Document:

EXHIBIT 4.2
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                               GUARANTEE AGREEMENT

                                     between

                     FIRST LITCHFIELD FINANCIAL CORPORATION,
                                  As Guarantor,

                                       and

                            WILMINGTON TRUST COMPANY,
                              As Guarantee Trustee

                            Dated as of June 16, 2006

                       FIRST LITCHFIELD STATUTORY TRUST II

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                                TABLE OF CONTENTS

ARTICLE I INTERPRETATION AND DEFINITIONS......................................1
SECTION 1.1     Interpretation................................................1
SECTION 1.2     Definitions...................................................2

ARTICLE II REPORTS............................................................6
SECTION 2.1     List of Holders...............................................6
SECTION 2.2     Periodic Reports to the Guarantee Trustee.....................6
SECTION 2.3     Event of Default; Waiver......................................6
SECTION 2.4     Event of Default; Notice......................................7

ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE................7
SECTION 3.1     Powers and Duties of the Guarantee Trustee....................7
SECTION 3.2     Certain Rights of the Guarantee Trustee.......................8
SECTION 3.3     Compensation.................................................10
SECTION 3.4     Indemnity....................................................10
SECTION 3.5     Securities...................................................11

ARTICLE IV GUARANTEE TRUSTEE.................................................11
SECTION 4.1     Guarantee Trustee; Eligibility...............................11
SECTION 4.2     Appointment, Removal and Resignation of the
                Guarantee Trustee............................................12

ARTICLE V GUARANTEE..........................................................12
SECTION 5.1     Guarantee....................................................12
SECTION 5.2     Waiver of Notice and Demand..................................13
SECTION 5.3     Obligations Not Affected.....................................13
SECTION 5.4     Rights of Holders............................................14
SECTION 5.5     Guarantee of Payment.........................................14
SECTION 5.6     Subrogation..................................................14
SECTION 5.7     Independent Obligations......................................15
SECTION 5.8     Enforcement..................................................15

ARTICLE VI COVENANTS AND SUBORDINATION.......................................15
SECTION 6.1     Dividends, Distributions and Payments........................15
SECTION 6.2     Subordination................................................16
SECTION 6.3     Pari Passu Guarantees........................................16

ARTICLE VII TERMINATION......................................................16
SECTION 7.1     Termination..................................................16

ARTICLE VIII MISCELLANEOUS...................................................17
SECTION 8.1     Successors and Assigns.......................................17
SECTION 8.2     Amendments...................................................17
SECTION 8.3     Notices......................................................17

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SECTION 8.4     Benefit......................................................18
SECTION 8.5     Governing Law................................................18
SECTION 8.6     Submission to Jurisdiction...................................19
SECTION 8.7     Counterparts; facsimile......................................19

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         GUARANTEE AGREEMENT,  dated as of June 16, 2006, executed and delivered
by  First  Litchfield  Financial   Corporation,   a  Delaware  corporation  (the
"Guarantor")  having  its  principal  office  at  13  North  Street,  Box  #578,
Litchfield,  CT.  06759,  and  WILMINGTON  TRUST  COMPANY,  a  Delaware  banking
corporation,  as trustee (in such capacity,  the "Guarantee  Trustee"),  for the
benefit of the Holders (as defined  herein)  from time to time of the  Preferred
Securities  (as  defined  herein)  of First  Litchfield  Statutory  Trust  II, a
Delaware statutory trust (the "Issuer").

                              W I T N E S S E T H :

         WHEREAS, pursuant to an Amended and Restated Trust Agreement,  dated as
of the date hereof (the "Trust Agreement"),  among the Guarantor,  as Depositor,
the Property Trustee, the Delaware Trustee and the Administrative Trustees named
therein  and the  holders  from  time to time of the  Preferred  Securities  (as
hereinafter  defined),  the Issuer is issuing $3,000,000  aggregate  Liquidation
Amount (as  defined  in the Trust  Agreement)  of its  Floating  Rate  Preferred
Securities  (Liquidation  Amount $1,000 per preferred  security) (the "Preferred
Securities") representing preferred undivided beneficial interests in the assets
of the Issuer and having the terms set forth in the Trust Agreement;

         WHEREAS,  the Preferred Securities will be issued by the Issuer and the
proceeds  thereof,  together with the proceeds from the issuance of the Issuer's
Common  Securities  (as defined  below),  will be used to purchase the Notes (as
defined in the Trust Agreement) of the Guarantor; and

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

         NOW,  THEREFORE,  in  consideration  of the  purchase by each Holder of
Preferred  Securities,  which purchase the Guarantor hereby agrees shall benefit
the Guarantor,  the Guarantor executes and delivers this Guarantee  Agreement to
provide  as follows  for the  benefit  of the  Holders  from time to time of the
Preferred Securities:

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

         SECTION 1.1 Interpretation.

         In this Guarantee Agreement, unless the context otherwise requires:

                  (a) capitalized terms used in this Guarantee Agreement but not
         defined in the preamble hereto have the respective meanings assigned to
         them in Section 1.2;

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                  (b) the words "include",  "includes" and "including"  shall be
         deemed to be followed by the phrase "without limitation";

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

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

                  (e) the words "hereby", "herein", "hereof" and "hereunder" and
         other words of similar  import refer to this  Guarantee  Agreement as a
         whole and not to any particular Article, Section or other subdivision;

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

                  (g) the  masculine,  feminine  or neuter  genders  used herein
         shall include the masculine, feminine and neuter genders.

         SECTION 1.2 Definitions.

         As used in this Guarantee  Agreement,  the terms set forth below shall,
unless the context otherwise requires, have the following meanings:

                  "Affiliate"  of any  specified  Person  means any other Person
         directly or indirectly  controlling or controlled by or under direct or
         indirect common control with such specified Person;  provided, that the
         Issuer shall not be deemed to be an Affiliate of the Guarantor. For the
         purposes of this  definition,  "control"  when used with respect to any
         specified  Person means the power to direct the management and policies
         of such Person,  directly or indirectly,  whether through the ownership
         of  voting  securities,   by  contract  or  otherwise;  and  the  terms
         "controlling"  and  "controlled"  have  meanings   correlative  to  the
         foregoing.

