  employees;  and the Property  Trustee  shall have the
               right  at  any   time  to  seek   instructions   concerning   the
               administration  of this  Declaration  from any court of competent
               jurisdiction;

          (vi) the Property 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 Holder, unless such Holder shall have
               provided  to  the  Property   Trustee   security  and  indemnity,
               reasonably  satisfactory  to the  Property  Trustee,  against the
               costs,   expenses  (including   reasonable  attorneys'  fees  and
               expenses  and the  expenses  of the  Property  Trustee's  agents,
               nominees or custodians) and liabilities that might be incurred by
               it in complying  with such request or direction,  including  such
               reasonable  advances as may be requested by the Property Trustee;
               provided,  however,  that,  nothing  contained  in  this  Section
               3.10(a)(vi) shall be taken to relieve the Property Trustee,  upon
               the  occurrence  of an Event of Default (of which,  other than in
               the case of Events of Default under Sections  5.01(a) and 5.01(b)
               of the  Indenture,  which the Property  Trustee is deemed to have
               knowledge of as provided in Section 2.7(b) hereof,  a Responsible
               Officer of the  Property  Trustee has actual  knowledge),  of its
               obligation to exercise the rights and powers vested in it by this
               Declaration;

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

          (viii) the  Property  Trustee  may execute any of the trusts or powers
               hereunder or perform any duties  hereunder  either directly or by
               or through  agents,  custodians,  nominees or attorneys,  and the
               Property Trustee shall not be

                                       23

<PAGE>

               responsible  for any  misconduct or negligence on the part of any
               such agent,  custodian,  nominee or attorney  appointed  with due
               care by it hereunder;

          (ix) any action taken by the Property  Trustee or its agents hereunder
               shall bind the Trust and the  Holders,  and the  signature of the
               Property  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 Property  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 Property  Trustee's or its agent's
               taking such action;

          (x)  whenever in the  administration  of this Declaration the Property
               Trustee  shall deem it  desirable  to receive  instructions  with
               respect  to  enforcing  any  remedy or right or taking  any other
               action   hereunder,   the   Property   Trustee  (i)  may  request
               instructions  from the  Holders  which  instructions  may only be
               given by the Holders of the same proportion in liquidation amount
               of the  Securities  as would be entitled  to direct the  Property
               Trustee  under the terms of the  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  protected  in
               conclusively  relying  on  or  acting  in  accordance  with  such
               instructions;

          (xi) except as otherwise  expressly provided by this Declaration,  the
               Property  Trustee  shall not be under any  obligation to take any
               action  that  is  discretionary  under  the  provisions  of  this
               Declaration; and

          (xii)the Property  Trustee  shall not be liable for any action  taken,
               suffered,  or  omitted to be taken by it in good  faith,  without
               negligence or willful  misconduct,  and reasonably believed by it
               to be  authorized  or within the  discretion  or rights or powers
               conferred upon it by this Declaration.

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

SECTION 3.11 Delaware Trustee.

     Notwithstanding  any other provision of this Declaration other than Section
5.2, the  Delaware  Trustee  shall not be entitled to exercise  any powers,  nor
shall the Delaware  Trustee have any of the duties and  responsibilities  of the
Trustees  described in this  Declaration  (except as required under the Business
Trust Act).  Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited  purpose of fulfilling the  requirements of ss.
3807 of the Business  Trust Act. In the event the Delaware  Trustee shall at any
time be required to take any action or

                                       24

<PAGE>

perform  any duty  hereunder,  the  Delaware  Trustee  shall be  entitled to the
benefits  of Section  3.9(b)(ii)  to (viii),  inclusive,  and Section  3.10.  No
implied covenants or obligations shall be read into this Declaration against the
Delaware Trustee.

SECTION 3.12 Execution of Documents.

     Unless otherwise required by applicable law, each  Administrative  Trustee,
individually,  is  authorized  to execute and deliver on behalf of the Trust any
documents,  agreements,  instruments  or  certificates  that the  Administrative
Trustees have the power and authority to execute pursuant to Section 3.6.

SECTION 3.13 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 Trust  Property or any part thereof.  The Trustees
make no representations as to the validity or sufficiency of this Declaration or
the Securities.

SECTION 3.14 Duration of Trust.

     The Trust,  unless earlier dissolved  pursuant to the provisions of Article
VIII hereof, shall dissolve on March 1, 2031.

SECTION 3.15 Mergers.

     (a)  The Trust may not merge with or into, consolidate,  amalgamate,  or be
          replaced by, or convey, transfer or lease its properties and assets as
          an entirety or substantially  as an entirety to any Person,  except as
          described  in Section  3.15(b) and (c) and except with  respect to the
          distribution of Debentures to Holders pursuant to Section  8.1(a)(iii)
          of this Declaration or Section 3 of Annex I.

     (b)  The Trust may, at the request of the Sponsor,  with the consent of the
          Administrative  Trustees or, if there are more than two, a majority of
          the  Administrative  Trustees  and without the consent of the Holders,
          the  Delaware  Trustee or the  Property  Trustee,  merge with or into,
          consolidate,  amalgamate,  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)  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 long as the

                                       25

<PAGE>

                    Successor Securities rank the same as the Securities rank in
                    priority  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 Property Trustee
               with respect to the Debentures;

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

          (iv) such   merger,    consolidation,    amalgamation,    replacement,
               conveyance,   transfer  or  lease  does  not  cause  the  Capital
               Securities (including any Successor Securities) or the Debentures
               to be downgraded by any nationally recognized  statistical rating
               organization that publishes a rating on the Capital Securities or
               the Debentures;

          (v)  such   merger,    consolidation,    amalgamation,    replacement,
               conveyance,  transfer  or lease  does not  adversely  affect  the
               rights,  preferences and privileges of the Holders (including the
               holders of any  Successor  Securities)  in any  material  respect
               (other than with respect to any dilution of the interests of such
               Holders or holders, as the case may be, in the Successor Entity);

          (vi) the  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  Sponsor  has  received  an
               opinion of 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 (including
                    the holders of any  Successor  Securities)  in any  material
                    respect  (other  than with  respect to any  dilution  of the
                    interests of such Holders or holders, as the case may be, 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

                                       26

<PAGE>

                    continue  to be  classified  as a grantor  trust for  United
                    States federal income tax purposes;

          (viii) the  Sponsor or any  permitted  successor  or  assignee  of the
               Sponsor owns all of the common securities of the Successor Entity
               and guarantees the obligations of the Successor  Entity under the
               Successor  Securities  at least  to the  extent  provided  by the
               Securities Guarantees; and

          (ix) there  shall  have been  furnished  to the  Property  Trustee  an
               Officers'  Certificate  and an  Opinion of  Counsel,  each to the
               effect that all conditions  precedent in this Declaration to such
               transaction have been satisfied.

     (c)  Notwithstanding  Section 3.15(b), the Trust shall not, except with the
          consent  of  Holders of 100% in  aggregate  liquidation  amount of the
          Securities,  consolidate,  amalgamate,  merge  with  or  into,  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
          the  Successor  Entity  not to be  classified  as a grantor  trust for
          United States federal income tax purposes.

                                   ARTICLE IV
                                     SPONSOR

SECTION 4.1 Sponsor's Purchase of Common Securities.

     At the  Closing  Time,  pursuant  to  the  Common  Securities  Subscription
Agreement, the Sponsor will purchase all of the Common Securities then issued by
the Trust,  in an amount equal to at least 3% of the total capital of the Trust,
at the same time as the Series A Capital Securities are issued and sold.

SECTION 4.2 Responsibilities of the Sponsor.

     In  connection  with the  issue  and sale of the  Capital  Securities,  the
Sponsor  shall  have the  exclusive  right and  responsibility  to engage in, or
direct the Administrative Trustees to engage in, the following activities:

     (a)  to prepare the Offering Memorandum, in preliminary and final form, and
          to  prepare  for  filing  by  the  Trust  with  the   Commission   any
          Registration   Statement,   including  any  amendments   thereto,   as
          contemplated by the Registration Rights Agreement;

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

                                       27

<PAGE>

     (c)  if deemed necessary or advisable by the Sponsor, to prepare for filing
          by the Trust an application to permit the Capital  Securities to trade
          or be  quoted  or  listed  in or on the  PORTAL  Market,  or any other
          securities  exchange,  quotation  system or the Nasdaq Stock  Market's
          National Market;

     (d)  to prepare for filing by the Trust with the  Commission a registration
          statement on Form 8-A, including any amendments  thereto,  relating to
          the  registration  of the Capital  Securities  under  Section 12(b) or
          12(g)  of the  Exchange  Act,  as  the  case  may  be,  including  any
          amendments thereto; and

     (e)  to  negotiate  the terms  of,  execute,  enter  into and  deliver  the
          Purchase   Agreement,   the  Registration  Rights  Agreement  and  the
          Liquidated Damages Agreement.

SECTION 4.3 Right to Proceed.

     The Sponsor  acknowledges the rights of the Holders of Capital  Securities,
in the event that a failure  of the Trust to pay  Distributions  on the  Capital
Securities is  attributable  to the failure of the  Debenture  Issuer to pay the
principal of or premium (if any) or interest on the  Debentures,  to institute a
proceeding  directly against the Debenture Issuer for enforcement of its payment
obligations in respect of the Debentures.

SECTION 4.4 Right to Dissolve Trust.

     The  Sponsor  will have the right at any time to  dissolve  the Trust  and,
after  satisfaction  of  liabilities  to  creditors  of the Trust as required by
applicable  law, to cause the  Debentures  to be  distributed  to the Holders in
liquidation of the Trust. Such right is subject to the Sponsor's having received
(i) an Opinion of Counsel to the effect  that such  distribution  will not cause
the Holders of Capital  Securities  to recognize  gain or loss for United States
federal income tax purposes and (ii) all required regulatory approvals.

                                    ARTICLE V
                                    TRUSTEES

SECTION 5.1 Number of Trustees; Appointment of Co-Trustee.

     The number of Trustees initially shall be five (5), 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

     (b)  after the  issuance of any  Securities,  the number of Trustees may be
          increased  or  decreased  by  vote of the  Holders  of a  Majority  in
          Liquidation  Amount of the  Common  Securities  voting as a class at a
          meeting of the Holders of the Common Securities;

provided,  however,  that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the

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<PAGE>

State of Delaware or that, if not a natural  person,  is an entity which has its
principal  place of business in the State of Delaware (the "Delaware  Trustee");
(2) there  shall be at least one Trustee who is an employee or officer of, or is
affiliated with, the Sponsor (an "Administrative  Trustee"); and (3) one Trustee
shall be the  Property  Trustee for so long as this  Declaration  is required to
qualify as an indenture under the Trust Indenture Act, and such Trustee may also
serve  as   Delaware   Trustee   if  it  meets  the   applicable   requirements.
Notwithstanding the above, unless an Event of Default shall have occurred and be
continuing,  at any  time or  times,  for  the  purpose  of  meeting  the  legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust  Property may at the time be located,  the Holders of a Majority in
Liquidation  Amount of the Common  Securities  acting as a class at a meeting of
the Holders of the Common Securities, and the Administrative Trustees shall have
power to appoint one or more Persons either to act as a co-trustee, jointly with
the Property  Trustee,  of all or any part of the Trust  Property,  or to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in such  capacity  any  property,  title,  right or power  deemed  necessary  or
desirable,  subject to the provisions of this  Declaration.  In case an Event of
Default has occurred and is  continuing,  the Property  Trustee alone shall have
power to make any such appointment of a co-trustee.

SECTION 5.2 Delaware Trustee.

     For so long as required by the Business  Trust Act,  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 has its principal  place of
          business  in  the  State  of  Delaware,   and   otherwise   meets  the
          requirements of applicable law,

provided,  however,  that, if the Property  Trustee has its  principal  place of
business  in the State of  Delaware  and  otherwise  meets the  requirements  of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.

     The initial Delaware Trustee shall be:

                      Wilmington Trust Company
                      Rodney Square North
                      1100 North Market Street
                      Wilmington, Delaware 19890-0001
                      Telephone: (302) 651-1000
                      Telecopier: (302) 651-8882

SECTION 5.3 Property Trustee; Eligibility.

     (a)  There shall at all times be one Trustee (the "Property Trustee") which
          shall act as Property Trustee and which shall:

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

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<PAGE>

          (ii) be a corporation  organized and doing  business under the laws of
               the United States of America or any State or Territory thereof or
               of the District of Columbia, or a corporation or Person permitted
               by the Commission to act as an indenture  trustee under the Trust
               Indenture Act,  authorized under such laws to exercise  corporate
               trust powers,  having a combined  capital and surplus of at least
               fifty  million  U.S.  dollars   ($50,000,000),   and  subject  to
               supervision  or  examination  by federal,  state,  territorial or
               District of Columbia  authority.  If such  corporation  publishes
               reports of condition at least annually, pursuant to law or to the
               requirements of the supervising or examining  authority  referred
               to above, then for the purposes of this Section  5.3(a)(ii),  the
               combined capital and surplus of such corporation  shall be deemed
               to be its  combined  capital and surplus as set forth in its most
               recent report of condition so published.

     (b)  If at any time the Property  Trustee  shall cease to be eligible to so
          act under  Section  5.3(a),  the Property  Trustee  shall  immediately
          resign in the manner and with the effect set forth in Section 5.6(c).

     (c)  If  the  Property  Trustee  has  or  shall  acquire  any  "conflicting
          interest" within the meaning of ss. 330(b) of the Trust Indenture Act,
          the Property Trustee and the Holder of the Common Securities (as if it
          were the obligor referred to in ss. 310(b) of the Trust Indenture Act)
          shall in all respects  comply with the provisions of ss. 310(b) of the
          Trust Indenture Act.

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

     (e)  The initial Property Trustee shall be:

                      Wilmington Trust Company
                      Rodney Square North
                      1100 North Market Street
                      Wilmington, Delaware 19890-0001
                      Telephone: (302) 651-1000
                      Telecopier: (302) 651-8882

SECTION 5.4 Certain  Qualifications  of  Administrative  Trustees  and  Delaware
            Trustee

     Generally.

     Each  Administrative  Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware  Trustee)  shall be 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.

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<PAGE>

SECTION 5.5 Administrative Trustees.

     The initial Administrative Trustees shall be:

                      Frank M. McCord
                      C.F. Safstrom
                      Russell E. Rosendal
                      c/o Cascade Financial Corporation
                      2828 Colby Avenue
                      Everett, Washington 98201
                      Telephone: (425) 339-5500
                      Telecopier: (425) 258-0624

     (a)  Except as otherwise expressly set forth in this Declaration and except
          if a meeting of the Administrative  Trustees is called with respect to
          any matter over which the  Administrative  Trustees have power to act,
          any power of the Administrative  Trustees may be exercised by, or with
          the consent of, any one such Administrative Trustee.

     (b)  Unless  otherwise   required  by  the  Business  Trust  Act  or  other
          applicable law, any Administrative  Trustee acting alone is authorized
          to   execute  on  behalf  of  the  Trust  any   documents   which  the
          Administrative  Trustees  have the  power and  authority  to cause the
          Trust to execute pursuant to Section 3.6.

     (c)  An  Administrative  Trustee may, by power of attorney  consistent with
          applicable  law,  delegate to any other natural person over the age of
          21 his or her power for the  purposes of signing any  documents  which
          the  Administrative  Trustees  have power and  authority  to cause the
          Trust to execute pursuant to Section 3.6.

SECTION 5.6 Appointment, Removal and Resignation of Trustees.

     (a)  Subject  to  Section  5.6(b)  hereof  and to  Section  6(b) of Annex I
          hereto,

     Trustees may be appointed or removed without cause at any time:

          (i)  until the  issuance  of any  Securities,  by  written  instrument
               executed by the Sponsor;

          (ii) unless an Event of Default  shall have occurred and be continuing
               after the issuance of any Securities, by vote of the Holders of a
               Majority in Liquidation Amount of the Common Securities voting as
               a class at a meeting of the Holders of the Common Securities; and

          (iii)if an Event of Default  shall  have  occurred  and be  continuing
               after  the  issuance  of  the  Securities,  with  respect  to the
               Property Trustee or the Delaware Trustee, by vote of Holders of a
               Majority in Liquidation  Amount of the Capital  Securities voting
               as a class at a meeting of Holders of the Capital Securities, and
               with respect to the  Administrative  Trustees,  in the manner set
               forth in Section 5.6(a)(ii) hereof.

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<PAGE>

     (b)  (i)  The Trustee that acts as Property Trustee shall not be removed in
               accordance with Section 5.6(a) until a Successor Property Trustee
               has been  appointed and has accepted such  appointment by written
               instrument  executed  by  such  Successor  Property  Trustee  and
               delivered to the removed  Property  Trustee,  the  Administrative
               Trustees and the Sponsor; and

          (ii) the Trustee that acts as Delaware Trustee shall not be removed in
               accordance  with this Section  5.6(a)  until a successor  Trustee
               possessing the  qualifications  to act as Delaware  Trustee under
               Sections 5.2 and 5.4 (a  "Successor  Delaware  Trustee") has been
               appointed and has accepted such appointment by written instrument
               executed by such Successor  Delaware Trustee and delivered to the
               removed  Delaware  Trustee,  the Property Trustee (if the removed
               Delaware  Trustee  is  not  also  the  Property   Trustee),   the
               Administrative Trustees and the Sponsor.

     (c)  A Trustee  appointed to office  shall hold office until his  successor
          shall have been appointed or until his death,  removal or resignation.
          Any  Trustee  may  resign  from  office  (without  need  for  prior or
          subsequent  accounting)  by an  instrument  in  writing  signed by the
          Trustee  and  delivered  to the other  Trustees,  the  Sponsor and the
          Trust,  which resignation shall take effect upon such delivery or upon
          such later date as is specified therein; provided, however, that:

          (i)  No such  resignation  of the  Trustee  that acts as the  Property
               Trustee shall be effective:

               (A)  until a Successor  Property  Trustee has been  appointed and
                    has accepted such appointment by instrument executed by such
                    Successor  Property  Trustee and delivered to the Trust, the
                    Sponsor,  the Delaware  Trustee (if the  resigning  Property
                    Trustee is not also the Delaware  Trustee) and the resigning
                    Property Trustee; or

               (B)  until  the  assets  of  the  Trust   have  been   completely
                    liquidated  and  the  proceeds  thereof  distributed  to the
                    Holders; and

          (ii) no such  resignation  of the  Trustee  that acts as the  Delaware
               Trustee shall be effective until a Successor Delaware Trustee has
               been  appointed and has accepted such  appointment  by instrument
               executed by such Successor  Delaware Trustee and delivered to the
               Trust, the Property Trustee (if the resigning Delaware Trustee is
               not also the  Property  Trustee),  the Sponsor and the  resigning
               Delaware Trustee.