                  "Beneficiaries"  means  any  Person  to whom the  Issuer is or
         hereafter becomes indebted or liable.

                  "Board of  Directors"  means  either the board of directors of
         the Guarantor or any duly authorized committee of that board.

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

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                  "Debt" means with respect to any Person,  whether  recourse is
         to all or a portion of the  assets of such  Person,  whether  currently
         existing  or  hereafter  incurred,  and whether or not  contingent  and
         without  duplication,  (i) every  obligation  of such  Person for money
         borrowed;  (ii) every  obligation  of such Person  evidenced  by bonds,
         debentures,  notes or other similar instruments,  including obligations
         incurred in  connection  with the  acquisition  of property,  assets or
         businesses;  (iii) every  reimbursement  obligation of such Person with
         respect  to  letters  of  credit,   bankers'   acceptances  or  similar
         facilities issued for the account of such Person; (iv) every obligation
         of such  Person  issued or assumed as the  deferred  purchase  price of
         property or services (but excluding  trade accounts  payable arising in
         the ordinary course of business); (v) every capital lease obligation of
         such Person; (vi) all indebtedness of such Person,  whether incurred on
         or  prior  to the  date  of  this  Guarantee  Agreement  or  thereafter
         incurred,  for  claims in  respect of  derivative  products,  including
         interest rate,  foreign exchange rate and commodity forward  contracts,
         options, swaps and similar arrangements;  (vii) every obligation of the
         type referred to in clauses (i) through (vi) of another  Person and all
         dividends of another Person the payment of which,  in either case, such
         Person has  guaranteed  or is  responsible  or liable for,  directly or
         indirectly,   as  obligor  or  otherwise;   and  (viii)  any  renewals,
         extensions,  refundings,  amendments or modifications of any obligation
         of the type referred to in clauses (i) through (vii).

                  "Event of Default"  means a default by the Guarantor on any of
         its  payment  or other  obligations  under  this  Guarantee  Agreement;
         provided,  that  except  with  respect  to a default  in payment of any
         Guarantee Payments, the Guarantor shall have received notice of default
         from the Guarantee Trustee and shall not have cured such default within
         thirty (30) days after receipt of such notice.

                  "Guarantee   Payments"   means  the   following   payments  or
         distributions,  without  duplication,  with  respect  to the  Preferred
         Securities,  to the  extent  not  paid or made by or on  behalf  of the
         Issuer: (i) any accumulated and unpaid Distributions (as defined in the
         Trust Agreement)  required to be paid on the Preferred  Securities,  to
         the extent the Issuer  shall have funds on hand  available  therefor at
         such time,  (ii) the  Redemption  Price with  respect to any  Preferred
         Securities to the extent the Issuer shall have funds on hand  available
         therefor  at such  time,  and (iii)  upon a  voluntary  or  involuntary
         termination,  winding up or liquidation of the Issuer, unless Notes are
         distributed  to the  Holders,  the lesser of (a) the  aggregate  of the
         Liquidation  Amount of $1,000 per Preferred  Security plus  accumulated
         and unpaid  Distributions  on the  Preferred  Securities to the date of
         payment,  to the  extent  that the Issuer  shall  have funds  available
         therefor  at such  time and (b) the  amount  of  assets  of the  Issuer
         remaining  available for  distribution to Holders in liquidation of the
         Issuer after  satisfaction of liabilities to creditors of the Issuer in
         accordance  with  applicable  law (in  either  case,  the  "Liquidation
         Distribution").

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                  "Guarantee  Trustee"  means  Wilmington  Trust  Company in its
         capacity as trustee hereunder,  until a Successor Guarantee Trustee, as
         defined  below,  has been  appointed and has accepted such  appointment
         pursuant to the terms of this Guarantee Agreement, and thereafter means
         each such Successor Guarantee Trustee.

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

                  "Indenture" means the Junior Subordinated Indenture,  dated as
         of the date hereof, as supplemented and amended,  between the Guarantor
         and Wilmington Trust Company, as trustee.

                  "List of Holders" has the meaning specified in Section 2.1.

                  "Majority in Liquidation  Amount of the Preferred  Securities"
         means a vote by the Holder(s),  voting  separately as a class,  of more
         than fifty  percent (50%) of the  aggregate  Liquidation  Amount of all
         then outstanding Preferred Securities issued by the Issuer.

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

                  "Officers'  Certificate"  means, with respect to any Person, a
         certificate  signed by the Chief  Executive  Officer,  Chief  Financial
         Officer,  President  or a Vice  President  of such  Person,  and by the
         Treasurer,  an  Assistant  Treasurer,  the  Secretary  or an  Assistant
         Secretary of such Person, and delivered to the Guarantee  Trustee.  Any
         Officers'  Certificate  delivered  with  respect to  compliance  with a
         condition or covenant  provided for in this Guarantee  Agreement (other
         than the certificate provided pursuant to Section 2.4) shall include:

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

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

                  (c) a statement that each 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

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

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

                  "Responsible  Officer"  means,  with respect to the  Guarantee
         Trustee, any Senior Vice President,  any Vice President,  any Assistant
         Vice President,  the Secretary, any Assistant Secretary, the Treasurer,
         any Assistant  Treasurer,  any Trust Officer or Assistant Trust Officer
         or any other  officer in the  Corporate  Trust Office of the  Guarantee
         Trustee  with  direct  responsibility  for the  administration  of this
         Guarantee  Agreement  and also  means,  with  respect  to a  particular
         corporate  trust  matter,  any other  officer  to whom  such  matter is
         referred  because of that officer's  knowledge of and familiarity  with
         the particular subject.