     (d)  The Holders of the Common  Securities or, if an Event of Default shall
          have occurred and be continuing  after the issuance of the Securities,
          the Holders of the Capital  Securities shall use their best efforts to
          promptly appoint a Successor  Property  Trustee or Successor  Delaware
          Trustee,  as the case may be, if the Property  Trustee or the Delaware
          Trustee  delivers an instrument of resignation in accordance with this
          Section 5.6.

     (e)  If no Successor  Property Trustee or Successor  Delaware Trustee shall
          have been  appointed  and  accepted  appointment  as  provided in this
          Section  5.6  within  60  days  after  delivery  of an  instrument  of
          resignation  or removal,  the  Property  Trustee or  Delaware  Trustee
          resigning or being removed,  as applicable,  may petition any court of
          competent jurisdiction for

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<PAGE>

          appointment  of a Successor  Property  Trustee or  Successor  Delaware
          Trustee.  Such court may thereupon,  after prescribing such notice, if
          any, as it may deem proper to prescribe,  appoint a Successor Property
          Trustee or Successor Delaware Trustee, as the case may be.

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

     (g)  At the time of resignation  or removal of the Property  Trustee or the
          Delaware  Trustee,  the Sponsor  shall pay to such Trustee any amounts
          that may be owed to such Trustee pursuant to Section 10.4.

     (h)  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
          Successor Delaware Trustee in the State of Delaware.

SECTION 5.7 Vacancies among Trustees.

     If a  Trustee  ceases  to hold  office  for any  reason  and the  number of
Trustees is not reduced pursuant to Section 5.l, or if the number of Trustees is
increased  pursuant  to  Section  5.1,  a  vacancy  shall  occur.  A  resolution
certifying the existence of such vacancy by the  Administrative  Trustees or, if
there are more than two,  a majority  of the  Administrative  Trustees  shall be
conclusive  evidence of the  existence  of such  vacancy.  The vacancy  shall be
filled with a Trustee appointed in accordance with Section 5.6.

SECTION 5.8 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,  liquidate  or annul the Trust or to  terminate  this
Declaration.  Whenever a vacancy in the number of Administrative  Trustees shall
occur,  until such  vacancy is filled by the  appointment  of an  Administrative
Trustee in accordance with Section 5.6, the  Administrative  Trustees in office,
regardless  of  their  number,   shall  have  all  the  powers  granted  to  the
Administrative  Trustees  and shall  discharge  all the duties  imposed upon the
Administrative Trustees by this Declaration.

SECTION 5.9 Meetings.

     If  there  is  more  than  one  Administrative  Trustee,  meetings  of  the
Administrative  Trustees  shall be held  from  time to time upon the call of any
Administrative  Trustee.  Regular meetings of the Administrative Trustees may be
held at a time and place fixed by  resolution  of the  Administrative  Trustees.
Notice of any in-person  meetings of the  Administrative  Trustees 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 such meeting. Notice of
any telephonic meetings of the Administrative  Trustees 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 an Administrative Trustee at

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<PAGE>

a meeting  shall  constitute a waiver of notice of such meeting  except where an
Administrative Trustee 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  Administrative  Trustees  may be taken at a meeting  by vote of a
majority  of the  Administrative  Trustees  present  (whether  in  person  or by
telephone)  and eligible to vote with respect to such matter,  provided  that, a
Quorum is present,  or without a meeting by the unanimous written consent of the
Administrative  Trustees. In the event there is only one Administrative Trustee,
any and all  action  of such  Administrative  Trustee  shall be  evidenced  by a
written consent of such Administrative Trustee.

SECTION 5.10 Delegation of Power.

     (a)  Any Administrative  Trustee may, by power of attorney  consistent with
          applicable  law,  delegate to any other natural person over the age of
          21 his or her  power  for the  pur  pose of  executing  any  documents
          contemplated in Section 3.6,  including any registration  statement or
          amendment  thereto  filed  with the  Commission,  or making  any other
          governmental filing.

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

SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.

     Any Person into which the Property  Trustee or the Delaware  Trustee or any
Administrative  Trustee that is not a natural person, as the case may be, may be
merged  or  converted  or  with  which  it may be  consolidated,  or any  Person
resulting  from any merger,  conversion or  consolidation  to which the Property
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 Property Trustee or the Delaware  Trustee,  as the case may be, shall be the
successor of the Property 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 Delaware  Secretary
of State as contemplated in Section 5.6(h).

                                   ARTICLE VI
                                  DISTRIBUTIONS

SECTION 6.1 Distributions.

     Holders shall receive Distributions in accordance with the applicable terms
of the relevant  Holder's  Securities.  If and to the extent that the  Debenture
Issuer makes a payment of interest (including Compounded Interest and Additional
Sums),  premium and/or  principal on the Debentures held by the Property Trustee
or Liquidated Damages or any other payments pursuant to the Registration  Rights
Agreement or Liquidated Damages Agreement with respect to the

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<PAGE>

Debentures held by the Property  Trustee (the amount of any such payment being a
"Payment  Amount"),  the Property  Trustee shall and is directed,  to the extent
funds are available for that purpose,  to make a distribution (a "Distribution")
of the Payment Amount to Holders in accordance with the terms of the Securities.

                                   ARTICLE VII
                             ISSUANCE OF SECURITIES

SECTION 7.1 General Provisions Regarding Securities.

     (a)  The  Administrative  Trustees shall, on behalf of the Trust, issue one
          class  of  capital   securities   representing   undivided   preferred
          beneficial  interests  in the assets of the Trust having such terms as
          are set forth in Annex I (the "Series A Capital  Securities")  and one
          class of common  securities  representing  undivided common beneficial
          interests  in the  assets of the Trust  having  such  terms as are set
          forth  in  Annex  I  (the  "Common  Securities").  The  Administrative
          Trustees  shall,  on behalf of the  Trust,  issue one class of capital
          securities  representing  undivided preferred  beneficial interests in
          the assets of the Trust having such terms as set forth in Annex I (the
          "Series B Capital  Securities")  in exchange  for the Series A Capital
          Securities accepted for exchange in the Exchange Offer, which Series B
          Capital  Securities  shall not bear the  legends  required  by Section
          9.2(i) unless the Holder of such Series A Capital Securities is either
          (A) a  broker-dealer  who purchased  such Series A Capital  Securities
          directly from the Trust for resale  pursuant to Rule 144A or any other
          available   exemption   under  the   Securities   Act,  (B)  a  Person
          participating in the  distribution of the Series A Capital  Securities
          or (C) a Person who is an Affiliate  of the Sponsor or the Trust.  The
          Trust shall issue no  securities  or other  interests in the assets of
          the Trust other than the Capital Securities and the Common Securities.

     (b)  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.

     (c)  Upon issuance of the Securities as provided in this  Declaration,  the
          Securities so issued shall be deemed to be validly issued and, subject
          to the  terms  of  this  Declaration,  fully  paid  and  nonassessable
          undivided beneficial interests in the assets of the Trust and entitled
          to the benefits of this Declaration,  and the Holders thereof shall be
          entitled to the benefits of this Declaration.

     (d)  Every  Person,  by  virtue  of  having  become a Holder  or a  Capital
          Security  Beneficial  Owner  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.

SECTION 7.2 Execution and Authentication.

     (a)  The  Securities  shall  be  signed  on  behalf  of  the  Trust  by  an
          Administrative  Trustee.  In case any  Administrative  Trustee  of the
          Trust who shall have  signed any of the  Securities  shall cease to be
          such  Administrative  Trustee before the Securities so signed shall be
          delivered by the Trust, such Securities  nevertheless may be delivered
          as though the Person who signed such  Securities  had not ceased to be
          such  Administrative  Trustee;  and any  Securities  may be  signed on
          behalf  of the  Trust  by such  persons  who,  at the  actual  date of
          execution of such Security, shall be the

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<PAGE>

          Administrative  Trustees  of the  Trust,  although  at the date of the
          execution and delivery of this  Declaration any such person was not an
          Administrative Trustee.

     (b)  One  Administrative  Trustee shall sign the Capital Securities for the
          Trust by manual or facsimile signature. Unless otherwise determined by
          an  Administrative  Trustee on behalf of the Trust, an  Administrative
          Trustee  shall  sign the  Common  Securities  for the  Trust by manual
          signature.

     A Capital  Security  shall not be valid until  authenticated  by the manual
signature of an  authorized  signatory of the Property  Trustee.  The  signature
shall be conclusive  evidence that the Capital  Security has been  authenticated
under this  Declaration.  A Common  Security shall be valid upon execution by an
Administrative Trustee without any act of the Property Trustee.

     Upon a written order of the Trust signed by one Administrative Trustee, the
Property Trustee shall  authenticate the Capital  Securities for original issue.
The aggregate  number of Capital  Securities  outstanding  at any time shall not
exceed the number set forth in Annex I hereto except as provided in Section 7.6.

     The Property Trustee may appoint an authenticating  agent acceptable to the
Trust  to  authenticate   Capital  Securities.   An  authenticating   agent  may
authenticate  Capital  Securities  whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee hereunder with respect to the Sponsor or an Affiliate.

SECTION 7.3 Form and Dating.

     The  Capital  Securities  shall be  evidenced  by one or more  certificates
substantially  in the form of Exhibit  A-1, and the Common  Securities  shall be
evidenced by one or more certificates  substantially in the form of Exhibit A-2.
The Property Trustee's  certificate of authentication  shall be substantially in
the form set forth in Exhibit A-1. Certificates  representing the Securities may
be printed,  lithographed  or engraved or may be produced in any other manner as
is  reasonably  acceptable  to an  Administrative  Trustee,  as evidenced by the
execution  thereof.  The Securities may have letters,  "CUSIP" or other 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 en
dorsement is in a form acceptable to the Administrative  Trustees,  as evidenced
by their  execution  thereof.  The Trust at the direction of the Sponsor,  shall
furnish any such legend not contained in Exhibit A-1 to the Property  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 Property Trustee and the Sponsor,
by their  execution and delivery of this  Declaration,  expressly  agree to such
terms and provisions and to be bound thereby.

     (a)  Global Capital Security.  Capital  Securities offered and sold to QIBs
          in reliance on Rule 144A, as provided in the Purchase Agreement, shall
          be issued in the form of a single permanent global Capital Security in
          definitive,  fully registered form without  distribution  coupons with
          the appropriate  global legends and Restricted  Securities  Legend set
          forth in Exhibit

                                       36

<PAGE>

          A-1 hereto (the "Global Capital  Security"),  which shall be deposited
          on behalf of the  purchasers  of the  Capital  Securities  represented
          thereby with the Property  Trustee,  at its Corporate Trust Office, as
          custodian for the Clearing  Agency,  and registered in the name of the
          Clearing Agency or a nominee of the Clearing Agency,  duly executed by
          the Trust and  authenticated  by the Property  Trustee as  hereinafter
          provided.  The number of Capital Securities  represented by the Global
          Capital  Security  may from time to time be  increased or decreased by
          adjustments  made  on the  records  of the  Property  Trustee  and the
          Clearing Agency or its nominee as hereinafter provided.

     (b)  Book-Entry  Provisions.  This  Section  7.3(b) shall apply only to the
          Global  Capital  Security and such other Capital  Securities in global
          form as may be  authorized  by the  Trust to be  deposited  with or on
          behalf of the Clearing Agency.

     An Administrative  Trustee shall execute and the Property Trustee shall, in
accordance with this Section 7.3,  authenticate  and make available for delivery
initially a single Global  Capital  Security that (i) shall be registered in the
name of Cede & Co. or other nominee of such Clearing  Agency,  and (ii) shall be
delivered by the Property  Trustee to such  Clearing  Agency or pursuant to such
Clearing Agency's written  instructions or, if no such written  instructions are
received by the Property Trustee,  held by the Property Trustee as custodian for
the Clearing Agency.

     Members of, or participants in, the Clearing Agency  ("Participants") shall
have no rights  under  this  Declaration  with  respect  to the  Global  Capital
Security held on their behalf by the Clearing Agency or by the Property  Trustee
as the custodian of the Clearing  Agency or under such Global Capital  Security,
and the Clearing  Agency may be treated by the Trust,  the Property  Trustee and
any agent of the Trust or the  Property  Trustee as the  absolute  owner of such
Global  Capital  Security  for  all  purposes  whatsoever.  Notwithstanding  the
foregoing,  nothing herein shall prevent the Trust,  the Property Trustee or any
agent of the Trust or the  Property  Trustee  from giving  effect to any written
certification,  proxy or other authorization furnished by the Clearing Agency or
impair,  as between the Clearing Agency and its  Participants,  the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in the Global Capital Security.

     (c)  Definitive  Capital  Securities.  Except as provided in Section 7.9 or
          9.2(f)(i),  owners  of  beneficial  interests  in the  Global  Capital
          Security  will  not  be  entitled  to  receive  physical  delivery  of
          certificated  Capital Securities  ("Definitive  Capital  Securities").
          Purchasers of Securities who are "accredited investors" (as defined in
          Rule 501(a)(1),  (2), (3) or (7) under the Securities Act) and who are
          not QIBs will receive  Capital  Securities  in the form of  individual
          certificates in definitive, fully registered form without distribution
          coupons and with the Restricted Securities Legend set forth in Exhibit
          A-1 hereto  ("Restricted  Definitive Capital  Securities");  provided,
          however,  that  upon  registration  of  transfer  of  such  Restricted
          Definitive  Capital  Securities to a QIB, such  Restricted  Definitive
          Capital  Securities  will,  unless the  Global  Capital  Security  has
          previously been exchanged,  be exchanged for an interest in the Global
          Capital Security pursuant to the provisions of Section 9.2. Restricted
          Definitive  Capital  Securities  will bear the  Restricted  Securities
          Legend set forth on Exhibit A-1 unless removed in accordance with this
          Section 7.3 or Section 9.2.

                                       37

<PAGE>

SECTION 7.4 Registrar, Paying Agent and Exchange Agent.

     The Trust shall  maintain in  Wilmington,  Delaware (i) an office or agency
where  Capital   Securities  may  be  presented  for  registration  of  transfer
("Registrar"),  (ii)  an  office  or  agency  where  Capital  Securities  may be
presented  for  payment  ("Paying  Agent")  and (iii) an office or agency  where
Securities may be presented for exchange ("Exchange Agent"). The Registrar shall
keep a register of the Capital  Securities and of their transfer.  The Trust may
appoint the  Registrar,  the Paying Agent and the Exchange Agent and may appoint
one or more co-registrars,  one or more additional paying agents and one or more
additional  Exchange Agents in such other locations as it shall  determine.  The
term  "Registrar"  includes any  additional  registrar,  the term "Paying Agent"
includes any additional  paying agent and the term "Exchange Agent" includes any
additional  Exchange  Agent.  The Trust may change any Paying Agent,  Registrar,
co-registrar  or Exchange  Agent without prior notice to any Holder.  The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written  notice
to the Property Trustee, the Administrative  Trustees and the Sponsor. The Trust
shall  notify the  Property  Trustee of the name and  address of any Agent not a
party to this  Declaration.  If the Trust fails to appoint or  maintain  another
entity as Registrar,  Paying Agent or Exchange Agent, the Property Trustee shall
act as  such.  The  Trust  or any of its  Affiliates  may act as  Paying  Agent,
Registrar, or Exchange Agent. The Trust shall act as Paying Agent, Registrar and
Exchange Agent for the Common Securities.

     The Trust  initially  appoints the Property  Trustee as  Registrar,  Paying
Agent and Exchange Agent for the Capital Securities.

SECTION 7.5 Paying Agent to Hold Money in Trust.

     The Trust shall  require each Paying Agent other than the Property  Trustee
to agree in writing  that the Paying Agent will hold in trust for the benefit of
Holders or the  Property  Trustee  all money  held by the  Paying  Agent for the
payment of liquidation  amounts or  Distributions,  and will notify the Property
Trustee  if there  are  insufficient  funds  for such  purpose.  While  any such
insufficiency  continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee.  The Trust at any time may require
a Paying  Agent  to pay all  money  held by it to the  Property  Trustee  and to
account  for any  money  disbursed  by it.  Upon  payment  over to the  Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent,  it shall  segregate
and hold in a separate  trust fund for the benefit of the Holders all money held
by it as Paying Agent.

SECTION 7.6 Replacement Securities.

     If a Holder claims that a Security owned by it has been lost,  destroyed or
wrongfully  taken or if such  Security is mutilated  and is  surrendered  to the
Trust or in the case of the  Capital  Securities  to the  Property  Trustee,  an
Administrative Trustee shall execute and the Property Trustee shall authenticate
and make available for delivery a replacement Security if the Property Trustee's
requirements are met. An indemnity bond must be provided by the Holder which, in
the judgment of the Property Trustee, is sufficient to protect the Trustees, the
Sponsor,  the Trust or any authenticating  agent from any loss which any of them
may suffer if a Security is  replaced.  The Trust may charge such Holder for its
expenses in replacing a Security.

                                       38

<PAGE>

SECTION 7.7 Outstanding Capital Securities.

     The  Capital  Securities  outstanding  at any  time  are  all  the  Capital
Securities  authenticated  by the Property  Trustee except for those canceled by
it, those delivered to it for cancellation,  and those described in this Section
as not outstanding.

     If a Capital  Security is replaced,  paid or purchased  pursuant to Section
7.6 hereof,  it ceases to be outstanding  unless the Property  Trustee  receives
proof  satisfactory to it that the replaced,  paid or purchased Capital Security
is held by a bona fide purchaser.

     If Capital  Securities are considered  paid in accordance with the terms of
this  Declaration,  they cease to be outstanding and Distributions on them shall
cease to accumulate.

     A Capital  Security  does not cease to be  outstanding  because  one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.

SECTION 7.8 Capital Securities in Treasury.

     In  determining  whether the Holders of the required  amount of  Securities
have concurred in any direction,  waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining  whether the Property Trustee shall be fully protected in relying on
any such  direction,  waiver or  consent,  only  Securities  which the  Property
Trustee actually knows are so owned shall be so disregarded.

SECTION 7.9 Temporary Securities.

     (a)  Until Definitive Capital Securities are ready for delivery,  the Trust
          may prepare and, in the case of the Capital  Securities,  the Property
          Trustee shall authenticate temporary Securities.  Temporary Securities
          shall be  substantially in the form of Definitive  Capital  Securities
          but may have  variations  that the  Trust  considers  appropriate  for
          temporary  Securities.  Without  unreasonable  delay,  the Trust shall
          prepare  and,  in the case of the  Capital  Securities,  the  Property
          Trustee shall  authenticate  Definitive Capital Securities in exchange
          for temporary Securities.

     (b)  The Global Capital Security deposited with the Clearing Agency or with
          the Property  Trustee as custodian for the Clearing Agency pursuant to
          Section 7.3 shall be transferred  to the beneficial  owners thereof in
          the  form of  Definitive  Capital  Securities  only  if such  transfer
          complies  with  Section 9.2 and (i) the Clearing  Agency  notifies the
          Sponsor that it is unwilling or unable to continue as Clearing  Agency
          for such  Global  Capital  Security  or if at any time  such  Clearing
          Agency ceases to be a "clearing agency"  registered under the Exchange
          Act,  and, in each case,  a clearing  agency is not  appointed  by the
          Sponsor  within 90 days of receipt of such notice or of becoming aware
          of such condition,  (ii) a Default or an Event of Default has occurred
          and is continuing, or (iii) the Trust at its sole discretion elects to
          cause the issuance of Definitive Capital Securities.

                                       39

<PAGE>

     (c)  Any Global  Capital  Security that is  transferable  to the beneficial
          owners thereof in the form of Definitive Capital  Securities  pursuant
          to this Section 7.9 shall be surrendered by the Clearing Agency to the
          Property  Trustee to be so transferred,  in whole or from time to time
          in part,  without charge,  and the Property Trustee shall authenticate
          and make available for delivery, upon such transfer of each portion of
          such Global Capital Security, an equal aggregate liquidation amount of
          Capital  Securities  of  authorized   denominations  in  the  form  of
          Definitive  Capital  Securities.  Any  portion of the  Global  Capital
          Security  transferred  pursuant to this Section shall be registered in
          such names as the Clearing Agency shall direct. Any Definitive Capital
          Security  delivered  in exchange  for an  interest  in the  Restricted
          Global  Capital  Security  shall,  except  as  otherwise  provided  by
          Sections 7.3 and 9.1, bear the Restricted  Securities Legend set forth
          in Exhibit A-l hereto.

     (d)  Subject to the provisions of Section 7.9(c),  the Holder of the Global
          Capital Security may grant proxies and otherwise authorize any Person,
          including  Participants  and Persons that may hold  interests  through
          Participants, to take any action which such Holder is entitled to take
          under this Declaration or the Securities.

     (e)  In the  event of the  occurrence  of any of the  events  specified  in
          Section 7.9(b), the Trust will promptly make available to the Property
          Trustee a reasonable  supply of certifi  cated  Capital  Securities in
          fully registered form without distribution coupons.

SECTION 7.10 Cancellation.

     The  Trust at any time  may  deliver  Capital  Securities  to the  Property
Trustee for cancellation.  The Registrar,  Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital  Securities  surrendered to them for
registration of transfer, redemption,  exchange or payment. The Property Trustee
shall promptly cancel all Capital  Securities  surrendered  for  registration of
transfer,  redemption,  exchange, payment, replacement or cancellation and shall
dispose  of  canceled  Capital  Securities  in  accordance  with  its  customary
procedures  unless  the  Trust  otherwise  directs.  The Trust may not issue new
Capital  Securities to replace Capital  Securities that it has paid or that have
been delivered to the Property  Trustee for  cancellation or that any Holder has
exchanged.

SECTION 7.11 CUSIP Numbers.

     The Trust in issuing the  Capital  Securities  may use "CUSIP"  numbers (if
then  generally  in use),  and, if so, the  Property  Trustee  shall use "CUSIP"
numbers  in  notices  of redemp  tion as a  convenience  to  Holders  of Capital
Securities;  provided that, any such notice may state that no  representation is
made as to the  correctness  of such  numbers  either as printed on the  Capital
Securities  or as contained in any notice of a redemption  and that reliance may
be placed  only on the  other  identification  numbers  printed  on the  Capital
Securities,  and any such  redemption  shall not be affected by any defect in or
omission of such numbers.  The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.

                                       40

<PAGE>

                                  ARTICLE VIII
                              DISSOLUTION OF TRUST

SECTION 8.1 Dissolution of Trust.

     (a)  The Trust shall automatically dissolve:

          (i)  upon the bankruptcy of the Sponsor;

          (ii) upon the filing of a certificate of dissolution or liquidation or
               its equivalent with respect to the Sponsor;  or the revocation of
               the  Sponsor's  charter and the  expiration  of 90 days after the
               date of revocation without a reinstatement thereof;

          (iii)following the  distribution of a Like Amount of the Debentures to
               the Holders,  provided  that,  the Property  Trustee has received
               written notice from the Sponsor directing the Property Trustee to
               dissolve  the Trust (which  direction is optional,  and except as
               otherwise  expressly provided below, within the discretion of the
               Sponsor),  and provided,  further,  that such  direction and such
               distribution  is conditioned on (a) the receipt by the Sponsor of
               any and all required regulatory approvals,  and (b) the Sponsor's
               receipt and delivery to the Administrative Trustees of an opinion
               of independent  tax counsel  experienced  in such matters,  which
               opinion  may rely on public or private  rulings  of the  Internal
               Revenue  Service,  to the effect  that the Holders of the Capital
               Securities  will not recognize any gain or loss for United States
               federal income tax purposes as a result of the dissolution of the
               Trust and the distribution of Debentures;

          (iv) upon the entry of a decree of judicial  dissolution  of the Trust
               by a court of competent jurisdiction;

          (v)  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;

          (vi) upon the  redemption  or repayment of the  Debentures  or at such
               time as no Debentures are outstanding; or

          (vii)the  expiration  of the term of the  Trust  provided  in  Section
               3.14.

     (b)  As soon as is practicable  upon  completion of winding up of the Trust
          following the occurrence of an event referred to in Section 8.1(a) and
          the  satisfaction  of  creditors  of  the  Trust  in  accordance  with
          applicable law, the Administrative  Trustees shall terminate the Trust
          by filing a certificate of cancellation with the Secretary of State of
          the State of Delaware in accordance with the Business Trust Act.

                                       41

<PAGE>

     (c)  The  provisions  of  Section  3.9  and  Article  X shall  survive  the
          dissolution and termination of the Trust.

                                   ARTICLE IX
                              TRANSFER OF INTERESTS

SECTION 9.1 Transfer of Securities.

     (a)  Securities may only be transferred, in whole or in part, in accordance
          with the terms and  conditions  set forth in this  Declaration  and in
          accordance  with the terms of the  Securities.  To the fullest  extent
          permitted by law,  any transfer or purported  transfer of any Security
          not made in accordance with this Declaration shall be null and void.

     (b)  Subject  to  this  Article  IX,   Capital   Securities   may  only  be
          transferred,  in whole or in part,  in  accordance  with the terms and
          conditions  set  forth  in this  Declaration.  To the  fullest  extent
          permitted by law,  any transfer or purported  transfer of any Security
          not made in accor dance with this Declaration shall be null and void.

     (c)  For so long as the Securities remain  outstanding,  the Sponsor agrees
          (i) not to transfer  ownership of the Common  Securities of the Trust,
          provided  that  any  permitted  successor  of the  Sponsor  under  the
          Indenture  may  succeed  to the  Sponsor's  ownership  of  the  Common
          Securities,  (ii) not to cause, as Sponsor of the Trust, or to permit,
          as Holder of the Common  Securities,  the  dissolution,  winding-up or
          liquidation of the Trust,  except as provided in this  Declaration and
          (iii) to use its best  efforts  to cause  the  Trust  (a) to  remain a
          business  trust,   except  in  connection  with  the  distribution  of
          Debentures to the Holders in liquidation of the Trust,  the redemption
          of  all of the  Securities,  or  certain  mergers,  consolidations  or
          amalgamations,  each  as  permitted  by this  Declaration,  and (b) to
          otherwise  continue  to be  classified  as a grantor  trust for United
          States federal income tax purposes.

     (d)  The Registrar shall provide for the registration of Capital Securities
          and of the  transfer  of Capital  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 Capital Securities,  an Administrative
          Trustee shall cause one or more new Capital Securities to be issued in
          the name of the designated  transferee or  transferees.  Every Capital
          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  Capital   Security   surrendered  for
          registration  of transfer  shall be  delivered  to the  Registrar  and
          canceled in  accordance  with Section  7.10. A transferee of a Capital
          Security   shall  be  entitled  to  the  rights  and  subject  to  the
          obligations of a Holder  hereunder upon the receipt by such transferee
          of a Capital  Security.  By  acceptance  of a Capital  Security or any
          interest therein, each transferee shall be deemed to have agreed to be
          bound by this Declaration.

                                       42

<PAGE>

SECTION 9.2 Transfer Procedures and Restrictions.

     (a)  General.  Except as otherwise  provided in Section 9.2(b),  if Capital
          Securities  are issued upon the transfer,  exchange or  replacement of
          Capital Securities bearing the Re stricted Securities Legend set forth
          in  Exhibit  A-1  hereto,  or if a  request  is  made to  remove  such
          Restricted  Securities  Legend  on  Capital  Securities,  the  Capital
          Securities so issued shall bear the Restricted  Securities  Legend, or
          the Restricted Securities Legend shall not be removed, as the case may
          be,  unless there is  delivered to the Trust and the Property  Trustee
          such satisfactory evidence, which shall include an Opinion of Counsel,
          as may be reasonably  required by the Trust and the Property  Trustee,
          that neither the Restricted  Securities Legend nor the restrictions on
          transfer  set forth  therein are  required  to ensure  that  transfers
          thereof  are made  pursuant  to an  exception  from  the  registration
          requirements  of the  Securities  Act or, with  respect to  Restricted
          Capital  Securities,  that such Securities are not "restricted" within
          the  meaning  of  Rule  144.  Upon  provision  of such  satisfac  tory
          evidence,  the  Property  Trustee,  at  the  written  direction  of an
          Administrative  Trustee on behalf of the Trust, shall authenticate and
          deliver Capital Securities that do not bear the legend.

     (b)  Transfers After Effectiveness of a Registration  Statement.  After the
          effectiveness of a Registration  Statement with respect to any Capital
          Securities,  all  requirements  pertaining  to legends on such Capital
          Securities  will cease to apply (other than the legend  requiring that
          transfers of Capital  Securities be made in blocks having an aggregate
          liquidation amount of not less than $100,000 (100 Capital  Securities)
          and multiples of $1,000 in excess thereof),  and beneficial  interests
          in the Global Capital  Security  without  legends will be available to
          transferees  of  such  Capital   Securities,   upon  exchange  of  the
          transferring   Holder's  Restricted  Definitive  Capital  Security  or
          directions to transfer such Holder's beneficial interest in the Global
          Capital Security,  as the case may be. No such transfer or exchange of
          a  Restricted  Definitive  Capital  Security  or of an interest in the
          Global  Capital  Security  shall be  effective  unless the  transferor
          delivers to the Property Trustee a certificate in a form substantially
          similar to that attached hereto as the form of "Assignment" in Exhibit
          A-1.  Except  as  otherwise  provided  in  Section  9.2(m),  after the
          effectiveness of a Registration  Statement,  an Administrative Trustee
          on behalf of the Trust shall issue and the  Property  Trustee,  upon a
          written order of the Trust signed by one Administrative Trustee, shall
          authenticate  a  Global  Capital   Security   without  the  Restricted
          Securities  Legend (the  "Unrestricted  Global  Capital  Security") to
          deposit with the Clearing  Agency to evidence  transfers of beneficial
          interests from the Global Capital  Security and Restricted  Definitive
          Capital Securities.

     (c)  Transfer  and  Exchange  of  Definitive   Capital   Securities.   When
          Definitive  Capital  Securities  are  presented  to the  Registrar  or
          co-registrar:

          (x)  to register the transfer of such Definitive  Capital  Securities;
               or

          (y)  to exchange  such  Definitive  Capital  Securities  which  became
               mutilated,  destroyed,  defaced,  stolen  or  lost,  for an equal
               number  of  Definitive  Capital  Securities,   the  Registrar  or
               co-registrar  shall register the transfer or make the exchange as
               requested if its reasonable requirements for such transaction are
               met;

         provided,  however, that the Definitive Capital Securities  surrendered
         for registration of transfer or exchange:

                                       43

<PAGE>

          (i)  shall be duly endorsed or accompanied by a written  instrument of
               transfer  in form  reasonably  satisfactory  to the Trust and the
               Registrar or co-registrar, duly executed by the Holder thereof or
               his attorney duly authorized in writing; and

          (ii) in the case of Definitive  Capital Securities that are Restricted
               Definitive Capital Securities:

               (A)  if such Restricted Capital Securities are being delivered to
                    the  Registrar by a Holder for  registration  in the name of
                    such Holder,  without transfer,  certification(s)  from such
                    Holder to that effect; or

               (B)  if such Restricted Capital Securities are being transferred:
                    (i) certification(s) in a form substantially similar to that
                    attached  hereto as the form of "Assignment" in Exhibit A-1,
                    and (ii) if the Trust or  Registrar  so  requests,  evidence
                    reasonably  satisfactory  to them as to the compliance  with
                    the  restrictions  set  forth in the  Restricted  Securities
                    Legend.

     (d)  Restrictions  on  Transfer  of a  Definitive  Capital  Security  for a
          Beneficial  Interest  in the Global  Capital  Security.  A  Definitive
          Capital Security may not be exchanged for a beneficial interest in the
          Global Capital  Security except upon  satisfaction of the requirements
          set forth below.  Upon receipt by the Property Trustee of a Definitive
          Capital   Security,   duly  endorsed  or  accompanied  by  appropriate
          instruments of transfer, in form satisfactory to the Property Trustee,
          together with:

          (i)  if such  Definitive  Capital  Security  is a  Restricted  Capital
               Security,  certification(s)  in a form  substantially  similar to
               that attached  hereto as the form of "Assignment" in Exhibit A-1;
               and

          (ii) whether or not such Definitive  Capital  Security is a Restricted
               Capital  Security,  written  instructions  directing the Property
               Trustee to make,  or to direct the  Clearing  Agency to make,  an
               adjustment  on its books and records  with  respect to the Global
               Capital  Security  to  reflect an  increase  in the number of the
               Capital Securities represented by such Global Capital Security,

          then  the  Property  Trustee  shall  cancel  such  Definitive  Capital
          Security  and  cause,  or direct  the  Clearing  Agency to cause,  the
          aggregate  number of  Capital  Securities  represented  by the  Global
          Capital  Security to be increased  accordingly.  If the Global Capital
          Security is not then outstanding,  an Administrative Trustee on behalf
          of the Trust shall issue and the Property Trustee shall  authenticate,
          upon written order of any Administrative Trustee, a new Global Capital
          Security representing an appropriate number of Capital Securities.

     (e)  Transfer  and  Exchange  of the Global  Capital  Security.  Subject to
          Section  9.2(f),  the  transfer  and  exchange  of the Global  Capital
          Security or beneficial interests therein shall be effected through the
          Clearing  Agency  in  accordance  with  this  Declaration   (including
          applicable  restrictions on transfer set forth herein, if any) and the
          procedures of the Clearing Agency therefor.

                                       44

<PAGE>

     (f)  Transfer of a Beneficial Interest in the Global Capital Security for a
          Definitive Capital Security.

          (i)  Any Person  having a  beneficial  interest in the Global  Capital
               Security may upon request,  but only upon 20 days prior notice to
               the  Property  Trustee,  and if  accompanied  by the  information
               specified  below,   exchange  such  beneficial   interest  for  a
               Definitive  Capital  Security  representing  the same  number  of
               Capital Securities. Upon receipt by the Property Trustee from the
               Clearing  Agency or its nominee on behalf of any Person  having a
               beneficial  interest  in the Global  Capital  Security of written
               instructions  or such other form of  instructions as is customary
               for the Clearing Agency or the Person  designated by the Clearing
               Agency as  having  such a  beneficial  interest  in a  Restricted
               Capital  Security and  certification(s)  from the transferor in a
               form substantially similar to that attached hereto as the form of
               "Assignment" in Exhibit A-1, which may be submitted by facsimile,
               then the  Property  Trustee  will cause the  aggregate  number of
               Capital Securities  represented by the Global Capital Security to
               be  reduced  on  its  books  and  records  and,   following  such
               reduction,  the Trust will execute and the Property  Trustee will
               authenticate  and make available for delivery to the transferee a
               Definitive Capital Security.

          (ii) Definitive Capital Securities issued in exchange for a beneficial
               interest in the Global Capital Security  pursuant to this Section
               9.2(f) shall be registered  in such names and in such  authorized
               denominations  as the Clearing  Agency,  pursuant to instructions
               from its Clearing Agency Participants or indirect participants or
               otherwise,  shall instruct the Property  Trustee in writing.  The
               Property  Trustee  shall  deliver such Capital  Securities to the
               Persons in whose names such Capital  Securities are so registered
               in accordance with such instructions of the Clearing Agency.

     (g)  Restrictions on Transfer and Exchange of the Global Capital  Security.
          Notwithstanding  any other provisions of this Declaration  (other than
          the  provisions  set forth in subsection (h) of this Section 9.2), the
          Global  Capital  Security may not be  transferred as a whole except by
          the  Clearing  Agency to a nominee of the  Clearing  Agency or another
          nominee of the Clearing  Agency or by the Clearing  Agency or any such
          nominee to a successor  Clearing Agency or a nominee of such successor
          Clearing Agency.

     (h)  Authentication of Definitive Capital Securities. If at any time:

          (i)  a Default or an Event of Default has occurred and is continuing,

          (ii) the Trust, in its sole discretion,  notifies the Property Trustee
               in writing  that it elects to cause the  issuance  of  Definitive
               Capital Securities under this Declaration, or

          (iii)the Clearing  Agency notifies the Sponsor that it is unwilling or
               unable to  continue as  Clearing  Agency for such Global  Capital
               Security or if at any time

                                       45

<PAGE>

               such Clearing Agency ceases to be a "clearing agency"  registered
               under the Exchange Act,  and, in each case, a clearing  agency is
               not  appointed  by the Sponsor  within 90 days of receipt of such
               notice or of becoming aware of such condition,

          then an  Administrative  Trustee on behalf of the Trust will  execute,
          and the Property Trustee, upon receipt of a written order of the Trust
          signed by one Administrative Trustee requesting the authentication and
          delivery of Definitive Capital Securities to the Persons designated by
          the  Trust,   will   authenticate  and  make  available  for  delivery
          Definitive  Capital  Securities,  equal in  number  to the  number  of
          Capital  Securities  represented  by the Global Capital  Security,  in
          exchange for such Global Capital Security.

          (i)  Legend.

          (i)  Except as permitted by the following paragraph (ii), each Capital
               Security  Certificate  evidencing the Global Capital Security and
               each  Definitive  Capital  Security  (and all Capital  Securities
               issued in exchange therefor or substitution thereof) shall bear a
               legend (the "Restricted  Securities Legend") in substantially the
               following form:

                    THIS  CAPITAL  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  LAW.  NEITHER  THIS  CAPITAL  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,
                    REGISTRATION.