                  "Senior  Debt"  means the  principal  of and any  premium  and
         interest on (including  interest accruing on or after the filing of any
         petition in bankruptcy or for reorganization  relating to the Guarantor
         whether or not such claim for post-petition interest is allowed in such
         proceeding) all Debt of the Guarantor,  whether incurred on or prior to
         the date of the Indenture or thereafter incurred, unless it is provided
         in the instrument  creating or evidencing the same or pursuant to which
         the same is  outstanding,  that such  obligations  are not  superior in
         right of payment to the Preferred Securities;  provided,  however, that
         if the Guarantor is subject to the  regulation  and  supervision  of an
         "appropriate  Federal  banking  agency" within the meaning of 12 U.S.C.
         1813(q),  the  Guarantor  shall  have  received  the  approval  of such
         appropriate Federal banking agency prior to issuing any such obligation
         if not otherwise generally approved; provided further, that Senior Debt
         shall not include any other debt securities,  and guarantees in respect
         of such debt securities,  issued to any trust other than the Issuer (or
         a trustee of such trust),  partnership or other entity  affiliated with
         the  Guarantor  that  is  a  financing  vehicle  of  the  Guarantor  (a
         "financing entity"),  in connection with the issuance by such financing
         entity of equity  securities  or other  securities  that are treated as
         equity  capital  for  regulatory  capital  purposes  guaranteed  by the
         Guarantor  pursuant  to an  instrument  that  ranks  pari passu with or
         junior in right of  payment  to this  Guarantee  Agreement,  including,
         without  limitation,  securities  issued by First Litchfield  Statutory
         Trust I.

                  "Successor  Guarantee  Trustee"  means a  successor  Guarantee
         Trustee possessing the qualifications to act as Guarantee Trustee under
         Section 4.1.

                  "Trust  Indenture Act" means the Trust  Indenture Act of 1939,
         as amended and as in effect on the date of this Guarantee Agreement.

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Capitalized  or otherwise  defined terms used but not otherwise  defined  herein
shall have the  meanings  assigned  to such terms in the Trust  Agreement  as in
effect on the date hereof.

                                   ARTICLE II

                                     REPORTS

         SECTION 2.1 List of Holders.

         The  Guarantor  shall furnish or cause to be furnished to the Guarantee
Trustee at such times as the  Guarantee  Trustee may request in writing,  within
thirty (30) days after the receipt by the Guarantor of any such request, a list,
in such form as the Guarantee Trustee may reasonably  require,  of the names and
addresses  of the  Holders  (the "List of  Holders")  as of a date not more than
fifteen (15) days prior to the time such list is furnished,  in each case to the
extent such  information is in the possession or control of the Guarantor and is
not identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders  previously given to it on receipt of a new List
of Holders.

         SECTION 2.2 Periodic Reports to the Guarantee Trustee.

         The  Guarantor  shall  deliver  to the  Guarantee  Trustee,  within one
hundred and twenty (120) days after the end of each fiscal year of the Guarantor
ending after the date of this  Guarantee  Agreement,  an  Officers'  Certificate
covering the preceding  fiscal year,  stating whether or not to the knowledge of
the signers thereof the Guarantor is in default in the performance or observance
of any of the terms or  provisions or any of the  conditions  of this  Guarantee
Agreement  (without  regard  to any  period  of grace or  requirement  of notice
provided  hereunder)  and,  if  the  Guarantor  shall  be  in  default  thereof,
specifying  all such  defaults  and the nature and status  thereof of which they
have knowledge.

         SECTION 2.3 Event of Default; Waiver.

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

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         SECTION 2.4 Event of Default; Notice.

                  (a) The Guarantee Trustee shall, within ninety (90) days after
         the  occurrence  of a default,  transmit to the Holders  notices of all
         defaults actually known to the Guarantee Trustee,  unless such defaults
         have been cured or waived  before the giving of such notice,  provided,
         that,  except in the case of a default in the  payment  of a  Guarantee
         Payment,  the Guarantee  Trustee shall be protected in withholding such
         notice  if and so  long  as  the  Board  of  Directors,  the  executive
         committee or a trust committee of directors and/or Responsible Officers
         of the Guarantee  Trustee in good faith  determine that the withholding
         of such notice is in the  interests of the Holders.  For the purpose of
         this Section 2.4, the term "default"  means any event that is, or after
         notice or lapse of time or both would become, an Event of Default.

                  (b)  The  Guarantee  Trustee  shall  not  be  deemed  to  have
         knowledge  of any  default  or Event of Default  unless  the  Guarantee
         Trustee shall have received  written notice,  or a Responsible  Officer
         charged with the administration of this Guarantee  Agreement shall have
         received  written notice,  of such default or Event of Default from the
         Guarantor or a Holder.

                                  ARTICLE III

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

         SECTION 3.1 Powers and Duties of the Guarantee Trustee.

                  (a) This  Guarantee  Agreement  shall be held by the Guarantee
         Trustee for the benefit of the Holders, and the Guarantee Trustee shall
         not transfer  this  Guarantee  Agreement to any Person  except a Holder
         exercising  its rights  pursuant  to Section  5.4(d) or to a  Successor
         Guarantee  Trustee upon acceptance by such Successor  Guarantee Trustee
         of its appointment to act as Successor  Guarantee  Trustee.  The right,
         title and interest of the Guarantee Trustee shall automatically vest in
         any Successor  Guarantee  Trustee,  upon  acceptance by such  Successor
         Guarantee  Trustee of its appointment  hereunder,  and such vesting and
         cessation  of title  shall be  effective  whether  or not  conveyancing
         documents have been executed and delivered  pursuant to the appointment
         of such Successor Guarantee Trustee.