                    THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
                    AGREES TO OFFER,  SELL OR  OTHERWISE  TRANSFER  THIS CAPITAL
                    SECURITY,   PRIOR  TO  THE  DATE  (THE  "RESALE  RESTRICTION
                    TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
                    ORIGINAL  ISSUANCE  DATE  HEREOF  AND THE LAST DATE ON WHICH
                    CASCADE  FINANCIAL  CORPORATION (THE  "CORPORATION")  OR ANY
                    "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL
                    SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL  SECURITY) ONLY
                    (A) TO  THE  CORPORATION,  (B)  PURSUANT  TO A  REGISTRATION
                    STATEMENT WHICH HAS BEEN

                                       46

<PAGE>

                    DECLARED  EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
                    THIS  CAPITAL  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO
                    RULE 144A  UNDER THE  SECURITIES  ACT  ("RULE  144A"),  TO A
                    PERSON IT 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,  (D) TO AN  INSTITUTIONAL
                    "ACCREDITED  INVESTOR"  WITHIN THE  MEANING OF  SUBPARAGRAPH
                    (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
                    THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,
                    OR FOR  THE  ACCOUNT  OF SUCH  AN  INSTITUTIONAL  ACCREDITED
                    INVESTOR,  FOR INVESTMENT  PURPOSES PURSUANT TO AN EXEMPTION
                    FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
                    NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
                    ANY  DISTRIBUTION  IN VIOLATION OF THE SECURITIES ACT OR (E)
                    PURSUANT  TO  ANY  OTHER   AVAILABLE   EXEMPTION   FROM  THE
                    REGISTRATION  REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
                    TO THE RIGHT OF CASCADE  CAPITAL  TRUST I (THE  "TRUST") AND
                    THE  CORPORATION  PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER
                    (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
                    AN  OPINION  OF   COUNSEL,   CERTIFICATIONS   AND/OR   OTHER
                    INFORMATION  SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT
                    TO CLAUSE (D) TO REQUIRE THAT THE TRANSFEROR  DELIVER TO THE
                    TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM
                    OF ANNEX A TO THE  OFFERING  MEMORANDUM  DATED  FEBRUARY 25,
                    2000.  SUCH HOLDER  FURTHER  AGREES THAT IT WILL  DELIVER TO
                    EACH PERSON TO WHOM THIS CAPITAL  SECURITY IS  TRANSFERRED A
                    NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

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

                                       47

<PAGE>

                    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 THE  CAPITAL
                    SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR
                    HOLDER IS ELIGIBLE FOR THE EXEMPTIVE  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 CAPITAL
                    SECURITIES  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 THE CAPITAL  SECURITIES
                    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 all  circumstances,  each Capital Security  Certificate  shall
               bear the following legend:

                    THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
                    ONLY IN BLOCKS HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN
                    $100,000 (100 CAPITAL SECURITIES) AND MULTIPLES OF $1,000 IN
                    EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF CAPITAL SECURITIES
                    IN A BLOCK

                                       48

<PAGE>

                    HAVING A  LIQUIDATION  AMOUNT  OF LESS  THAN  $100,000  (100
                    CAPITAL  SECURITIES)  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 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.

          (ii) Upon  any  sale or  transfer  of a  Restricted  Capital  Security
               (including any  Restricted  Capital  Security  represented by the
               Global Capital  Security)  pursuant to an effective  registration
               statement under the Securities Act or pursuant to Rule 144:

               (A)  in the case of any  Restricted  Capital  Security  that is a
                    Definitive Capital Security,  the Registrar shall permit the
                    Holder thereof to exchange such Restricted  Capital Security
                    for a  Definitive  Capital  Security  that does not bear the
                    Restricted  Securities Legend and rescind any restriction on
                    the transfer of such Restricted Capital Security; and

               (B)  in the  case  of any  Restricted  Capital  Security  that is
                    represented  by the Global Capital  Security,  the Registrar
                    shall permit the Holder of such Global  Capital  Security to
                    exchange  such Global  Capital  Security for another  Global
                    Capital   Security   that  does  not  bear  the   Restricted
                    Securities Legend.

     (j)  Cancellation or Adjustment of Global Capital Security. At such time as
          all beneficial  interests in the Global  Capital  Security have either
          been  exchanged  for  Definitive  Capital  Securities  to  the  extent
          permitted by this Declaration or redeemed,  repurchased or canceled in
          accordance  with the terms of this  Declaration,  such Global  Capital
          Security shall be returned to the Clearing Agency for  cancellation or
          retained and canceled by the  Property  Trustee.  At any time prior to
          such  cancellation,  if any beneficial  interest in the Global Capital
          Security is  exchanged  for  Definitive  Capital  Securities,  Capital
          Securities  represented  by such  Global  Capital  Security  shall  be
          reduced  and an  adjustment  shall be made on the books and records of
          the Property Trustee and the Clearing Agency or its nominee to reflect
          such reduction.

     (k)  Obligations  with  Respect  to  Transfers  and  Exchanges  of  Capital
          Securities.

          (i)  To permit  registrations  of transfers and  exchanges,  the Trust
               shall  execute  and  the  Property  Trustee  shall   authenticate
               Definitive  Capital Securities and the Global Capital Security at
               the Registrar's or co-registrar's  request in accordance with the
               terms of this Declaration.

                                       49

<PAGE>

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

          (iii)The Registrar or  co-registrar  shall not be required to register
               the  transfer of or exchange of (a) Capital  Securities  during a
               period  beginning  at the  opening of business 15 days before the
               day of  mailing  of a  notice  of  redemption  or any  notice  of
               selection of Capital  Securities for redemption and ending at the
               close of business  on the day of such  mailing or (b) any Capital
               Security so selected for  redemption in whole or in part,  except
               the unredeemed  portion of any Capital Security being redeemed in
               part.

          (iv) Prior to the due presentation for registration of transfer of any
               Capital  Security,  the Trust, the Property  Trustee,  the Paying
               Agent,  the Registrar or any  co-registrar may deem and treat the
               Person in whose  name a Capital  Security  is  registered  as the
               absolute  owner  of such  Capital  Security  for the  purpose  of
               receiving  Distributions  on such  Capital  Security  and for all
               other purposes  whatsoever,  and none of the Trust,  the Property
               Trustee,  the Paying  Agent,  the  Registrar or any  co-registrar
               shall be affected by notice to the contrary.

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

               (l)  No Obligation of the Property Trustee.

                    (i)  The Property  Trustee shall have no  responsibility  or
                         obligation to any Capital Security  Beneficial Owner, a
                         Participant in the Clearing Agency or other Person with
                         respect to the  accuracy of the records of the Clearing
                         Agency or its  nominee or of any  Participant  thereof,
                         with respect to any  ownership  interest in the Capital
                         Securities  or  with  respect  to the  delivery  to any
                         Participant,  beneficial  owner or other Person  (other
                         than the Clearing Agency) of any notice  (including any
                         notice of  redemption)  or the  payment of any  amount,
                         under or with respect to such Capital  Securities.  All
                         notices and  communications  to be given to the Holders
                         and  all  payments  to be  made to  Holders  under  the
                         Capital  Securities  shall be given or made  only to or
                         upon the order of the  registered  Holders (which shall
                         be the  Clearing  Agency or its  nominee in the case of
                         the  Global  Capital  Security).  The rights of Capital
                         Security  Beneficial  Owners  shall be  exercised  only
                         through the Clearing  Agency  subject to the applicable
                         rules  and  procedures  of  the  Clearing  Agency.  The
                         Property  Trustee  may  conclusively  rely and shall be
                         fully protected in relying upon  information  furnished
                         by the  Clearing  Agency  or  any  agent  thereof  with
                         respect to its  Participants  and any Capital  Security
                         Beneficial Owners.

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<PAGE>

                    (ii) The Property  Trustee and the  Registrar  shall have no
                         obligation or duty to monitor,  determine or inquire as
                         to compliance with any restrictions on transfer imposed
                         under this  Declaration  or under  applicable  law with
                         respect to any  transfer of any interest in any Capital
                         Security  (including  any  transfers  between  or among
                         Clearing  Agency   Participants  or  Capital   Security
                         Beneficial  Owners)  other than to require  delivery of
                         such  certificates and other  documentation or evidence
                         as are expressly  required by, and to do so if and when
                         expressly  required by, the terms of this  Declaration,
                         and  to  examine  the  same  to  determine  substantial
                         compliance  as to form  with the  express  requirements
                         hereof.

     (m)  Exchange  of  Series  A  Capital   Securities  for  Series  B  Capital
          Securities.  The Series A Capital  Securities  shall be exchanged  for
          Series B Capital  Securities  pursuant  to the  terms of the  Exchange
          Offer if the following conditions are satisfied:

     The  Sponsor  shall   present  the  Property   Trustee  with  an  Officers'
Certificate certifying the following:

     (A)  upon  issuance of the Series B Capital  Securities,  the  transactions
          contemplated by the Exchange Offer have been consummated; and

     (B)  the number of Series A Capital  Securities  properly  tendered  in the
          Exchange Offer that are represented by the Global Capital Security and
          the number of Series A Capital  Securities  properly  tendered  in the
          Exchange Offer that are represented by Definitive Capital  Securities,
          the name of each Holder of such  Definitive  Capital  Securities,  the
          liquidation  amount of Capital  Securities  properly  tendered  in the
          Exchange  Offer by each such  Holder and the name and address to which
          Definitive Capital Securities for Series B Capital Securities shall be
          registered and sent for each such Holder.

     The Property Trustee, upon receipt of (i) such Officers' Certificate,  (ii)
an Opinion of Counsel (x) to the effect that the Series B Capital Securities and
the Series B Capital  Securities  Guarantee have been registered under Section 5
of the  Securities  Act and that  this  Declaration  and the  Series  B  Capital
Securities  Guarantee have been qualified  under the Trust Indenture Act and (y)
with respect to the matters set forth in Section 3(q) of the Registration Rights
Agreement,  shall  authenticate  (A) the Global Capital  Security,  executed and
delivered by the Trust to the Property Trustee,  for Series B Capital Securities
in aggregate  liquidation  amount equal to the aggregate  liquidation  amount of
Series A Capital Securities represented by the Global Capital Security indicated
in  such  Officers'  Certificate  as  having  been  properly  tendered  and  (B)
Definitive  Capital  Securities,  executed  and  delivered  by the  Trust to the
Property Trustee,  representing  Series B Capital  Securities  registered in the
names and in the liquidation amounts indicated in such Officers' Certificate.

     If, upon  consummation of the Exchange Offer, less than all the outstanding
Series A Capital Securities shall have been properly tendered and not withdrawn,
the Property Trustee shall

                                       51

<PAGE>

make an  endorsement  on the  Global  Capital  Security  for  Series  A  Capital
Securities  indicating  the  reduction in the number and  aggregate  liquidation
amount represented thereby as a result of the Exchange Offer.

     The Trust shall deliver such  authenticated  Definitive  Capital Securities
for Series B Capital  Securities  to the Holders  thereof as  indicated  in such
Officers' Certificate.

     (n)  Minimum  Transfers.  Series  A  Capital  Securities  and,  if and when
          issued, Series B 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 Series A Capital Securities or Series B Capital Securities
          in a block  having  an  aggregate  liquidation  amount  of  less  than
          $100,000  shall  be  deemed  to  be  voided  and  of no  legal  effect
          whatsoever.  Any such purported transferee shall be deemed not to be a
          Holder  of such  Series A  Capital  Securities  or  Series  B  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.

SECTION 9.3 Deemed Security Holders.

     The  Trustees  may treat the  Person in whose  name any  Security  shall be
registered on the books and records of the Trust as the sole owner and Holder of
such Security 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  Security on the part of any Person,  whether
or not the Trust shall have actual or other notice thereof.

SECTION 9.4 Book-Entry Interests.

     The Global Capital  Security shall initially be registered on the books and
records  of the Trust in the name of Cede & Co.,  the  nominee  of the  Clearing
Agency and no Capital Security  Beneficial Owner will receive physical  delivery
of a definitive Capital Security certificate (a "Capital Security  Certificate")
representing such Capital Security  Beneficial  Owner's interests in such Global
Capital Security,  except as provided in Section 9.2 and Section 7.9. Unless and
until  Definitive  Capital  Securities have been issued to the Capital  Security
Beneficial Owners pursuant to Section 9.2 or Section 7.9:

     (a)  the provisions of this Section 9.4 shall be in full force and effect;

     (b)  the Trust and the Trustees shall be entitled to deal with the Clearing
          Agency for all purposes of this Declaration  (including the payment of
          Distributions on the Global Capital Security and receiving  approvals,
          votes or consents  hereunder) as the sole Holder of the Global Capital
          Security  and  shall  have  no  obligation  to  the  Capital  Security
          Beneficial Owners;

     (c)  to the extent that the  provisions  of this Section 9.4 conflict  with
          any other  provisions  of this  Declaration,  the  provisions  of this
          Section 9.4 shall control; and

                                       52

<PAGE>

     (d)  the  rights  of  the  Capital  Security  Beneficial  Owners  shall  be
          exercised  only  through the  Clearing  Agency and shall be limited to
          those established by law and agreements  between such Capital Security
          Beneficial  Owners and the Clearing  Agency and/or the Clearing Agency
          Participants,  and the  Clearing  Agency  shall  receive and  transmit
          payments  of  Distributions  on the Global  Capital  Security  to such
          Clearing Agency Participants;  provided,  however, that solely for the
          purposes of determining whether the Holders of the requisite amount of
          Capital  Securities  have  voted on any  matter  provided  for in this
          Declaration,   the  Trustees,  with  respect  to  the  Global  Capital
          Security,  may conclusively rely on, and shall be protected in relying
          on,  any  written  instrument  (including  a proxy)  delivered  to the
          Trustees by the Clearing  Agency  setting  forth the Capital  Security
          Beneficial  Owners' votes or assigning the right to vote on any matter
          to any  other  Persons  either in whole or in part;  and the  Clearing
          Agency will also make  book-entry  transfers among the Clearing Agency
          Participants.

SECTION 9.5 Notices to Clearing Agency.

     Whenever a notice or other communication to the Capital Security Holders is
required to be given by a Trustee  under this  Declaration,  such Trustee  shall
give all such  notices and  communications  specified  herein to be given to the
Holder of the Global Capital  Security to the Clearing  Agency and shall have no
notice obligations to the Capital Security Beneficial Owners.

SECTION 9.6 Appointment of Successor Clearing Agency.

     If any Clearing  Agency  elects to  discontinue  its services as securities
depositary with respect to the Capital Securities,  the Administrative  Trustees
may, in their sole discretion,  appoint a successor Clearing Agency with respect
to such Capital Securities.

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

SECTION 10.1 Liability.

     (a)  Except as  expressly  set forth in this  Declaration,  the  Securities
          Guarantees 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 which shall
               be made solely from assets of the Trust; and

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

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

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<PAGE>

     (c)  Pursuant to ss.  3803(a) of the Business  Trust Act, the Holders 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.

SECTION 10.2 Exculpation.

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

     (b)  An  Indemnified  Person  shall be fully  protected  in relying in good
          faith  upon  the  records  of the  Trust  and upon  such  information,
          opinions,  reports or statements  presented to the Trust by any Person
          as to matters the Indemnified  Person  reasonably  believes are within
          such other Person's professional or expert competence and who has been
          selected 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 might properly be paid.

SECTION 10.3 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 Property  Trustee under the Trust Indenture Act), are agreed by
          the parties  hereto to replace  such other duties and  liabilities  of
          such Indemnified Person.

     (b)  Unless otherwise expressly provided herein:

          (i)  whenever a conflict  of  interest  exists or arises  between  any
               Covered Person and any Indemnified Person, or

          (ii) whenever this  Declaration  or any other  agreement  contemplated
               herein or therein  provides that an Indemnified  Person shall act
               in a  manner  that is,  or  provides  terms  that  are,  fair and
               reasonable to the Trust or any Holder of Securities,

          the Indemnified  Person shall resolve such conflict of interest,  take
          such  action  or  provide  such  terms,  considering  in each case the
          relative interest of each party (including its own interest) to such

                                       54

<PAGE>

          conflict,  agreement,  transaction  or situation  and the benefits and
          burdens relating to such interests, any customary or accepted industry
          practices,  and any applicable generally accepted accounting practices
          or principles.  In the absence of bad faith by the Indemnified Person,
          the  resolution,  action  or term so made,  taken or  provided  by the
          Indemnified  Person shall not constitute a breach of this  Declaration
          or  any  other  agreement  contemplated  herein  or  of  any  duty  or
          obligation  of  the  Indem  nified  Person  at  law  or in  equity  or
          otherwise.

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

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

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

SECTION 10.4 Indemnification.

     (a)  (i)  The Sponsor shall indemnify, to the full extent permitted by law,
               any  Company  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 he is or was a
               Company   Indemnified   Person,   against   expenses   (including
               attorneys' fees and expenses),  judgments, fines and amounts paid
               in  settlement   actually  and  reasonably  incurred  by  him  in
               connection  with such action,  suit or  proceeding if he acted in
               good faith and in a manner he reasonably believed to be in or not
               opposed to the best interests of the Trust,  and, with respect to
               any criminal  action or  proceeding,  had no reasonable  cause to
               believe his conduct was unlawful.  The termination of any action,
               suit or proceeding by judgment, order, settlement, conviction, or
               upon a plea of nolo contendere or its  equivalent,  shall not, of
               itself,  create a presumption that the Company Indemnified Person
               did not act in good  faith  and in a manner  which he  reasonably
               believed  to be in or not  opposed to the best  interests  of the
               Trust,  and, with respect to any criminal  action or  proceeding,
               had reasonable cause to believe that his conduct was unlawful.

          (ii) The Sponsor shall indemnify, to the full extent permitted by law,
               any  Company  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 he is
               or was a Company  Indemnified Person against expenses  (including
               attorneys' fees and expenses) actually and reasonably incurred by
               him in  connection  with the defense or settlement of such action
               or suit if he acted in good  faith and in a manner he  reasonably
               believed  to be in or not  opposed to the best  interests  of the
               Trust and except  that no such  indemnification  shall be made in
               respect  of any claim,  issue or matter as to which such  Company
               Indemnified  Person shall have been  adjudged to be liable to the
               Trust unless and only to the extent

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<PAGE>

               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  a  Company  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
               10.4(a),  or in defense of any claim, issue or matter therein, he
               or she shall be indemnified, to the full extent permitted by law,
               against  expenses   (including   attorneys'  fees)  actually  and
               reasonably incurred by him or her in connection therewith.

          (iv) Any indemnification under paragraphs (i) and (ii) of this Section
               10.4(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 Company  Indemnified  Person is proper in
               the  circumstances  because  he or she  has  met  the  applicable
               standard of conduct set forth in  paragraphs  (i) and (ii).  Such
               determination shall be made (1) by the Administrative Trustees by
               a majority  vote of a Quorum  consisting  of such  Administrative
               Trustees who were not parties to such action, suit or proceeding,
               (2) if such a Quorum is not  obtainable,  or, even if obtainable,
               if a Quorum of disinterested  Administrative Trustees so directs,
               by independent legal counsel in a written opinion,  or (3) by the
               Common Security Holder of the Trust.

          (v)  Expenses  (including  attorneys' fees and expenses) incurred by a
               Company  Indemnified  Person  in  defending  a  civil,  criminal,
               administrative  or  investigative   action,  suit  or  proceeding
               referred to in  paragraphs  (i) and (ii) of this Section  10.4(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 Company  Indemnified Person to repay such
               amount if it shall ultimately be determined that he or she is not
               entitled to be  indemnified  by the Sponsor as authorized in this
               Section 10.4(a).  Notwithstanding the foregoing, no advance shall
               be made by the  Sponsor  if a  determination  is  reasonably  and
               promptly  made (i) by the  Administrative  Trustees by a majority
               vote of a Quorum of disinterested  Administrative  Trustees, (ii)
               if such a Quorum is not obtainable,  or, even if obtainable, if a
               Quorum of disinterested  Administrative  Trustees so directs,  by
               independent  legal  counsel in a written  opinion or (iii) by the
               Common Security Holder of the Trust,  that,  based upon the facts
               known  to the  Administrative  Trustees,  counsel  or the  Common
               Security  Holder at the time  such  determination  is made,  such
               Company Indemnified Person acted in bad faith or in a manner that
               the Common  Security Holder did not believe to be in, or believed
               was opposed to, the best interests of the Trust, or, with respect
               to any criminal proceeding,  that such Company Indemnified Person
               believed  or had  reasonable  cause to believe his or her conduct
               was unlawful.  In no event shall any advance be made in instances
               where the Administrative  Trustees,  independent legal counsel or
               Common  Security  Holder  reasonably  determine  that  a  Company
               Indemnified Person  deliberately  breached his or her duty to the
               Trust or its Common or Capital Security Holders.

          (vi) The  indemnification  and advancement of expenses provided by, or
               granted pursuant to, the other paragraphs of this Section 10.4(a)
               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

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<PAGE>

               Capital  Security  Holders of the Trust or otherwise,  both as to
               action in his  official  capacity  and as to  action  in  another
               capacity while holding such office. All rights to indemnification
               under this  Section  10.4(a)  shall be deemed to be provided by a
               contract between the Sponsor and each Company  Indemnified Person
               who  serves  in such  capacity  at any time  while  this  Section
               10.4(a) is in effect.  Any repeal or modification of this Section
               10.4(a) shall not affect any rights or obligations then existing.

          (vii)The Sponsor or the Trust may purchase  and maintain  insurance on
               behalf of any person who is or was a Company  Indemnified  Person
               against any liability asserted against him or her and incurred by
               him or her in any such  capacity,  or  arising  out of his or her
               status as such,  whether or not the  Debenture  Issuer would have
               the power to indemnify  him or her against such  liability  under
               the provisions of this Section 10.4(a).

          (viii) For purposes of this Section 10.4(a), 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  10.4(a) with respect to the
               resulting  or  surviving  entity  as he or she  would  have  with
               respect to such constituent  entity if its separate existence had
               continued.

          (ix) The  indemnification  and advancement of expenses provided by, or
               granted pursuant to, this Section 10.4(a) shall, unless otherwise
               provided when authorized or ratified, continue as to a Person who
               has ceased to be a Company  Indemnified Person and shall inure to
               the benefit of the heirs,  executors and administrators of such a
               Person.

     (b)  The Sponsor  agrees to indemnify  the (i) Property  Trustee,  (ii) the
          Delaware  Trustee,  (iii) any Affiliate of the Property Trustee or the
          Delaware  Trustee,  and (iv) any  officers,  directors,  shareholders,
          members, partners, employees, representatives, custodians, nominees or
          agents of the Property  Trustee or the Delaware  Trustee  (each of the
          Persons in (i) through (iv),  including  the Property  Trustee and the
          Delaware  Trustee in their  respective  individual  capacities,  being
          referred to as a "Fiduciary Indemnified Person") for, and to hold each
          Fiduciary  Indemnified  Person  harmless  against,  any and all  loss,
          liability,  damage,  action,  suit,  claim or expense  including taxes
          (other  than taxes based on the income of such  Fiduciary  Indemnified
          Person) of any kind and nature whatsoever incurred without negligence,
          bad  faith  or  willful  misconduct  on the  part  of  such  Fiduciary
          Indemnified  Person,   arising  out  of  or  in  connection  with  the
          acceptance  or  administration  of  the  trust  or  trusts  hereunder,
          including the costs and expenses (including  reasonable legal fees and
          expenses) of defending against or investigating any claim or liability
          in connection with the exercise or performance of any of the powers or
          duties of such Fiduciary Indemnified Person hereunder.  The obligation
          to indemnify as set forth in this Section  10.4(b)  shall  survive the
          resignation or removal of the Property Trustee or the Delaware Trustee
          and the satisfaction and discharge of this Declaration.

     (c)  The  Sponsor  agrees  to pay the  Property  Trustee  and the  Delaware
          Trustee,  from  time to  time,  such  compensation  for  all  services
          rendered by the Property  Trustee and the Dela ware Trustee  hereunder
          as may be  mutually  agreed  upon in  writing by the  Sponsor  and the
          Property  Trustee or the  Delaware  Trustee,  as the case may be, and,
          except as  otherwise  expressly  provided  herein,  to  reimburse  the
          Property  Trustee and the Delaware  Trustee upon its or their  request
          for all  reasonable  expenses  (including  legal  fees and  expenses),
          disbursements and advances incurred or made by the Property Trustee or
          the  Delaware  Trustee,  as the case may be,  in  accordance  with the
          provisions of this Declaration,  except any such expense, disbursement
          or advance as may be  attributable  to its or their  negligence or bad
          faith.

SECTION 10.5 Outside Businesses.

     Any Covered  Person,  the Sponsor,  the  Delaware  Trustee and the Property
Trustee  (subject  to Section  5.3(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  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. No Covered Person, the Sponsor, the Delaware
Trustee,  or the Property  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 Property 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 Property 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.

                                   ARTICLE XI
                                   ACCOUNTING

SECTION 11.1 Fiscal Year.

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

SECTION 11.2 Certain Accounting Matters.

     (a)  At all times  during the  existence of the Trust,  the  Administrative
          Trustees  shall  keep,  or cause to be kept,  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. The
          Trust shall use the accrual  method of  accounting  for United  States
          federal  income tax purposes.  The books of account and the records of
          the Trust shall be examined by and reported upon as of the end of each
          Fiscal  Year of the Trust by a firm of  independent  certified  public
          accountants selected by the Administrative Trustees.

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     (b)  The  Administrative  Trustees  shall  cause  to be duly  prepared  and
          delivered  to each of the Holders  any 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  Administrative  Trustees  shall  endeavor  to  deliver  all  such
          information  statements  within 30 days  after the end of each  Fiscal
          Year of the Trust.

     (c)  The Administrative  Trustees shall cause to be duly prepared and filed
          with the appropriate taxing authority, 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 Administrative  Trustees on behalf
          of the Trust with any state or local taxing authority.

SECTION 11.3 Banking.

     The Trust may  maintain  one or more bank  accounts in the name and for the
sole  benefit of the Trust;  provided,  however,  that all  payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property  Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees;  provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.

SECTION 11.4 Withholding.

     The Trust and the Administrative Trustees shall comply with all withholding
requirements  under United States federal,  state and local law. The Trust shall
request,  and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder,  and any  representations  and forms as shall reasonably be requested by
the Trust to assist it in  determining  the extent of,  and in  fulfilling,  its
withholding  obligations.  The  Administrative  Trustees shall cause to be filed
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
Trust is  required to withhold  and pay over any amounts to any  authority  with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution  in the amount of the  withholding to the Holder.
In the event of any claim of excess withholding,  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 Trust may reduce
subsequent Distributions by the amount of such withholding.

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                                   ARTICLE XII
                             AMENDMENTS AND MEETINGS

SECTION 12.1 Amendments.

     (a)  Except as otherwise provided in this Declaration  (including Section 7
          of Annex I hereto) or by any applicable terms of the Securities,  this
          Declaration may only be amended by a written  instrument  approved and
          executed by:

          (i)  the Sponsor  and the  Administrative  Trustees  (or, if there are
               more  than  two  Administrative   Trustees,  a  majority  of  the
               Administrative Trustees);

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

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

     (b)  No amendment shall be made, and any such purported  amendment shall be
          void and ineffective:

          (i)  unless,  in the  case of any  proposed  amendment,  the  Property
               Trustee shall have first received 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);

          (ii) unless,  in the case of any proposed  amendment which affects the
               rights, powers, duties, obligations or immunities of the Property
               Trustee, the Property 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;

               provided,  however,  that  the  Property  Trustee  shall  not  be
               required to sign any such amendment; and

          (iii)to the extent the result of such amendment would be to:

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

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<PAGE>

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

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

     (c)  At such time  after the Trust has issued any  Securities  that  remain
          outstanding,  any amendment  that would  adversely  affect the rights,
          privileges  or  preferences  of any Holder  (other  than an  amendment
          pursuant  to (g)  below)  may be  effected  only with such  additional
          requirements as may be set forth in the terms of such Securities;

     (d)  Section 10.1(c) and this Section 12.1 shall not be amended without the
          consent of all of the Holders;

     (e)  Article  Four shall not be amended  without the consent of the Holders
          of a Majority in Liquidation Amount of the Common Securities;

     (f)  The rights of the Holders of the Common  Securities under Article V 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 Common Securities; and

     (g)  Notwithstanding  Section  12.1(c),  this  Declaration  may be  amended
          without the consent of the Holders to:

          (i)  cure any  ambiguity,  correct or supplement any provision in this
               Declaration that may be inconsistent  with any other provision of
               this  Declaration or to make any other provisions with respect to
               matters or questions  arising under this Declaration  which shall
               not be inconsistent with the other provisions of the Declaration;

          (ii) to modify,  eliminate or add to any provisions of the Declaration
               to such  extent as shall be  necessary  to ensure  that the Trust
               will be classified  for United States federal income tax purposes
               as  a  grantor  trust  at  all  times  that  any  Securities  are
               outstanding  or to ensure  that the Trust will not be required to
               register as an Investment  Company under the  Investment  Company
               Act; and

          (iii)to modify,  eliminate or add any provisions of the Declaration to
               such  extent as shall be  necessary  to  enable  the Trust or the
               Sponsor to conduct an Exchange  Offer in the manner  contemplated
               by the Registration Rights Agree ment;

          provided,  however,  that in each clause above,  such action shall not
          adversely affect in any material respect the interests of the Holders,
          and any such  amendments of this  Declaration  shall become  effective
          when notice thereof is given to the Holders.

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<PAGE>

SECTION 12.2 Meetings of the Holders; Action by Written Consent.

     (a)  Meetings  of the Holders of any class of  Securities  may be called at
          any time by the  Administrative  Trustees (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.  The Administrative  Trustees shall call a meeting of the
          Holders of such class if  directed to do so by the Holders of at least
          20% in Liquidation Amount of such class of Securities.  Such direction
          shall be given by  delivering  to the  Administrative  Trustees one or
          more notices in writing  stating that the signing Holders wish to call
          a meeting and indicating the general or specific purpose for which the
          meeting is to be called.  Any Holders  calling a meeting shall specify
          in writing  the  Capital  Security  Certificates  held by the  Holders
          exercising  the  right to call a  meeting  and only  those  Securities
          specified  shall be counted for  purposes of  determining  whether the
          required percentage set forth in the second sentence of this paragraph
          has been met.

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

          (i)  notice  of any such  meeting  shall  be given to all the  Holders
               having a right to vote  thereat at least  seven days and not more
               than 60 days  before the date of such  meeting.  Whenever a vote,
               consent or approval of the Holders 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, such vote,
               consent or approval may be given at a meeting of the Holders; any
               action that may be taken at a meeting of the Holders may be taken
               without  a meeting  if a consent  in  writing  setting  forth the
               action so taken is signed by the Holders owning not less than the
               minimum amount of Securities in liquidation  amount that would be
               necessary  to authorize or take such action at a meeting at which
               all  Holders  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  entitled  to vote who have not
               consented in writing; and the Administrative Trustees may specify
               that any written ballot  submitted to the Security Holder for the
               purpose of taking any action  without a meeting shall be returned
               to the Trust  within  the time  specified  by the  Administrative
               Trustees;

          (ii) each  Holder may  authorize  any Person to act for it by proxy on
               all  matters  in  which a  Holder  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  eleven  months  from  the  date  thereof   unless
               otherwise  provided in the proxy;  every proxy shall be revocable
               at the  pleasure  of the  Holder  executing  it;  and,  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  were  stockholders  of a
               Delaware corporation;

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<PAGE>

          (iii)each   meeting  of  the  Holders   shall  be   conducted  by  the
               Administrative   Trustees  or  by  such  other  Person  that  the
               Administrative Trustees may designate; and

          (iv) unless the Business 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 or
               trading,  otherwise  provides,  the Administrative  Trustees,  in
               their  sole  discretion,  shall  establish  all other  provisions
               relating to meetings  of Holders,  including  notice of the time,
               place or  purpose  of any  meeting  at which any  matter is to be
               voted on by any  Holders,  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.

                                  ARTICLE XIII
                       REPRESENTATIONS OF PROPERTY TRUSTEE
                              AND DELAWARE TRUSTEE

SECTION 13.1 Representations and Warranties of Property Trustee.

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

     (a)  the Property  Trustee is a Delaware  banking  corporation,  a national
          banking  association  or a bank  or  trust  company,  duly  organized,
          validly  existing  and in good  standing  under the laws of the United
          States or the State of  Delaware  as the case may be,  with  corporate
          power and  authority  to  execute  and  deliver,  and to carry out and
          perform its obligations under the terms of, this Declaration;

     (b)  the execution,  delivery and  performance  by the Property  Trustee of
          this  Declaration has been duly authorized by all necessary  corporate
          action on the part of the Property  Trustee;  and this Declaration has
          been duly  executed and  delivered  by the Property  Trustee and under
          Delaware law  (excluding  any  securities  laws)  constitutes a legal,
          valid and binding  obligation  of the  Property  Trustee,  enforceable
          against it in accordance  with its terms,  subject to applicable  bank
          ruptcy, 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  the
          enforcement  of such  remedies is considered in a proceeding in equity
          or at law);

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

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<PAGE>

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

SECTION 13.2 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)  the Delaware  Trustee is a Delaware  banking  corporation,  a national
          banking  association  or a bank  or  trust  company,  duly  organized,
          validly  existing  and in good  standing  under the laws of the United
          States or the State of  Delaware,  as the case may be, with  corporate
          power and  authority  to  execute  and  deliver,  and to carry out and
          perform its obligations under the terms of, this Declaration;

     (b)  the execution,  delivery and  performance  by the Delaware  Trustee of
          this  Declaration has been duly authorized by all necessary  corporate
          action on the part of the Delaware  Trustee;  and 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 the
          enforcement  of such  remedies is considered in a proceeding in equity
          or at law);

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

     (d)  no consent,  approval or  authorization  of, or  registration  with or
          notice to, any federal or Delaware  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

     (e)  the  Delaware  Trustee is a natural  person  who is a resident  of the
          State of Delaware or, if not a natural person, an entity which has its
          principal place of business in the State of Delaware,  and is a Person
          that  satisfies  for the Trust Section  3807(a) of the Business  Trust
          Act.

                                   ARTICLE XIV
                               REGISTRATION RIGHTS

SECTION 14.1 Registration Rights Agreement; Liquidated Damages.

     The Holders of the Series A Capital Securities, the Series A Debentures and
the Series A Capital  Securities  Guarantee  are entitled to the benefits of the
Registration  Rights Agreement and the Liquidated Damages Agreement.  In certain
limited  circumstances  set forth in the  Registration  Rights Agreement and the
Liquidated Damages Agreement, the Debenture Issuer shall

                                       63

<PAGE>

be required to pay  liquidated  damages with respect to the Series A Debentures.
Unless otherwise stated,  the term  "Distribution," as used in this Declaration,
includes any and all liquidated damages.

                                   ARTICLE XV
                                  MISCELLANEOUS

SECTION 15.1 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 or
mailed by first class mail, overnight courier service or confirmed telecopy,  as
follows:

     (a)  if given to the Trust, in care of the  Administrative  Trustees at the
          Trust's  mailing address set forth below (or such other address as the
          Trust may give notice of to the Property Trustee, the Delaware Trustee
          and the Holders):

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

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

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

                                       64

<PAGE>

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

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

     (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 to the Trust):

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

     (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 15.2 Governing Law.

     This Declaration and the rights of the parties  hereunder shall be governed
by and  construed in accordance  with the laws of the State of Delaware  without
regard to conflict of laws principles thereof.

SECTION 15.3 Intention of the Parties.

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

SECTION 15.4 Headings.

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

                                       65

<PAGE>

SECTION 15.5 Successors and Assigns.

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

SECTION 15.6 Partial Enforceability.

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

SECTION 15.7 Counterparts.

     This  Declaration  may contain more than one  counterpart  of the signature
page and this  Declaration  may be executed by the affixing of the  signature of
each of the Trustees to one or more 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.

                                       66

<PAGE>

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

                                      /s/ Frank M. McCord
                                    ------------------------------------
                                    Frank M. McCord
                                    as Administrative Trustee

                                      /s/ C.F. Safstrom
                                    ------------------------------------
                                    C.F. Safstrom
                                    as Administrative Trustee

                                      /s/ Russell E. Rosendal
                                    ------------------------------------
                                    Russell E. Rosendal
                                    as Administrative Trustee

                                    WILMINGTON TRUST COMPANY,
                                    as Delaware Trustee

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

                                    WILMINGTON TRUST COMPANY,
                                    as Property Trustee

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

                                    CASCADE FINANCIAL CORPORATION,
                                    as Sponsor and Debenture Issuer

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

<PAGE>

                                     ANNEX I

                                    TERMS OF
                  11.00% CAPITAL SECURITIES, SERIES A/SERIES B
                            11.00% COMMON SECURITIES

     Pursuant to Section 7.1 of the Amended and Restated  Declaration,  dated as
of March  1,  2000 (as  amended  from  time to  time,  the  "Declaration"),  the
designation, rights, privileges,  restrictions,  preferences and other terms and
provisions of the Securities are set out below (each  capitalized  term used but
not defined herein has the meaning set forth in the  Declaration,  the Indenture
or, if not defined in such Declaration or Indenture,  as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):

     1.   Designation and Number.

          (a)  Capital  Securities.  11.00%  Series A Capital  Securities of the
               Trust and 11.00% Series B Capital  Securities of the Trust,  each
               series with an aggregate  liquidation  amount with respect to the
               assets of the Trust of Ten Million Dollars ($10,000,000) and with
               a  liquidation  amount with respect to the assets of the Trust of
               One Thousand  Dollars  ($1,000)  (the  "Liquidation  Amount") per
               security,   are   hereby   designated   for   the   purposes   of
               identification only as "11.00% Capital Securities,  Series A" and
               "11.00%    Capital    Securities,    Series   B,"    respectively
               (collectively,   the  "Capital  Securities").   The  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  exchange  or  quotation  system on or in which  the  Capital
               Securities are listed, traded or quoted.