                  (b) The rights, immunities, duties and responsibilities of the
         Guarantee Trustee shall be as provided by this Guarantee  Agreement and
         there shall be no other duties or obligations,  express or implied,  of
         the Guarantee Trustee.  Notwithstanding the foregoing, no provisions of
         this Guarantee  Agreement shall require the Guarantee Trustee to expend
         or risk its own funds or otherwise incur any financial liability in the
         performance of any of its duties  hereunder,  or in the exercise of any
         of its  rights or  powers,  if it shall  have  reasonable  grounds  for
         believing  that repayment of such funds or adequate  indemnity  against
         such risk or liability is not reasonably  assured to it. Whether or not
         herein  expressly  so

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         provided,  every provision of this Guarantee  Agreement relating to the
         conduct or affecting  the  liability of or affording  protection to the
         Guarantee  Trustee  shall be subject to the  provisions of this Section
         3.1. To the extent that, at law or in equity, the Guarantee Trustee has
         duties and  liabilities  relating to the Guarantor or the Holders,  the
         Guarantee  Trustee  shall not be liable to any Holder for the Guarantee
         Trustee's  good faith  reliance  on the  provisions  of this  Guarantee
         Agreement.  The provisions of this Guarantee  Agreement,  to the extent
         that they restrict the duties and liabilities of the Guarantee  Trustee
         otherwise existing at law or in equity, are agreed by the Guarantor and
         the  Holders  to  replace  such other  duties  and  liabilities  of the
         Guarantee Trustee.

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

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

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

         SECTION 3.2 Certain Rights of the Guarantee Trustee.

         (a) Subject to the provisions of Section 3.1:

                           (i) the Guarantee  Trustee may conclusively  rely and
                  shall be fully  protected in acting or refraining  from acting
                  in good faith and in accordance with the terms hereof 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  reasonably  believed  by it to be genuine and to
                  have been  signed,  sent or  presented  by the proper party or
                  parties;

                           (ii)   any   direction   or  act  of  the   Guarantor
                  contemplated by this Guarantee Agreement shall be sufficiently
                  evidenced  by  an  Officers'   Certificate   unless  otherwise
                  prescribed herein;

                           (iii) the Guarantee Trustee may consult with counsel,
                  and the  advice  of such  counsel  shall be full and  complete
                  authorization  and  protection in respect of any action taken,
                  suffered or omitted to be taken

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                  by it hereunder  in good faith and in reliance  thereon and in
                  accordance  with such  advice.  Such counsel may be counsel to
                  the Guarantee Trustee,  the Guarantor or any of its Affiliates
                  and may be one of its employees.  The Guarantee  Trustee shall
                  have the right at any time to seek instructions concerning the
                  administration  of this Guarantee  Agreement from any court of
                  competent jurisdiction;

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

                           (v) the Guarantee  Trustee shall not be bound to make
                  any  investigation  into the  facts or  matters  stated in any
                  resolution,   certificate,   statement,  instrument,  opinion,
                  report,  notice,  request,  direction,  consent,  order, bond,
                  debenture, note, other evidence of indebtedness or other paper
                  or document, but the Guarantee Trustee, in its discretion, may
                  make such further inquiry or investigation  into such facts or
                  matters as it may see fit, and if the Guarantee  Trustee shall
                  determine to make such inquiry or  investigation,  it shall be
                  entitled  to examine the books,  records  and  premises of the
                  Guarantor, personally or by agent or attorney;

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

                           (vii)   whenever  in  the   administration   of  this
                  Guarantee  Agreement  the  Guarantee  Trustee  shall  deem  it
                  desirable  to receive  instructions  with respect to enforcing
                  any remedy or right hereunder,  the Guarantee  Trustee (A) may
                  request  instructions  from  the  Holders  of  a  Majority  in
                  Liquidation  Amount  of  the  Preferred  Securities,  (B)  may
                  refrain  from  enforcing  such  remedy or right or taking such
                  other  action  until such  instructions  are  received and (C)
                  shall  be  protected  in  acting  in   accordance   with  such
                  instructions;

                                       9
<PAGE>

                           (viii) except as otherwise expressly provided by this
                  Guarantee Agreement,  the Guarantee Trustee shall not be under
                  any obligation to take any action that is discretionary  under
                  the provisions of this Guarantee Agreement;

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

                           (x) the  Guarantee  Trustee shall have no duty to see
                  to any recording,  filing or registration of any instrument or
                  other writing (or any rerecording, refilling or reregistration
                  thereof).

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

         SECTION 3.3 Compensation.

         The Guarantor agrees to pay to the Guarantee  Trustee from time to time
reasonable  compensation  for  all  services  rendered  by it  hereunder  (which
compensation  shall not be  limited  by any  provisions  of law in regard to the
compensation  of a trustee of an express  trust) and to reimburse  the Guarantee
Trustee upon request for all  reasonable  expenses,  disbursements  and advances
(including  the  reasonable  fees and  expenses  of its  attorneys  and  agents)
incurred or made by the Guarantee  Trustee in accordance  with any provisions of
this Guarantee Agreement.

         SECTION 3.4 Indemnity.

         The  Guarantor  agrees to indemnify  and hold  harmless  the  Guarantee
Trustee (including in its individual capacity) and any of its Affiliates and any
of their officers, directors, shareholders, employees, representatives or agents
from and against any loss, damage,  liability, tax (other than income, franchise
or other  taxes  imposed on amounts  paid  pursuant  to Section  3.3),  penalty,
expense or claim of any kind or nature whatsoever  incurred without  negligence,
bad faith or willful  misconduct  on its part,  arising out of or in  connection
with the acceptance or administration of this Guarantee Agreement, including the
costs and  expenses  of  defending  itself  against  any claim or  liability  in

                                       10
<PAGE>

connection  with the  exercise or  performance  of any of its rights,  powers or
duties  hereunder.  The  Guarantee  Trustee  will not claim or exact any lien or
charge on any Guarantee  Payments as a result of any amount due to it under this
Guarantee  Agreement.  This  indemnity  shall  survive the  termination  of this
Agreement or the resignation or removal of the Guarantee Trustee.