          (b)  Common  Securities.  310 Common  Securities  of the Trust with an
               aggregate  liquidation  amount with  respect to the assets of the
               Trust of Three  Hundred Ten  Thousand  Dollars  ($310,000)  and a
               liquidation  amount  with  respect  to the assets of the Trust of
               $1,000 per security,  are hereby  designated  for the purposes of
               identification  only as "11.00% Common  Securities"  (the "Common
               Securities").  The certificates  evidencing the Common Securities
               shall  be  substantially  in  the  form  of  Exhibit  A-2  to the
               Declaration, with such changes and additions thereto or deletions
               therefrom  as  may be  required  by  ordinary  usage,  custom  or
               practice.

     2.   Distributions.

          (a)  Distributions  on each  Security  will be payable at a fixed rate
               per annum of 11.00% (the "Coupon Rate") of the liquidation amount
               of $1000  per  Security,  such rate  being  the rate of  interest
               payable on the  Debentures  to be held by the  Property  Trustee.
               Distributions  in arrears  for more than one  semi-annual  period
               will   bear   additional    Distributions    thereon   compounded
               semi-annually  at the  Coupon  Rate (to the extent  permitted  by
               applicable law).  Pursuant to the  Registration  Rights Agreement
               and  the  Liquidated  Damages   Agreement,   in  certain  limited
               circumstances  the  Debenture  Issuer  will  be  required  to pay
               Liquidated  Damages  (as  defined  in  the  Registration   Rights
               Agreement and the Liquidated  Damages  Agreement) with respect to
               the Debentures. The term "Distributions" as used herein, includes
               distributions of any and all such interest and Liquidated

                                       I-1

<PAGE>

               Damages,  if any, payable unless otherwise stated. A Distribution
               is payable only to the extent that payments are made with respect
               to the Debentures held by the Property  Trustee and to the extent
               the Property Trustee has funds legally available therefor.

          (b)  Distributions   on  the  Securities  will  be  cumulative,   will
               accumulate from the most recent date to which  Distributions have
               been paid or, if no  Distributions  have been paid, from March 1,
               2000 and will be  payable  semi-annually  in arrears on March 1st
               and  September  1st of each year,  commencing  September  1, 2000
               (each,  a  "Distribution  Date"),  except as otherwise  described
               below. Distributions will be computed on the basis a 360-day year
               of  twelve  30-day  months.  As long as no Event of  Default  has
               occurred and is  continuing  under the  Indenture,  the Debenture
               Issuer has the right  under the  Indenture  to defer  payments of
               interest by extending the interest payment period at any time and
               from time to time on the  Debentures  for a period not  exceeding
               ten  consecutive  semi-annual  periods,  including the first such
               semi-annual   period  during  such  period  (each  an  "Extension
               Period"),  during which Extension Period no interest shall be due
               and payable on the Debentures,  provided that no Extension Period
               shall end on a date other than an Interest  Payment  Date for the
               Debentures or extend beyond the Maturity Date of the  Debentures.
               As a  consequence  of such defer ral,  Distributions  (other than
               Liquidated    Damages,   if   any)   will   also   be   deferred.
               Notwithstanding  such  deferral,  Distributions  will continue to
               accumulate with additional  Distributions  thereon (to the extent
               permitted  by  applicable  law but not at a rate greater than the
               rate at which interest is then accruing on the Debentures) at the
               Coupon Rate  compounded  semi-annually  during any such Extension
               Period.  Prior to the  termination of any such Extension  Period,
               the Debenture  Issuer may further  defer  payments of interest by
               further  extending  such  Extension  Period,  provided  that such
               extension does not cause such Extension Period, together with all
               such  previous  and  further  extensions  within  such  Extension
               Period, to exceed ten consecutive semi-annual periods,  including
               the first semi-annual period during such Extension Period, end on
               a date other than an Interest  Payment Date for the Debentures or
               extend  beyond  the  Maturity  Date of the  Debentures.  Upon the
               termination  of any  Extension  Period  and  the  payment  of all
               amounts  then  due,  the  Debenture  Issuer  may  commence  a new
               Extension Period, subject to the above requirements.

          (c)  Distributions  on the  Securities  will be payable to the Holders
               thereof as they  appear on the books and  records of the Trust on
               the close of  business  on the 15th day of the month  immediately
               preceding  the  month in which  the  relevant  Distribution  Date
               occurs,  which  Distribution  Dates  correspond  to the  Interest
               Payment Dates for the Debentures.  Subject to any applicable laws
               and regulations and the provisions of the Declaration,  each such
               payment  with respect to the Capital  Securities  will be made as
               described under the heading "Description of Capital Securities --
               Form,  Denomination,  Book-Entry  Procedures and Transfer" in the
               Offering  Memorandum  dated  February  25, 2000 of the  Debenture
               Issuer  and  the  Trust   relating  to  the  Securities  and  the
               Debentures.  The relevant record dates for the Common  Securities
               shall be the same as the record dates for the Capital Securities.
               Distributions  payable on any Securities  that are not punctually
               paid on any  Distribution  Date,  as a  result  of the  Debenture
               Issuer having failed to make a payment under the Debentures, will
               cease to be payable to the Holder on the  relevant  record  date,
               and such  defaulted  Distribution  will instead be payable to the
               Person  in whose  name  such  Securities  are  registered  on the
               special  record  date  or  other  specified  date  determined  in
               accordance with the Indenture. If any date on which Distributions
               are payable on the Securities is not a Business Day, then payment
               of the  Distributions  payable  on such  date will be made on the
               next  succeeding  day that is a  Business  Day (and  without  any
               interest or other  payment in respect of any such delay),  except
               that if such next succeeding

                                       I-2

<PAGE>

               Business Day falls in the next  succeeding  calendar  year,  such
               payment shall be made on the immediately  preceding  Business Day
               with the same  force  and  effect  as if made on such  date  (and
               without  any  interest  or other  payment  in respect of any such
               delay).

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

     3.   Liquidation Distribution Upon Dissolution.

          In the event of any  dissolution  of the  Trust,  the  Trust  shall be
     liquidated  by  the   Administrative   Trustees  as  expeditiously  as  the
     Administrative  Trustees  determine to be possible by  distributing  to the
     Holders,  after  satisfaction  of  liabilities to creditors of the Trust as
     provided  by  applicable  law,  a Like  Amount  (as  defined  below) of the
     Debentures,  unless such distribution is determined by the Property Trustee
     not to be  practicable,  in which  event such  Holders  will be entitled to
     receive out of the assets of the Trust legally  available for  distribution
     to Holders,  after satisfaction of liabilities to creditors of the Trust as
     provided  by  applicable  law,  an  amount  equal to the  aggregate  of the
     liquidation  amount of $1,000  per  Security  plus  accumulated  and unpaid
     Distributions  thereon  to the  date of  payment  (such  amount  being  the
     "Liquidation Distribution").

          "Like   Amount"  means  (i)  with  respect  to  a  redemption  of  the
     Securities,  Securities having a Liquidation  Amount equal to the principal
     amount of  Debentures  to be paid in  accordance  with their terms and (ii)
     with respect to a distribution  of Debentures  upon the  liquidation of the
     Trust, Debentures having a principal amount equal to the Liquidation Amount
     of the Securities of the Holder to whom such Debentures are distributed.

          If, upon any such  liquidation,  the Liquidation  Distribution  can be
     paid  only in part  because  the  Trust  has  insufficient  assets  legally
     available to pay in full the aggregate Liquidation  Distribution,  then the
     amounts payable  directly by the Trust with respect to the Securities shall
     be paid on a Pro Rata basis.

     4.   Redemption and Distribution.

          (a)  Upon the repayment of the Debentures  (with  premium,  if any) in
               whole or in part, at maturity or otherwise  (either at the option
               of the  Debenture  Issuer  or  pursuant  to a Special  Event,  as
               described  below),  the  proceeds  from such  repayment  shall be
               simultaneously  applied by the Property  Trustee  (subject to the
               Property  Trustee having received written notice no later than 45
               days  prior to such  repayment)  to  redeem a Like  Amount of the
               Securities at a redemption  price equal to (i) in the case of the
               repayment of the  Debentures on the Maturity  Date,  the Maturity
               Redemption  Price  (as  defined  below),  (ii) in the case of the
               optional  prepayment  of the  Debentures  prior  to  the  Initial
               Optional Redemption Date and upon the occurrence and continuation
               of a  Special  Event,  the  Special  Event  Redemption  Price (as
               defined  below) and (iii) in the case of the optional  prepayment
               of the  Debentures  on or after the Initial  Optional  Redemption
               Date,  the  Optional  Redemption  Price (as defined  below).  The
               Maturity Redemption Price, the Special Event Redemption Price and
               the Optional Redemption Price are referred to collectively as the
               "Redemption  Price."  Holders  will be given not less than 30 nor
               more than 60 days prior written notice of such redemption.

                                       I-3

<PAGE>

          (b)  (i)  The "Maturity  Redemption  Price" shall mean an amount equal
                    to  100%  of the  principal  of,  plus  accrued  and  unpaid
                    interest (including Compounded Interest and Additional Sums,
                    if  any,   thereon  to  the  date  of  redemption)  on,  the
                    Debentures as of the Maturity Date thereof.

               (ii) The  Debenture  Issuer shall have the right  (subject to the
                    conditions  in  the   Indenture)  to  elect  to  prepay  the
                    Debentures,  in whole  or in  part,  at any time on or after
                    March 1, 2010 (the "Initial Optional Redemption Date"), and,
                    simultaneous with such prepayment, to cause a Like Amount of
                    the  Securities  to be redeemed by the Trust at the Optional
                    Redemption Price on a Pro Rata basis.  "Optional  Redemption
                    Price"  shall  mean  an  amount  equal  to  the   applicable
                    redemption  price  set forth  below  plus,  accumulated  and
                    unpaid  Distributions  thereon,  if any, to the date of such
                    redemption if redeemed during the 12-month period  beginning
                    March 1st, of the years indicated below:

                                     Percentage of
        Year                      Liquidation Amount
------------------------------------------------------

        2010                            105.500%
        2011                            104.950%
        2012                            104.500%
        2013                            103.850%
        2014                            103.300%
        2015                            102.750%
        2016                            102.200%
        2017                            101.650%
        2018                            101.100%
        2019                            100.550%
2020 and thereafter                     100.000%

               (c)  If at any time an  Investment  Company  Event,  a Regulatory
                    Capital  Event or a Tax Event  (each as defined  below,  and
                    each a "Special  Event") occurs,  the Debenture Issuer shall
                    have the right  (subject to the  conditions set forth in the
                    Indenture)  at  any  time  prior  to  the  Initial  Optional
                    Redemption  Date, to prepay the Debentures in whole, but not
                    in part, within the 90 days following the occurrence of such
                    Special Event (the "90 Day Period"),  and, simultaneous with
                    such prepayment, to cause a Like Amount of the Securities to
                    be  redeemed by the Trust at the  Special  Event  Redemption
                    Price on a Pro Rata basis.

          "Investment  Company  Event"  shall mean the receipt by the  Debenture
     Issuer  and the  Trust of an  opinion  of  independent  securities  counsel
     experienced  in such  matters  to the  effect  that as a result  of (a) any
     amendment to, or change  (including any announced  prospective  change) in,
     the

                                       I-4

<PAGE>

     laws or any  regulations  thereunder  of the  United  States or any  rules,
     guidelines  or  policies of any  applicable  regulatory  authority  for the
     Debenture  Issuer  or (b)  any  official  administrative  pronouncement  or
     judicial decision interpreting or applying such laws or regulations,  which
     amendment  or change is  effective  or which  pronouncement  or decision is
     announced on or after the date of original issuance of the Securities,  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.

          "Regulatory  Capital  Event"  shall mean the receipt by the  Debenture
     Issuer and the Trust of an opinion of independent  bank regulatory  counsel
     experienced  in such  matters  to the  effect  that as a result  of (a) any
     amendment to, or change  (including any announced  prospective  change) in,
     the laws or any  regulations  thereunder of the United States or any rules,
     guidelines  or  policies  of an  applicable  regulatory  authority  for the
     Debenture  Issuer  or (b)  any  official  administrative  pronouncement  or
     judicial decision interpreting or applying such laws or regulations,  which
     amendment  or change is  effective  or which  pronouncement  or decision is
     announced on or after the date of original issuance of the Securities,  the
     Capital Securities do not constitute, or within 90 days of the date of such
     opinion will not constitute,  Tier 1 Capital (or its then equivalent if the
     Sponsor were subject to such capital requirement);  provided, 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
     Regulatory Capital Event.

          "Special  Event  Redemption  Price"  shall mean,  with  respect to any
     redemption of the Securities  following a Special Event,  an amount in cash
     equal to the greater of (i) 100% of the principal  amount of the Securities
     or (ii) the sum,  as  determined  by a  Quotation  Agent (as defined in the
     Indenture),  of the present values of the remaining  scheduled  payments of
     principal and interest on such  Securities,  discounted  to the  redemption
     date on a semi-annual  basis  (assuming a 360-day year consisting of twelve
     30-day months) at the Adjusted Treasury Rate (as defined in the Indenture),
     plus, in the case of (i) or (ii), any accrued and unpaid  interest  thereon
     (including  Compounded Interest and Additional Sums, if any) to the date of
     such redemption.

          A "Tax Event" shall occur upon receipt by the Debenture Issuer and the
     Trust of an opinion of independent tax counsel  experienced in such matters
     to the  effect  that,  as a  result  of (a) 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 (b) any official  administrative
     pronouncement  or judicial  decision  interpreting or applying such laws or
     regulations,  which amendment or change is effective or which pronouncement
     or decision is announced  on or after the date of original  issuance of the
     Securities, there is more than an insubstantial risk that (i) the Trust is,
     or will be within 90 days of the date of such  opinion,  subject  to United
     States federal income tax with respect to income received or accrued on the
     Debentures,  (ii) the  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 federal
     income  tax  purposes,  or (iii) the Trust is, or will be within 90 days of
     the date of such opinion, subject to more than a de minimis amount of other
     taxes, duties or other governmental charges.

               (d)  In the case of an optional redemption, if fewer than all the
                    outstanding  Securities  are to be so  redeemed,  the Common
                    Securities and the Capital  Securities shall be redeemed Pro
                    Rata

                                       I-5

<PAGE>

                    and the Capital Securities to be redeemed will be determined
                    as described in Section 4(f)(ii) below. Upon the entry of an
                    order  for  the  dissolution  of the  Trust  by a  court  of
                    competent  jurisdiction,  the Debentures  thereafter will be
                    subject to optional  redemption,  in whole, but not in part,
                    on or after the Initial Optional Redemption Date.

               (e)  On and from the date  fixed by the  Administrative  Trustees
                    for any  distribution  of Debentures and  liquidation of the
                    Trust:  (i) the  Securities  will no  longer be deemed to be
                    outstanding, (ii) the Clearing Agency or its nominee (or any
                    successor Clearing Agency or its nominee),  as the Holder of
                    the Capital  Securities,  will receive a  registered  global
                    certificate or cer tificates  representing the Debentures to
                    be  delivered   upon  such   distribution,   and  (iii)  any
                    certificates   representing   Securities  not  held  by  the
                    Clearing  Agency or its nominee (or any  successor  Clearing
                    Agency  or  its   nominee)   will  be  deemed  to  represent
                    beneficial  interests in a Like Amount of  Debentures  until
                    such  certificates  are presented to the Debenture Issuer or
                    its agent for transfer or reissue.

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

               (g)  The procedure with respect to  redemptions or  distributions
                    of Securities shall be as follows:

                    (i)  Notice of any redemption of, or notice of  distribution
                         of  Debentures  in  exchange  for,  the  Securities  (a
                         "Redemption/Distribution  Notice") will be given by the
                         Trust  by mail  to  each  Holder  of  Securities  to be
                         redeemed or  exchanged  not fewer than 30 nor more than
                         60  days  before  the  date  fixed  for  redemption  or
                         exchange  thereof  which,  in the case of a redemption,
                         will  be  the  date   fixed  for   redemption   of  the
                         Debentures. For purposes of the calculation of the date
                         of  redemption  or  exchange  and the  dates  on  which
                         notices are given pursuant to this Section  4(g)(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.  Each
                         Redemption/Distribution  Notice  shall be  addressed to
                         the   Holders  at  the  address  of  each  such  Holder
                         appearing  in the books and  records of the  Trust.  No
                         defect in the Redemption/Distribution  Notice or in the
                         mailing of either  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   particular
                         Securities  to be  redeemed  shall be selected on a Pro
                         Rata basis  (based upon  Liquidation  Amounts) not more
                         than 60 nor less than 30 days  prior to the date  fixed
                         for  redemption  from the  outstanding  Securities  not
                         previously  called for redemption;  provided,  however,
                         that with  respect to Holders that would be required to
                         hold less than 100 but more than zero  Securities  as a
                         result  of such  redemption,  the  Trust  shall  redeem
                         Securities  of each  such  Holder  so that  after  such
                         redemption such Holder shall hold either 100 Securities
                         or such  Holder no longer  holds  any  Securities,  and
                         shall use such method (including,  without  limitation,
                         by lot) as the Trust  shall deem fair and  appropriate;
                         provided, further, that any such redemption may be made
                         on the basis of the aggregate Liquidation Amount of

                                       I-6

<PAGE>

                    Securities  held by each  Holder  thereof and may be made by
                    making  such   adjustments  as  the  Trust  deems  fair  and
                    appropriate in order that  fractional  Securities  shall not
                    thereafter  remain  outstanding.  With  respect  to  Capital
                    Securities  registered  in the name of and held of record by
                    the  Clearing  Agency  or  its  nominee  (or  any  successor
                    Clearing  Agency  or  its  nominee)  or  any  nominee,   the
                    distribution of the proceeds of such redemption will be made
                    to the Clearing Agency and disbursed by such Clearing Agency
                    in accordance with the procedures  applied by such agency or
                    nominee.

                    (iii)If Securities  are to be redeemed and the Trust gives a
                         Redemption/  Distribution  Notice (which notice will be
                         irrevocable),   then  (A)  with   respect   to  Capital
                         Securities  issued in  book-entry  form, by 12:00 noon,
                         New York City time, on the  redemption  date,  provided
                         that the Debenture Issuer has paid the Property Trustee
                         a  sufficient  amount  of cash in  connection  with the
                         related  redemption  or maturity of the  Debentures  by
                         10:00 a.m., New York City time, on the Maturity Date or
                         the  date of  redemption,  as the case re  quires,  the
                         Property  Trustee  will  deposit  irrevocably  with the
                         Clearing  Agency or its nominee (or successor  Clearing
                         Agency  or its  nominee)  immediately  available  funds
                         sufficient to pay the applicable  Redemption Price with
                         respect to such  Capital  Securities  and will give the
                         Clearing Agency irrevocable  instructions and authority
                         to pay the  Redemption  Price to the relevant  Clearing
                         Agency  Participants,  and (B) with  respect to Capital
                         Securities  issued  in  certificated  form  and  Common
                         Securities, provided that the Debenture Issuer has paid
                         the  Property  Trustee a  sufficient  amount of cash in
                         connection  with the related  redemption or maturity of
                         the Debentures,  the Property  Trustee will irrevocably
                         deposit   with  the  paying   agent  for  the   Capital
                         Securities  (if other than the Property  Trustee) funds
                         sufficient to pay the  applicable  Redemption  Price to
                         the  Holders  by check  mailed  to the  address  of the
                         relevant  Holder  appearing on the books and records of
                         the Trust on the redemption date, and provided further,
                         that any  such  payment  shall  become  due  only  upon
                         surrender  by the  Holder of the  related  certificated
                         Capital  Securities.   If  a  Redemption/  Distribution
                         Notice  shall  have been given and funds  deposited  as
                         required, if applicable,  then immediately prior to the
                         close of  business on the date of such  deposit,  or on
                         the redemption date, as applicable,  Distributions will
                         cease to  accumulate  on the  Securities  so called for
                         redemption  and all  rights of  Holders  so called  for
                         redemption will cease,  except the right of the Holders
                         of such  Securities to re ceive the  Redemption  Price,
                         but without interest on such Redemption Price, and such
                         Securities shall cease to be outstanding.