         In no event  shall the  Guarantee  Trustee be liable for any  indirect,
special,  punitive  or  consequential  loss or  damage  of any kind  whatsoever,
including,  but not limited to, lost profits,  even if the Guarantee Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

         In no event  shall the  Guarantee  Trustee be liable for any failure or
delay in the performance of its obligations  hereunder  because of circumstances
beyond its  control,  including,  but not limited to,  acts of God,  flood,  war
(declared or undeclared),  terrorism,  fire, riot, embargo or government action,
including any laws,  ordinances,  regulations,  governmental  action or the like
which delay,  restrict or prohibit the providing of the services contemplated by
this Guarantee Agreement.

         SECTION 3.5 Securities.

         The Guarantee Trustee or any other agent of the Guarantee  Trustee,  in
its individual or any other capacity,  may become the owner or pledgee of Common
or Preferred Securities.

                                   ARTICLE IV

                                GUARANTEE TRUSTEE

         SECTION 4.1 Guarantee Trustee; Eligibility.

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

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

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

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

                                       11
<PAGE>

                  (c)  If  the  Guarantee  Trustee  has  or  shall  acquire  any
         "conflicting  interest"  within the  meaning  of Section  310(b) of the
         Trust Indenture Act, the Guarantee  Trustee shall either eliminate such
         interest or resign in the manner and with the effect set out in Section
         4.2(c).

         SECTION 4.2  Appointment,  Removal  and  Resignation  of the  Guarantee
Trustee.

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

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

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

                  (d)  If  no  Successor   Guarantee  Trustee  shall  have  been
         appointed  and  accepted  appointment  as provided in this  Section 4.2
         within  thirty  (30)  days  after  delivery  to  the  Guarantor  of  an
         instrument  of  resignation,   the  resigning   Guarantee  Trustee  may
         petition,  at the  expense  of the  Guarantor,  any court of  competent
         jurisdiction  for appointment of a Successor  Guarantee  Trustee.  Such
         court may thereupon,  after  prescribing such notice, if any, as it may
         deem proper, appoint a Successor Guarantee Trustee.

                                   ARTICLE V

                                    GUARANTEE

         SECTION 5.1 Guarantee.

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

                                       12
<PAGE>

         amounts to the Holders.  The Guarantor shall give prompt written notice
         to the  Guarantee  Trustee in the event it makes any direct  payment to
         the Holders hereunder.

                  (b) The  Guarantor  hereby  also  agrees to assume any and all
         Obligations of the Issuer, and, in the event any such Obligation is not
         so assumed,  subject to the terms and conditions  hereof, the Guarantor
         hereby irrevocably and  unconditionally  guarantees to each Beneficiary
         the full payment,  when and as due, of any and all  Obligations to such
         Beneficiaries.  This Guarantee is intended to be for the  Beneficiaries
         who have received notice hereof.

         SECTION 5.2 Waiver of Notice and Demand.

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

         SECTION 5.3 Obligations Not Affected.

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

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

                  (b) the extension of time for the payment by the Issuer of all
         or any portion of the  Distributions  (other than an  extension of time
         for payment of  Distributions  that results  from the  extension of any
         interest  payment  period on the Notes as provided  in the  Indenture),
         Redemption  Price,  Liquidation  Distribution or any other sums payable
         under the terms of the  Preferred  Securities  or the extension of time
         for the performance of any other obligation  under,  arising out of, or
         in connection with, the Preferred Securities;

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

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

                                       13
<PAGE>

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

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

                  (g) any other  circumstance  whatsoever  that might  otherwise
         constitute a legal or equitable discharge or defense of a guarantor, it
         being  the  intent  of this  Section  5.3 that the  obligations  of the
         Guarantor  hereunder shall be absolute and unconditional  under any and
         all circumstances.

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

         SECTION 5.4 Rights of Holders.

         The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited  with the Guarantee  Trustee to be held for the benefit of the
Holders;  (b) the  Guarantee  Trustee  has the right to enforce  this  Guarantee
Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting  any  proceeding  for any remedy  available to the Guarantee
Trustee in respect of this Guarantee  Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any
Holder may  institute  a legal  proceeding  directly  against the  Guarantor  to
enforce its rights under this Guarantee  Agreement,  without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other Person.

         SECTION 5.5 Guarantee of Payment.

         This  Guarantee  Agreement  creates a  guarantee  of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without  duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.

         SECTION 5.6 Subrogation.

         The Guarantor shall be subrogated to all (if any) rights of the Holders
against  the  Issuer  in  respect  of any  amounts  paid to the  Holders  by the
Guarantor  under  this  Guarantee  Agreement  and shall  have the right to waive
payment by the Issuer  pursuant to Section 5.1;  provided,  that,  the Guarantor
shall not (except to the extent  required  by  mandatory  provisions  of law) be
entitled to enforce or exercise any rights it may acquire by way of  subrogation
or any indemnity,  reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee  Agreement.  If any amount shall
be paid to the Guarantor in violation of the preceding  sentence,  the Guarantor
agrees to hold such  amount in trust for the Holders and to pay over such amount
to the Holders.

                                       14
<PAGE>

         SECTION 5.7 Independent Obligations.

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

         SECTION 5.8 Enforcement.

         A Beneficiary may enforce the Obligations of the Guarantor contained in
Section  5.1(b)  directly  against the Guarantor,  and the Guarantor  waives any
right or remedy to require that any action be brought  against the Issuer or any
other person or entity before proceeding against the Guarantor.

                                   ARTICLE VI

                           COVENANTS AND SUBORDINATION

         SECTION 6.1 Dividends, Distributions and Payments.