                    (iv) Payment of accumulated and unpaid  Distributions on the
                         Redemption  Date of the  Securities  will be subject to
                         the  rights of Holders  at the close of  business  on a
                         regular record date in respect of a  Distribution  Date
                         occurring on or prior to such Redemption Date.

          Neither the Administrative Trustees nor the Trust shall be required to
     register  or cause to be  registered  the  transfer  of (i) any  Securities
     beginning at the opening of business 15 days before the day of mailing of a
     notice  of  redemption  or  any  notice  of  selection  of  Securities  for
     redemption  or (ii) any  Securities  selected  for  redemption,  except the
     unredeemed  portion of any Security being  redeemed.  If any date fixed for
     redemption  of  Securities  is not a  Business  Day,  then  payment  of the
     Redemption  Price payable on such date will be made on the next  succeeding
     day that is a Business Day (and  without any  interest or other  payment in
     respect  of any such  delay).  If  payment  of the Re  demption  Price with
     respect to any  Securities is  improperly  withheld or refused and not paid
     either

                                       I-7

<PAGE>

     by the  Property  Trustee or by the  Sponsor as  guarantor  pursuant to the
     relevant  Securities  Guarantee,  Distributions  on  such  Securities  will
     continue to accumulate 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.

          (v)  Redemption/Distribution  Notices  shall  be sent by the  Property
               Trustee  on behalf of the Trust to (A) with  respect  to  Capital
               Securities  issued in book-entry form, the Clearing Agency or its
               nominee (or any successor  Clearing  Agency or its nominee),  (B)
               with respect to Capital  Securities issued in certificated  form,
               to the  Holders  thereof,  and (C)  with  respect  to the  Common
               Securities, to the Holders thereof.

          (vi) Subject to the foregoing and applicable law  (including,  without
               limitation,  United States  federal  securities  laws and banking
               laws), the Sponsor or any of its subsidiaries may at any time 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),  6(b)  and 7 and  as
               otherwise required by law and the Declaration, the Holders of the
               Capital Securities will have no voting rights.

          (b)  So long as any Debentures are held by the Property  Trustee,  the
               Trustees  shall  not (i)  direct  the time,  method  and place of
               conducting  any  proceeding  for  any  remedy  available  to  the
               Debenture  Trustee or executing  any trust or power  conferred on
               such Debenture Trustee with respect to the Debentures, (ii) waive
               any past  default  that is  waivable  under  Section  5.07 of the
               Indenture,  (iii)  exercise  any  right  to  rescind  or  annul a
               declaration of  acceleration  of the maturity of the principal of
               the Debentures or (iv) consent to any amendment,  modification or
               termination  of the  Indenture  or  the  Debentures,  where  such
               consent shall be required,  without, in each case,  obtaining the
               prior approval of the Holders of a Majority in Liquidation Amount
               of all outstanding Capital Securities;  provided,  however,  that
               where a consent under the Indenture  would require the consent of
               each holder of Debentures affected thereby, no such consent shall
               be given by the Property  Trustee  without the prior  approval of
               each Holder of the Capital  Securities.  The  Trustees  shall not
               revoke any action previously  authorized or approved by a vote of
               the Holders of the Capital  Securities  except by subsequent vote
               of such Holders. The Property Trustee shall notify each Holder of
               Capital  Securities  of any notice of default with respect to the
               Debentures.  In addition to obtaining the foregoing  approvals of
               such  Holders of the Capital  Securities,  prior to taking any of
               the foregoing  actions,  the Trustees  shall obtain an opinion of
               counsel  experienced in such matters to the effect that the Trust
               will  continue  to be  classified  as a grantor  trust for United
               States  federal  income tax purposes after taking any such action
               into account.

          If an Event of  Default  under the  Declaration  has  occurred  and is
     continuing and such event is  attributable  to the failure of the Debenture
     Issuer  to  pay  principal  of or  premium,  if  any,  or  interest  on the
     Debentures  on  the  due  date  (or,  in the  case  of  redemption,  on the
     redemption  date),  then a Holder of Capital  Securities  may  institute  a
     proceeding directly against the Debenture Issuer for enforcement of payment
     to  such  Holder  of the  principal  of or  interest  on a Like  Amount  of
     Debentures  (a  "Direct  Action")  on or  after  the  respective  due  date
     specified in the Debentures. In

                                       I-8

<PAGE>

connection  with such  Direct  Action,  the  Common  Securities  Holder  will be
subrogated  to the rights of such Holder of Capital  Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct  Action.  Except as provided in the second  preceding  sentence,  or
except as set forth in the first sentence of Section 3.8(e) of the  Declaration,
the  Holders of Capital  Securities  will not be able to exercise  directly  any
other remedy available to the holders of the Debentures.

     Any approval or direction of Holders of Capital  Securities may be given at
a separate meeting of Holders of Capital  Securities  convened for such purpose,
at a meeting of all of the  Holders of  Securities  in the Trust or  pursuant to
written  consent.  The  Property  Trustee  will cause a notice of any meeting at
which  Holders of Capital  Securities  are entitled to vote to be mailed to each
Holder  of  record of  Capital  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 consent.

     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 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 be  entitled  to vote or consent  and shall,  for  purposes  of such vote or
consent, be treated as if they were not outstanding.

     6.   Voting Rights - Common Securities.

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

          (b)  Unless a Debenture  Event of Default  shall have  occurred and be
               continuing,  any Trustee may be removed at any time by the Holder
               of the Common  Securities.  If a  Debenture  Event of Default has
               occurred and is continuing, the Property Trustee and the Delaware
               Trustee  may be removed at such time by the Holders of a Majority
               in Liquidation Amount of the outstanding Capital  Securities.  In
               no event will the  Holders  of the  Capital  Securities  have the
               right to vote to appoint,  remove or replace  the  Administrative
               Trustees,  which  voting  rights  are vested  exclusively  in the
               Sponsor as the Holder of the Common Securities. No resignation or
               removal of a Trustee and no  appointment  of a successor  trustee
               shall be effective  until the  acceptance of  appointment  by the
               successor  trustee  in  accordance  with  the  provisions  of the
               Declaration.

          (c)  So long as any Debentures are held by the Property  Trustee,  the
               Trustees  shall  not (i)  direct  the time,  method  and place of
               conducting  any  proceeding  for  any  remedy  available  to  the
               Debenture  Trustee,  or executing any trust or power conferred on
               such Debenture Trustee with respect to the Debentures, (ii) waive
               any past  default  that is  waivable  under  Section  5.07 of the
               Indenture,  (iii)  exercise  any  right  to  rescind  or  annul a
               declaration of acceleration of the maturity of the

                                       I-9

<PAGE>

               principal of the  Debentures  or (iv)  consent to any  amendment,
               modification  or termination of the Indenture or the  Debentures,
               where such  consent  shall be  required,  without,  in each case,
               obtaining  the prior  approval  of the  Holders of a Majority  in
               Liquidation   Amount  of  all  outstanding   Common   Securities;
               provided, however, that where a consent under the Indenture would
               require  the  consent  of  each  holder  of  Debentures  affected
               thereby,  no such consent shall be given by the Property  Trustee
               without  the  prior   approval  of  each  Holder  of  the  Common
               Securities.  The Trustees shall not revoke any action  previously
               authorized  or  approved  by a vote of the  Holders of the Common
               Securities  except  by  subsequent  vote  of  such  Holders.  The
               Property Trustee shall notify each Holder of Common Securities of
               any notice of default with respect to the Debentures. In addition
               to  obtaining  the  foregoing  approvals  of such  Holders of the
               Common Securities,  prior to taking any of the foregoing actions,
               the Trustees  shall obtain an opinion of counsel  experienced  in
               such  matters to the effect  that the Trust will  continue  to be
               classified as a grantor trust for United  States  federal  income
               tax purposes after taking any such action into account.

     If an Event of Default under the Declaration has occurred and is continuing
and such event is  attributable  to the failure of the  Debenture  Issuer to pay
principal of or premium,  if any, or interest on the  Debentures on the due date
(or in the case of redemption,  on the redemption date), then a Holder of Common
Securities may institute a Direct Action directly  against the Debenture  Issuer
for  enforcement  of payment to such Holder of the  principal of or premium,  if
any, or interest on a Like Amount of Debentures on or after the  respective  due
date specified in the  Debentures.  In connection  with such Direct Action,  the
rights of the Common  Securities  Holder will be  subordinated  to the rights of
Holders of Capital  Securities  in respect  of any  payment  from the  Debenture
Issuer  in such  Direct  Action.  Except as  provided  in the  second  preceding
sentence, the Holders of Common Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.

     Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of  Securities in the Trust or pursuant to written
consent. The Administrative Trustees will cause a notice of any meeting at which
Holders of 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 record of 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.

     In addition to the requirements set out in Section 12.1 of the Declaration,
the  Declaration  may be amended from time to time by the Sponsor,  the Property
Trustee and the  Administrative  Trustees  without the consent of the Holders to
(i) cure any ambiguity, correct or

                                      I-10

<PAGE>

supplement any provisions in the Declaration  that may be inconsistent  with any
other  provisions,  or make any other  provisions  with  respect  to  matters or
questions arising under the Declaration which shall not be inconsistent with the
other  provisions  of the  Declaration,  (ii)  modify,  eliminate  or add to any
provisions  of the  Declaration  to such extent as shall be  necessary to ensure
that the Trust will be classified  for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or to ensure
that the Trust will not be required to register as an  Investment  Company under
the Investment  Company Act or (iii) modify,  eliminate or add any provisions of
the  Declaration to such extent as shall be necessary to enable the Trust or the
Sponsor  to  conduct  an  Exchange  Offer  in  the  manner  contemplated  by the
Registration Rights Agreement; provided, however, that in each case, such action
shall not adversely  affect in any material respect the interests of any Holder,
and any such  amendments of the Declaration  shall become  effective when notice
thereof  is given to the  Holders.  The  Declaration  may also be amended by the
Trustees and the Sponsor with (i) the consent of Holders representing a Majority
in Liquidation  Amount of all  outstanding  Securities,  and (ii) receipt by the
Trustees  of an Opinion of Counsel  to the  effect  that such  amendment  or the
exercise of any power granted to the Trustees in accordance  with such amendment
will not affect the Trust's  status as a grantor trust for United States federal
income tax  purposes  or the  Trust's  exemption  from  status as an  Investment
Company under the Investment Company Act; provided,  however,  that, without the
consent of each Holder of Trust  Securities,  the Declaration may not be amended
to (i)  change  the  amount  or timing of any  Distribution  on, or the  payment
required to be made in respect of, the Trust  Securities as of a specified  date
or (ii) restrict the right of a Holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.

     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 according to
the  aggregate  liquidation  amount  of the  Securities  held by such  Holder in
relation  to the  aggregate  liquidation  amount of all  Securities  outstanding
unless, in relation to a payment,  an Event of Default under the Declaration 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 Capital Securities held by such
Holder relative to the aggregate  liquidation  amount of all Capital  Securities
outstanding and then, only after satisfaction of all amounts owed to the Holders
of the  Capital  Securities,  to each  Holder  of  Common  Securities  pro  rata
according to the aggregate  liquidation amount of Common Securities held by such
Holder  relative to the aggregate  liquidation  amount of all Common  Securities
outstanding.

     9.   Ranking.

     The  Capital  Securities  rank pari passu with the  Common  Securities  and
payment thereon shall be made Pro Rata with the Common Securities,  except that,
if an Event of  Default  under the  Declaration  occurs  and is  continuing,  no
payments  in  respect  of  Distributions   on,  or  payments  upon  liquidation,
redemption  or otherwise  with respect to, the Common  Securities  shall be made
until  the  Holders  of the  Capital  Securities  shall  be  paid  in  full  the
Distributions, Redemption Price, Liquidation Distribution and any other payments
to which they are entitled at such time.

                                      I-11

<PAGE>

     10.  Acceptance  of  Capital   Securities   Guarantee,   Common  Securities
          Guarantee. Indenture and Debentures.

     Each Holder of Capital Securities and Common Securities,  by the acceptance
thereof,  agrees to the  provisions  of the Capital  Securities  Guarantee,  the
Common Securities  Guarantee,  the Indenture and the Debentures,  as applicable,
including the subordination provisions therein.

     11.  No Preemptive Rights.

     Neither the  issuance  of Capital  Securities,  nor the  issuance of Common
Securities is subject to preemptive or other similar  rights.  The Holders shall
have no preemptive or similar rights to subscribe for any additional securities.

     12.  Miscellaneous.

     These terms constitute a part of the Declaration.

     The Sponsor will provide a copy of the Declaration,  the Capital Securities
Guarantee or the Common Securities Guarantee,  as applicable,  and the Indenture
(including any  supplemental  indenture) to a Holder without charge upon written
request to the Trust at its principal place of business.

                                      I-12

<PAGE>

                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

     [IF THIS  CAPITAL  SECURITY  IS A GLOBAL  CAPITAL  SECURITY,  INSERT:  THIS
CAPITAL  SECURITY  IS A  GLOBAL  CAPITAL  SECURITY  WITHIN  THE  MEANING  OF THE
DECLARATION  HEREINAFTER  REFERRED  TO AND IS  REGISTERED  IN  THE  NAME  OF THE
DEPOSITORY  TRUST COMPANY (THE  "CLEARING  AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES  REGISTERED
IN THE NAME OF A PERSON  OTHER THAN THE  CLEARING  AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED  CIRCUMSTANCES  DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL  SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL  SECURITY AS A WHOLE BY
THE CLEARING  AGENCY TO A NOMINEE OF THE CLEARING  AGENCY OR BY A NOMINEE OF THE
CLEARING  AGENCY TO THE  CLEARING  AGENCY OR  ANOTHER  NOMINEE  OF THE  CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

     UNLESS THIS CAPITAL  SECURITY IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE
OF THE CLEARING  AGENCY TO THE TRUST OR ITS AGENT FOR  REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT,  AND ANY CAPITAL  SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE CLEARING  AGENCY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE  OR OTHER  USE  HEREOF  FOR  VALUE OR  OTHERWISE  BY OR TO ANY  PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

     THIS CAPITAL  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 LAW. NEITHER THIS CAPITAL 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, REGISTRATION.

     THE HOLDER OF THIS  CAPITAL  SECURITY BY ITS  ACCEPTANCE  HEREOF  AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY,  PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL  ISSUANCE  DATE  HEREOF  AND THE LAST DATE ON WHICH  CASCADE  FINANCIAL
CORPORATION  (THE  "CORPORATION")  OR ANY "AFFILIATE" OF THE CORPORATION WAS THE
OWNER OF THIS CAPITAL  SECURITY (OR ANY  PREDECESSOR  OF THIS CAPITAL  SECURITY)
ONLY (A) TO THE CORPORATION,  (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN

                                      A1-1

<PAGE>

DECLARED  EFFECTIVE  UNDER  THE  SECURITIES  ACT,  (C) SO LONG  AS THIS  CAPITAL
SECURITY IS ELIGIBLE FOR RESALE  PURSUANT TO RULE 144A UNDER THE  SECURITIES ACT
("RULE 144A"), TO A PERSON IT 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,  (D) TO AN  INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR
ITS  OWN  ACCOUNT,  OR FOR THE  ACCOUNT  OF  SUCH  AN  INSTITUTIONAL  ACCREDITED
INVESTOR, FOR INVESTMENT PURPOSES PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS  OF THE SECURITIES ACT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION  WITH, ANY  DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER  AVAILABLE  EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS
UNDER THE  SECURITIES  ACT,  SUBJECT TO THE RIGHT OF CASCADE  CAPITAL TRUST (THE
"TRUST")  AND THE  CORPORATION  PRIOR TO ANY SUCH OFFER,  SALE OR  TRANSFER  (i)
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE  DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS  AND/OR OTHER INFORMATION  SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT  TO CLAUSE (D) TO REQUIRE  THAT THE  TRANSFEROR  DELIVER TO THE TRUST A
LETTER FROM THE TRANSFEREE  SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM  DATED  FEBRUARY 25, 2000.  SUCH HOLDER  FURTHER  AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS  CAPITAL  SECURITY IS  TRANSFERRED  A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

     THE HOLDER OF THIS CAPITAL  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 THE CAPITAL  SECURITIES  OR ANY  INTEREST  THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE  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  CAPITAL  SECURITIES  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 THE CAPITAL  SECURITIES  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

                                      A1-2

<PAGE>

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.

     THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL  SECURITIES)
AND MULTIPLES OF $1,000 IN EXCESS  THEREOF.  ANY  ATTEMPTED  TRANSFER OF CAPITAL
SECURITIES  IN A BLOCK HAVING A  LIQUIDATION  AMOUNT OF LESS THAN  $100,000 (100
CAPITAL  SECURITIES)  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 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.

     THE HOLDER OF THIS CAPITAL  SECURITY BY ITS ACCEPTANCE  HEREOF AGREES TO BE
BOUND BY THE REGISTRATION RIGHTS AGREEMENT DATED AS OF FEBRUARY 25, 2000, BY AND
AMONG  THE  TRUST,  THE  SPONSOR  AND  SANDLER  O'NEILL  &  PARTNERS,  L.P.,  AS
REPRESENTATIVE  OF THE INITIAL  PURCHASERS  NAMED IN SCHEDULE A OF THE PURCHASER
AGREEMENT, AS AMENDED FROM TIME TO TIME.

                                      A1-3

<PAGE>

Certificate Number: [ ]   Aggregate Liquidation Amount: $       CUSIP Number:[ ]

                    Certificate Evidencing Capital Securities

                                       of

                             Cascade Capital Trust I

                       _____% Capital Securities, Series A
                (liquidation amount $1,000 per Capital Security)

     Cascade Capital Trust I, a statutory  business trust created under the laws
of the State of Delaware (the  "Trust"),  hereby  certifies that Cede & Co. (the
"Holder") is the  registered  owner of $  ____________in  aggregate  liquidation
amount of Capital  Securities  of the Trust1  ______________  is the  registered
owner of the  aggregate  liquidation  amount of Capital  Securities of the Trust
specified in Schedule A hereto]2  representing  undivided  preferred  beneficial
interests in the assets of the Trust  designated the _____% Capital  Securities,
Series  A  (liquidation  amount  $1,000  per  Capital  Security)  (the  "Capital
Securities").  The Capital  Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate  duly  endorsed and in proper form for  transfer.  The  designation,
rights, privileges, restrictions,  preferences and other terms and provisions of
the Capital  Securities  represented hereby are issued and shall in all respects
be subject to the  provisions of the Amended and Restated  Declaration of Trust,
dated as of March 1,  2000,  as the same may be  amended  from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set  forth  in Annex I to the  Declaration.  Capitalized  terms  used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.

     Upon receipt of this  Certificate,  the Holder is bound by the  Declaration
and is entitled to the  benefits  thereunder  and to the benefits of the Capital
Securities Guarantee to the extent provided therein.

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

         1        Insert in Global Capital Securities only.

         2        Insert in Definitive Capital Securities only.

                                      A1-4

<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate this 1st day of
March, 2000.

                                                     CASCADE CAPITAL TRUST I

                                                     By:  _____________________
                                                          C.F. Safstrom
                                                          Administrative Trustee

                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the _____% Capital  Securities,  Series A of Cascade Capital
Trust I referred to in the within-mentioned Declaration.

Dated:_____________________ ,

                                         WILMINGTON TRUST COMPANY,
                                         not in its individual capacity but
                                         solely as Property Trustee

                                         By:  _____________________
                                              Authorized Signatory

                                      A1-5

<PAGE>

                          [FORM OF REVERSE OF SECURITY]

     Distributions  on each Capital Security will be payable at a fixed rate per
annum of _____%  (the  "Coupon  Rate") of the  liquidation  amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property  Trustee.  Distributions in arrears for more than one
semi-annual  period will bear interest thereon  compounded  semi-annually at the
Coupon  Rate (to the  extent  permitted  by  applicable  law).  Pursuant  to the
Registration  Rights Agreement and the Liquidated Damages Agreement,  in certain
limited  circumstances  the Debenture  Issuer will be required to pay Liquidated
Damages (as defined in the  Registration  Rights  Agreement  and the  Liquidated
Damages Agreement) with respect to the Debentures.  The term "Distributions," as
used herein,  includes such cash distributions and any and all such interest and
Liquidated  Damages,  if any, payable unless otherwise stated. A Distribution is
payable only to the extent that  payments are made in respect of the  Debentures
held by the Property  Trustee and to the extent the  Property  Trustee has funds
legally available therefor.

     Distributions on the Capital Securities will be cumulative, will accumulate
from the most  recent  date to which  Distributions  have  been  paid or,  if no
Distributions   have  been  paid,  from  March  1,  2000  and  will  be  payable
semi-annually  in  arrears,  on  March  1st  and  September  1st of  each  year,
commencing September 1, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. As long
as no Event of Default has occurred and is continuing  under the Indenture,  the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending  the interest  payment  period at any time and from time to time on
the Debentures for a period not exceeding ten consecutive  semi-annual  calendar
periods,  including  the first such  semi-annual  period  during such  extension
period (each an "Extension Period"), provided that no Extension Period shall end
on a date other  than an  Interest  Payment  Date for the  Debentures  or extend
beyond the Maturity Date of the  Debentures.  As a consequence of such deferral,
Distributions  (other than  Liquidated  Damages,  if any) will also be deferred.
Notwithstanding  such  deferral,  semi-annual  Distributions  will  continue  to
accumulate with interest thereon (to the extent permitted by applicable law, but
not at a rate exceeding the rate of interest then accruing on the Debentures) at
the Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the  termination of any Extension  Period,  the Debenture  Issuer may further
defer payments of interest by further extending such Extension Period;  provided
that  such  Extension  Period,  together  with all  such  previous  and  further
extensions  within such  Extension  Period,  may not (i) exceed ten  consecutive
semi-annual  periods,   including  the  first  semi-annual  period  during  such
Extension Period, (ii) end on a date other than an Interest Payment Date for the
Debentures or (iii) extend beyond the Maturity Date of the Debentures.  Payments
of  accumulated  Distributions  will be payable to Holders as they appear on the
books and records of the Trust on the record date immediately  preceding the end
of the Extension  Period.  Upon the termination of any Extension  Period and the
payment  of all  amounts  then due,  the  Debenture  Issuer  may  commence a new
Extension Period, subject to the above requirements.

     Subject  to  receipt  by the  Sponsor  of any and all  required  regulatory
approvals and to certain other  conditions set forth in the  Declaration and the
Indenture,  the Property  Trustee may, at the  direction of the Sponsor,  at any
time dissolve the Trust and after  satisfaction  of  liabilities to creditors of
the Trust as provided by applicable  law, cause the Debentures to be distributed
to the

                                      A1-6

<PAGE>

Holders of the Securities in liquidation  of the Trust or,  simultaneously  with
any  redemption of the  Debentures,  cause a Like Amount of the Securities to be
redeemed by the Trust.

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

                                      A1-7

<PAGE>

     The following  abbreviations,  when used in the  inscription on the face of
this  Certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

         TEN CON - as tenants in common

         TEN ENT - as tenants in the entireties

         JT TEN - as joint tenants with right of survival

         UNIF GIFT MIN ACT - under Uniform Gift to Minors Act and not as tenants

         Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT

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

                       (Assignee's social security or tax identification number)

                       (Address and zip code of assignee)

and irrevocably appoints

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

Date:

Signature:

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

Signature Guarantee:

                                      A1-8

<PAGE>

     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 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
     Registrar in addition to, or in substitution  for, STAMP, all in accordance
     with the Securities Exchange Act of 1934, as amended.

                                      A1-9

<PAGE>

     [Include  the  following  if  the  Capital   Security  bears  a  Restricted
     Securities Legend]

In connection  with any transfer of any of the Capital  Securities  evidenced by
this  Certificate,  the  undersigned  confirms that such Capital  Securities are
being:

CHECK ONE BOX BELOW

     (1)  o    exchanged for the undersigned's own account without transfer; or

     (2)  o    transferred  pursuant to and in  compliance  with Rule 144A under
               the Securities Act of 1933, as amended; or

     (3)  o    transferred to an institutional  "accredited investor" within the
               meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
               the  Securities  Act  of  1933  that  is  acquiring  the  Capital
               Securities  for its own  account,  or for the  account of such an
               institutional  "accredited investor," for investment purposes and
               not with a view to, or for offer or sale in connection  with, any
               distribution  in  violation  of the  Securities  Act of 1933,  as
               amended; or

     (4)  o    transferred  pursuant  to another  available  exemption  from the
               registration  requirements  of the  Securities  Act of  1933,  as
               amended; or

     (5)  o    transferred pursuant to an effective registration statement.

Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital  Securities  evidenced by this Certificate in the name of any Person
other  than the  Holder  hereof;  provided,  however,  that if box (3) or (4) is
checked,  the Registrar may require,  prior to registering  any such transfer of
the  Capital   Securities,   such  legal  opinions,   certifications  and  other
information as the Trust has reasonably  requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, as amended, such as
the exemption provided by Rule 144 under such Act; provided,  further,  that (i)
if box (2) is checked,  by acceptance of this Certificate,  the transferee shall
be deemed to have  certified  that it is a "qualified  institutional  buyer" (as
defined in Rule 144A)  ("QIB")  acquiring  the  Capital  Securities  for its own
account  or for the  account  of  another  QIB  over  which  it  exercises  sole
investment  discretion  and that it is aware that the Holder is relying upon the
exemption  from  registration  afforded by Rule 144A in respect of the  Holder's
transfer  of  Capital  Securities  to it or  (ii)  if box  (3) is  checked,  the
transferee   must  also  provide  to  the  Registrar  a  Transferee   Letter  of
Representation  in the form  attached to the  Offering  Memorandum  of the Trust
dated  February  ___,  2000;  provided,  further,  that  after  the date  that a
registration statement has been filed and so long as such Registration Statement
continues to be  effective,  only then may the  Registrar  permit  transfers for
which box (5) has been checked.

                                           Signature

                                      A1-10

<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

         THIS COMMON 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 LAW. NEITHER THIS COMMON 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, REGISTRATION.

                                      A2-1

<PAGE>

     This  Certificate  is not  transferable  except in compliance  with Section
9.1(c) of the Declaration.

                    Certificate Evidencing Common Securities

                                       of

                             Cascade Capital Trust I

                             ____% Common Securities
                 (liquidation amount $1,000 per Common Security)

                  Cascade  Capital Trust I, a statutory  business  trust created
under the laws of the State of Delaware (the  "Trust"),  hereby  certifies  that
Cascade  Financial  Corporation  (the "Holder") is the  registered  owner of ___
common securities of the Trust representing  undivided  beneficial  interests in
the assets of the Trust  designated  the _____% Common  Securities  (liquidation
amount $1,000 per Common  Security)  (the "Common  Securities").  Subject to the
terms of  Section  9.1(c) of the  Declaration  (as  defined  below),  the Common
Securities  are  not   transferable.   The  designation,   rights,   privileges,
restrictions,   preferences  and  other  terms  and  provisions  of  the  Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated  Declaration of the Trust dated as of
March 1, 2000, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common  Securities as set forth in
Annex I to the Declaration.  Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration.  The Sponsor will provide a copy
of the Declaration, the Common Securities Guarantee and the Indenture (including
any  supplemental  indenture) to a Holder without charge upon written request to
the Trust at its principal place of business.

                  Upon receipt of this  Certificate,  the Holder is bound by the
Declaration  and is entitled to the benefits  thereunder  and to the benefits of
the Common Securities Guarantee to the extent provided therein.

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

                  IN WITNESS  WHEREOF,  the Trust has executed this  certificate
this 1st day of March, 2000.

                                      CASCADE CAPITAL TRUST I

                                      By:  _____________________
                                               C.F. Safstrom
                                               Administrative Trustee

                                      A2-2

<PAGE>

                          [FORM OF REVERSE OF SECURITY]

         Distributions  on each  Common  Security  will be  payable at a rate of
____% per annum  (the  "Coupon  Rate")  of the  liquidation  amount of $1000 per
Common Security,  such rate being the rate of interest payable on the Debentures
to be held by the Property  Trustee.  Distributions in arrears for more than one
semi-annual  period will bear interest thereon  compounded  semi-annually at the
Coupon  Rate (to the  extent  permitted  by  applicable  law).  Pursuant  to the
Registration  Rights Agreement,  in certain limited  circumstances the Debenture
Issuer  will  be  required  to  pay  Liquidated   Damages  (as  defined  in  the
Registration  Rights  Agreement)  with  respect  to  the  Debentures.  The  term
"Distributions",  as used herein,  includes such cash  distributions and any and
all such interest and  Liquidated  Damages,  if any,  payable  unless  otherwise
stated.  A Distribution  is payable only to the extent that payments are made in
respect of the  Debentures  held by the  Property  Trustee and to the extent the
Property Trustee has funds legally available therefor.

         Distributions on the Common Securities will be cumulative,  will accrue
from the most  recent  date to which  Distributions  have  been  paid or,  if no
Distributions   have  been  paid,  from  March  1,  2000  and  will  be  payable
semi-annually  in  arrears,  on  March  1st  and  September  1st of  each  year,
commencing September 1, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. As long
as no Event of Default has occurred and is continuing  under the Indenture,  the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending  the interest  payment  period at any time and from time to time on
the Debentures for a period not exceeding ten consecutive  calendar  semi-annual
periods,  including  the first such  semi-annual  period  during such  extension
period (each an "Extension Period"), provided that no Extension Period shall end
on a date other  than an  Interest  Payment  Date for the  Debentures  or extend
beyond the Maturity Date of the  Debentures.  As a consequence of such deferral,
Distributions will also be deferred.  Notwithstanding such deferral, semi-annual
Distributions  will continue to accumulate with interest  thereon (to the extent
permitted by  applicable  law, but not at a rate  exceeding the rate of interest
then accruing on the  Debentures)  at the Coupon Rate  compounded  semi-annually
during any such  Extension  Period.  Prior to the  termination  of any Extension
Period,  the Debenture  Issuer may further defer payments of interest by further
extending such Extension Period;  provided that such Extension Period,  together
with all such previous and further  extensions within such Extension Period, may
not (i)  exceed to ten  consecutive  semi-annual  periods,  including  the first
semi-annual  period during such Extension Period,  (ii) end on a date other than
an Interest  Payment Date for the Debentures or (iii) extend beyond the Maturity
Date of the  Debentures.  Payments of accrued  Distributions  will be payable to
Holders as they  appear on the books and records of the Trust on the record date
immediately  preceding the end of the Extension Period.  Upon the termination of
any  Extension  Period and the payment of all amounts  then due,  the  Debenture
Issuer may commence a new Extension Period, subject to the above requirements.

         Subject  to  the  receipt  by  the  Sponsor  of any  and  all  required
regulatory   approvals  and  to  certain  other  conditions  set  forth  in  the
Declaration and the Indenture, the Property Trustee may, at the direction of the
Sponsor,  at any  time  dissolve  the  Trust  and  cause  the  Debentures  to be
distributed  to the Holders of the  Securities in  liquidation  of the Trust or,
simultaneously with any redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.

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

         Under  certain  circumstances,  the rights of the holders of the Common
Securities  shall be  subordinate  to the rights of the  holders of the  Capital
Securities, as provided in the Declaration.

                                      A2-3COMMON SECURITY CERTIFICATE

         THIS COMMON 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 LAW. NEITHER THIS COMMON 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, REGISTRATION.

<PAGE>

This Certificate is not transferable except in compliance with Section 9.1(c) of
the Declaration.

                    Certificate Evidencing Common Securities

                                       of

                             Cascade Capital Trust I

                             ____% Common Securities
                 (liquidation amount $1,000 per Common Security)

     Cascade Capital Trust I, a statutory  business trust created under the laws
of the State of Delaware (the "Trust"),  hereby certifies that Cascade Financial
Corporation (the "Holder") is the registered  owner of 619 common  securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated  the ____% Common  Securities  (liquidation  amount $1,000 per Common
Security) (the "Common  Securities").  Subject to the terms of Section 9.1(c) of
the Declaration (as defined below),  the Common Securities are not transferable.
The designation, rights, privileges,  restrictions,  preferences and other terms
and provisions of the Common Securities  represented hereby are issued and shall
in all  respects  be subject  to the  provisions  of the  Amended  and  Restated
Declaration  of the Trust  dated as of  February  18,  2000,  as the same may be
amended from time to time (the "Declaration"),  including the designation of the
terms of the  Common  Securities  as set  forth  in Annex I to the  Declaration.
Capitalized  terms used but not defined herein shall have the meaning given them
in the  Declaration.  The Sponsor  will provide a copy of the  Declaration,  the
Common  Securities  Guarantee  and the  Indenture  (including  any  supplemental
indenture) to a Holder without  charge upon written  request to the Trust at its
principal place of business.

     Upon receipt of this  Certificate,  the Holder is bound by the  Declaration
and is entitled to the  benefits  thereunder  and to the  benefits of the Common
Securities Guarantee to the extent provided therein.

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

     IN WITNESS WHEREOF,  the Trust has executed this certificate this ___th day
of February, 2000.

                                                     CASCADE CAPITAL TRUST I

                                                     By:   _____________________
                                                           C.F. Safstrom
                                                          Administrative Trustee

<PAGE>

         Distributions  on each  Common  Security  will be  payable at a rate of
11.00%  per annum (the  "Coupon  Rate") of the  liquidation  amount of $1000 per
Common Security,  such rate being the rate of interest payable on the Debentures
to be held by the Property  Trustee.  Distributions in arrears for more than one
semi-annual  period will bear interest thereon  compounded  semi-annually at the
Coupon  Rate (to the  extent  permitted  by  applicable  law).  Pursuant  to the
Registration  Rights Agreement,  in certain limited  circumstances the Debenture
Issuer  will  be  required  to  pay  Liquidated   Damages  (as  defined  in  the
Registration  Rights  Agreement)  with  respect  to  the  Debentures.  The  term
"Distributions",  as used herein,  includes such cash  distributions and any and
all such interest and  Liquidated  Damages,  if any,  payable  unless  otherwise
stated.  A Distribution  is payable only to the extent that payments are made in
respect of the  Debentures  held by the  Property  Trustee and to the extent the
Property Trustee has funds legally available therefor.

         Distributions on the Common Securities will be cumulative,  will accrue
from the most  recent  date to which  Distributions  have  been  paid or,  if no
Distributions   have  been  paid,  from  March  1,  2000  and  will  be  payable
semi-annually  in  arrears,  on  March  1st  and  September  1st of  each  year,
commencing September 1, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. As long
as no Event of Default has occurred and is continuing  under the Indenture,  the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending  the interest  payment  period at any time and from time to time on
the Debentures for a period not exceeding ten consecutive  calendar  semi-annual
periods,  including  the first such  semi-annual  period  during such  extension
period (each an "Extension Period"), provided that no Extension Period shall end
on a date other  than an  Interest  Payment  Date for the  Debentures  or extend
beyond the Maturity Date of the  Debentures.  As a consequence of such deferral,
Distributions will also be deferred.  Notwithstanding such deferral, semi-annual
Distributions  will continue to accumulate with interest  thereon (to the extent
permitted by  applicable  law, but not at a rate  exceeding the rate of interest
then accruing on the  Debentures)  at the Coupon Rate  compounded  semi-annually
during any such  Extension  Period.  Prior to the  termination  of any Extension
Period,  the Debenture  Issuer may further defer payments of interest by further
extending such Extension Period;  provided that such Extension Period,  together
with all such previous and further  extensions within such Extension Period, may
not (i)  exceed to ten  consecutive  semi-annual  periods,  including  the first
semi-annual  period during such Extension Period,  (ii) end on a date other than
an Interest  Payment Date for the Debentures or (iii) extend beyond the Maturity
Date of the  Debentures.  Payments of accrued  Distributions  will be payable to
Holders as they  appear on the books and records of the Trust on the record date
immediately  preceding the end of the Extension Period.  Upon the termination of
any  Extension  Period and the payment of all amounts  then due,  the  Debenture
Issuer may commence a new Extension Period, subject to the above requirements.

         Subject  to  the  receipt  by  the  Sponsor  of any  and  all  required
regulatory   approvals  and  to  certain  other  conditions  set  forth  in  the
Declaration and the Indenture, the Property Trustee may, at the direction of the
Sponsor,  at any  time  dissolve  the  Trust  and  cause  the  Debentures  to be
distributed  to the Holders of the  Securities in  liquidation  of the Trust or,
simultaneously with any redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.

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

         Under  certain  circumstances,  the rights of the holders of the Common
Securities  shall be  subordinate  to the rights of the  holders of the  Capital
Securities, as provided in the Declaration.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]