         So long as any Preferred Securities remain outstanding,  if there shall
have occurred and be continuing an Event of Default or the Guarantor  shall have
entered  into an  Extension  Period as provided  for in the  Indenture  and such
period, or any extension thereof,  shall have commenced and be continuing,  then
the Guarantor may not (a) declare or pay any dividends or  distributions  on, or
redeem, purchase,  acquire or make a liquidation payment with respect to, any of
the  Guarantor's  Equity  Interests (as defined in the  Indenture),  (b) vote in
favor of or permit or otherwise allow any of its Subsidiaries (as defined in the
Indenture)  to  declare or pay any  dividends  or  distributions  on, or redeem,
purchase,  acquire or make a  liquidation  payment  with respect to or otherwise
retire, any of such Subsidiary's  Equity Interests entitling the holders thereof
to a stated  rate of return  other than  dividends  or  distributions  on Equity
Interests payable to the Company or any Subsidiary thereof (for the avoidance of
doubt,  whether such Equity  Interests are perpetual or otherwise),  or (c) make
any payment of principal  of or any interest or premium on or repay,  repurchase
or redeem  any debt  securities  of the  Guarantor  that rank pari  passu in all
respects with or junior in interest to the Preferred  Securities (other than (i)
repurchases,  redemptions  or other  acquisitions  of  Equity  Interests  of the
Guarantor in connection with (1) any employment contract,  benefit plan or other
similar  arrangement  with or for  the  benefit  of any  one or more  employees,
officers,  directors or consultants,  (2) a dividend reinvestment or stockholder
stock  purchase or similar plan with respect to any Equity  Interests or (3) the
issuance of Equity Interests of the Guarantor (or securities convertible into or
exercisable  for such  Equity  Interests)  as  consideration  in an  acquisition
transaction entered into prior to the occurrence of such Event of Default or the
applicable  Extension  Period,  (ii) as a result of an exchange or conversion of
any class or series of the Guarantor's Equity Interests (or any Equity Interests
of a Subsidiary  of the  Guarantor)  for any class or series of the  Guarantor's
Equity Interests or any class of series of the Guarantor's  indebtedness for any
class or series of the  Guarantor's  Equity

                                       15
<PAGE>

Interests, (iii) the purchase of fractional interests in Equity Interests of the
Guarantor  pursuant to the  conversions  or exchange  provisions  of such Equity
Interests or the security being converted or exchanged,  (iv) any declaration of
a dividend in connection  with any rights plan,  the issuance of rights,  Equity
Interests  or  other  property  under  any  rights  plan  or the  redemption  or
repurchase of rights pursuant thereto, or (v) any dividend in the form of Equity
Interests, warrants, options or other rights where the dividend Equity Interests
or the Equity  Interests  issuable  upon exercise of such  warrants,  options or
other rights is the same Equity Interests as that on which the dividend is being
paid or ranks pari passu with or junior to such Equity Interests).

         SECTION 6.2 Subordination.

         The  obligations of the Guarantor  under this Guarantee  Agreement will
constitute unsecured  obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor.

         SECTION 6.3 Pari Passu Guarantees.

                  (a) The  obligations  of the  Guarantor  under this  Guarantee
         Agreement  shall rank pari passu with the  obligations of the Guarantor
         under any similar  guarantee  agreements  issued by the Guarantor  with
         respect to  preferred  securities  (if any)  similar  to the  Preferred
         Securities, issued by trusts other than the Issuer established or to be
         established  by the  Guarantor  (if any),  in each case  similar to the
         Issuer, including,  without limitation,  the Guarantee Agreement, dated
         June 26, 2003,  issued by the  Guarantor  with respect to the preferred
         securities issued by First Litchfield Statutory Trust I.

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

                                  ARTICLE VII

                                   TERMINATION

         SECTION 7.1 Termination.

         This Guarantee Agreement shall terminate and be of no further force and
effect  upon  (a)  full  payment  of  the  Redemption  Price  of  all  Preferred
Securities,  (b) the distribution of Notes to the Holders in exchange for all of
the  Preferred  Securities  or (c)

                                       16
<PAGE>

full payment of the amounts  payable in accordance with the Trust Agreement upon
liquidation  of  the  Issuer.  Notwithstanding  the  foregoing,  this  Guarantee
Agreement will continue to be effective or will be  reinstated,  as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred  Securities or this  Guarantee  Agreement.  The  obligations of the
Guarantor  under Sections 3.3 and 3.4 shall survive any such  termination or the
resignation and removal of the Guarantee Trustee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.1 Successors and Assigns.

         All  guarantees and  agreements  contained in this Guarantee  Agreement
shall bind the successors,  assigns, receivers,  trustees and representatives of
the  Guarantor  and shall inure to the  benefit of the Holders of the  Preferred
Securities then outstanding.  Except in connection with a consolidation,  merger
or sale  involving  the  Guarantor  that is permitted  under Article VIII of the
Indenture and pursuant to which the  successor or assignee  agrees in writing to
perform the Guarantor's  obligations  hereunder,  the Guarantor shall not assign
its rights or delegate its obligations  hereunder  without the prior approval of
the Holders of a Majority in Liquidation Amount of the Preferred Securities.

         SECTION 8.2 Amendments.

         Except with  respect to any changes  that do not  adversely  affect the
rights of the Holders in any  material  respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior  approval of the Guarantor,  the Guarantee  Trustee and the Holders of not
less than a Majority in  Liquidation  Amount of the  Preferred  Securities.  The
provisions of Article VI of the Trust Agreement  concerning meetings or consents
of the Holders shall apply to the giving of such approval.

         SECTION 8.3 Notices.

         Any notice,  request or other communication required or permitted to be
given  hereunder  shall be in  writing,  duly  signed by the party  giving  such
notice, and delivered, telecopied or mailed by first class mail as follows:

                  (a) if given to the  Guarantor,  to the  address or  facsimile
         number set forth below or such other  address,  facsimile  number or to
         the  attention of such other Person as the Guarantor may give notice to
         the Guarantee Trustee and the Holders:

                           First Litchfield Financial Corporation
                           13 North Street, Box #578
                           Litchfield, Ct. 06759
                           Facsimile No.: (860) 567-9412
                           Attention: Treasurer

                                       17
<PAGE>

                  (b)  if  given  to the  Issuer,  at the  Issuer's  address  or
         facsimile  number  set forth  below or such  other  address,  facsimile
         number or to the  attention of such other Person as the Issuer may give
         notice to the Guarantee Trustee and the Holders:

                           First Litchfield Statutory Trust II
                           c/o First Litchfield Financial Corporation
                           13 North Street, Box #578
                           Litchfield, Ct. 06759
                           Facsimile No.: 860-567-9412
                           Attention: Administrative Trustee

                  (c) if given  to the  Guarantee  Trustee,  at the  address  or
         facsimile  number  set forth  below or such  other  address,  facsimile
         number  or to the  attention  of such  other  Person  as the  Guarantee
         Trustee may give notice to the Guarantor and the Holders:

                           Wilmington Trust Company
                           Rodney Square North, 1100 North Market Street
                           Wilmington, Delaware 19890-0001
                           Facsimile No.: (302) 636-4140
                           Attention: Corporate Capital Markets

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

         All notices  hereunder 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 8.4 Benefit.

         This  Guarantee  Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.

         SECTION 8.5 Governing Law.

         This Guarantee  Agreement and the rights and  obligations of each party
hereto,  shall be construed and enforced in accordance  with and governed by the
laws  of the  State  of New  York  without  reference  to its  conflict  of laws
provisions (other than Section 5-1401 of the General Obligations Law).

                                       18
<PAGE>

         SECTION 8.6 Submission to Jurisdiction.

         ANY LEGAL ACTION OR  PROCEEDING  BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT  TO OR  ARISING  OUT OF THIS  GUARANTEE  AGREEMENT  MAY BE BROUGHT IN OR
REMOVED  TO THE  COURTS OF THE STATE OF NEW YORK,  IN AND FOR THE  COUNTY OF NEW
YORK, OR OF THE UNITED  STATES OF AMERICA FOR THE SOUTHERN  DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF
THIS GUARANTEE  AGREEMENT,  EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY,  GENERALLY  AND  UNCONDITIONALLY,  THE  JURISDICTION  OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS GUARANTEE AGREEMENT.

         SECTION 8.7 Counterparts; facsimile.

         This instrument may be executed in any number of counterparts,  each of
which so executed shall be deemed to be an original,  but all such  counterparts
shall  together  constitute  but one and the  same  instrument.  Delivery  of an
executed  signature page of this Guarantee  Agreement by facsimile  transmission
shall be effective as delivery of a manually executed counterpart hereof.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       19
<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned  have  executed  this  Guarantee
Agreement as of the date first above written.

                                 FIRST LITCHFIELD FINANCIAL CORPORATION

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

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

                                 By:
                                      ---------------------------------------
                                      Name
                                      Title:EXHIBIT 4.3

                        JUNIOR SUBORDINATED NOTE DUE 2036

THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  WERE  ORIGINALLY  ISSUED IN A
TRANSACTION  EXEMPT  FROM  REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED (THE "SECURITIES  ACT"), AND SUCH SECURITIES,  AND ANY INTEREST THEREIN,
MAY NOT BE  OFFERED,  SOLD  OR  OTHERWISE  TRANSFERRED  IN THE  ABSENCE  OF SUCH
REGISTRATION  OR AN  APPLICABLE  EXEMPTION  THEREFROM.  EACH  PURCHASER  OF  ANY
SECURITIES IS HEREBY  NOTIFIED THAT THE SELLER OF THE  SECURITIES MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  AGREES FOR THE
BENEFIT  OF THE  COMPANY  THAT (A) SUCH  SECURITIES  MAY BE  OFFERED,  RESOLD OR
OTHERWISE  TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER
REASONABLY  BELIEVES IS A  "QUALIFIED  INSTITUTIONAL  BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, OR (III) 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  THE  SECURITY  FOR ITS OWN  ACCOUNT,  OR FOR  THE  ACCOUNT  OF AN
"ACCREDITED  INVESTOR,"  WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT, 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, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND,
IN THE CASE OF (III),  SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION
OF  COUNSEL  ADDRESSING  COMPLIANCE  WITH THE U.S.  SECURITIES  LAWS,  AND OTHER
INFORMATION  SATISFACTORY  TO IT AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF
ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE SECURITIES  WILL BE ISSUED AND MAY BE  TRANSFERRED  ONLY IN BLOCKS HAVING AN
AGGREGATE  PRINCIPAL  AMOUNT OF NOT LESS THAN  $100,000.  TO THE FULLEST  EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN,
IN A BLOCK  HAVING AN  AGGREGATE  PRINCIPAL  AMOUNT OF LESS  THAN  $100,000  AND
MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL
EFFECT  WHATSOEVER.  TO THE FULLEST EXTENT  PERMITTED BY LAW, ANY SUCH PURPORTED
TRANSFEREE  SHALL BE  DEEMED  NOT TO BE THE  HOLDER OF SUCH  SECURITIES  FOR ANY
PURPOSE,  INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST
ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY,  OR ANY INTEREST THEREIN,  BY ITS ACCEPTANCE HEREOF
OR THEREOF  ALSO  AGREES,  REPRESENTS  AND  WARRANTS  THAT IT IS NOT AN EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER

<PAGE>

PLAN OR  ARRANGEMENT  SUBJECT  TO  TITLE  I OF THE  EMPLOYEE  RETIREMENT  INCOME
SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR SECTION  4975 OF THE INTERNAL
REVENUE  CODE OF 1986,  AS AMENDED (THE  "CODE")  (EACH A "PLAN"),  OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT
IN THE ENTITY,  AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR
HOLD THIS SECURITY OR ANY INTEREST  THEREIN,  UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE  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 THIS SECURITY,  OR
ANY INTEREST THEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE WITH RESPECT TO SUCH  PURCHASE AND HOLDING.  ANY PURCHASER OR HOLDER
OF THE 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 OR OTHER  PLAN TO WHICH  TITLE I OF  ERISA OR  SECTION  4975 OF THE CODE IS
APPLICABLE,  A TRUSTEE  OR OTHER  PERSON  ACTING ON BEHALF OF ANY SUCH  EMPLOYEE
BENEFIT PLAN OR PLAN,  OR ANY OTHER PERSON OR ENTITY USING THE "PLAN  ASSETS" OF
ANY SUCH EMPLOYEE  BENEFIT PLAN OR PLAN TO FINANCE SUCH  PURCHASE,  OR (ii) SUCH
PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED  TRANSACTION  UNDER  SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE  RELIEF IS NOT
AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS  OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED  STATES,  INCLUDING THE FEDERAL  DEPOSIT  INSURANCE
CORPORATION.

<PAGE>

                     First Litchfield Financial Corporation

                 Floating Rate Junior Subordinated Note due 2036

No. 001                                                               $3,093,000

         First Litchfield  Financial  Corporation,  a corporation  organized and
existing under the laws of Delaware  (hereinafter  called the  "Company,"  which
term includes any successor Person under the Indenture hereinafter referred to),
for value received,  hereby promises to pay to Wilmington Trust Company,  not in
its  individual  capacity  but solely as Property  Trustee for First  Litchfield
Statutory  Trust II, or registered  assigns,  the principal sum of THREE MILLION
NINETY - THREE  THOUSAND AND 00/100  ($3,093,000)  DOLLARS on June 30, 2036. The
Company  further  promises to pay interest on said  principal  sum from June 16,
2006, or from the most recent  Interest  Payment Date to which interest has been
paid or duly provided for,  quarterly  (subject to deferral as set forth herein)
in arrears on March 30th,  June 30th,  September  30th and December 30th of each
year,  commencing on June 30, 2006, or if any such day is not a Business Day, on
the next succeeding Business Day (and no interest shall accrue in respect of the
amounts  whose payment is so delayed for the period from and after such Interest
Payment Date until such next  succeeding  Business  Day),  except that,  if such
Business Day falls in the next  succeeding  calendar year, such payment shall be
made on the  immediately  preceding  Business  Day, in each case,  with the same
force and effect as if made on the Interest Payment Date, at a variable rate per
annum, reset quarterly,  equal to LIBOR plus 1.45%, together with Additional Tax
Sums, if any, as provided in Section 10.5 of the Indenture,  until the principal
hereof is paid or duly  provided for or made  available  for payment;  provided,
that any overdue  principal,  premium,  if any, or  Additional  Tax Sums and any
overdue  installment of interest shall bear  Additional  Interest (to the extent
that the payment of such interest  shall be legally  enforceable)  at a variable
rate  per  annum,  reset  quarterly,  equal  to  LIBOR  plus  1.45%,  compounded
quarterly,  from the dates  such  amounts  are due  until  they are paid or made
available for payment, and such interest shall be payable on demand.

         The  amount  of  interest  payable  for any  interest  period  shall be
computed and paid on the basis of a 360-day  year and the actual  number of days
elapsed in the relevant interest period. The interest so payable, and punctually
paid or duly  provided for, on any Interest  Payment Date shall,  as provided in
the Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor  Securities)  is  registered at the close of business on the Regular
Record Date for such interest  installment.  Any such interest not so punctually
paid or duly provided for shall  forthwith  cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more  Predecessor  Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted  Interest to
be fixed by the Trustee,  notice whereof shall be given to Holders of Securities
not less than ten (10) days prior to such Special Record Date, or be paid at any
time in any other lawful manner not  inconsistent  with the  requirements of any
securities exchange or automated quotation system on which the Securities may be
listed,  traded  or  quoted  and upon such  notice  as may be  required  by such
exchange  or  automated  quotation  system,  all as more fully  provided  in the
Indenture.

         So long as no Event of Default pursuant to Sections  5.1(c),  (e), (f),
(g) or (h) of the  Indenture has occurred and is  continuing,  the Company shall
have  the  right,  at any time and  from

<PAGE>

time to time during the term of this Security,  to defer the payment of interest
on this  Security  for a  period  of up to  twenty  (20)  consecutive  quarterly
interest payment periods (each such period, an "Extension Period"), during which
Extension Period(s), no interest shall be due and payable (except any Additional
Tax Sums that may be due and payable).  No Extension  Period shall end on a date
other than an Interest Payment Date, and no Extension Period shall extend beyond
the Stated Maturity of the principal of this Security.  No interest shall be due
and payable during an Extension  Period (except any Additional Tax Sums that may
be due and payable), except at the end thereof, but each installment of interest
that would  otherwise  have been due and payable  during such  Extension  Period
shall bear Additional  Interest (to the extent payment of such interest would be
legally  enforceable) at a variable rate per annum,  reset  quarterly,  equal to
LIBOR plus 1.45%,  compounded  quarterly,  from the dates on which amounts would
have otherwise been due and payable until paid or made available for payment. At
the end of any such  Extension  Period,  the Company shall pay all interest then
accrued and unpaid on this  Security,  together with such  Additional  Interest.
Prior to the termination of any such Extension  Period,  the Company may further
defer the payment of interest;  provided, that (i) all such previous and further
extensions  comprising such Extension Period do not exceed twenty (20) quarterly
interest  payment  periods,  (ii) no Extension  Period shall end on a date other
than an Interest  Payment Date and (iii) no Extension Period shall extend beyond
the Stated  Maturity of the principal of this Security.  Upon the termination of
any such  Extension  Period  and upon the  payment  of all  accrued  and  unpaid
interest and any Additional  Interest then due on any Interest Payment Date, the
Company  may  elect to begin a new  Extension  Period;  provided,  that (i) such
Extension Period does not exceed twenty (20) quarterly interest payment periods,
(ii) no  Extension  Period  shall end on a date other than an  Interest  Payment
Date,  (iii) no Extension  Period shall extend beyond the Stated Maturity of the
principal  of this  Security  and (iv) no Event of Default  pursuant to Sections
5.1(c),  (e), (f), (g) or (h) has occurred and is continuing.  The Company shall
give (i) the  Holder of this  Security,  (ii) the  Trustee,  (iii) the  Property
Trustee and (iv) any  beneficial  owner of the Preferred  Securities  reasonably
identified  to the  Company  (which  identification  may be made  either by such
beneficial  owner or by the  Purchaser)  written notice of its election to begin
any such  Extension  Period no later than the close of business on the fifteenth
(15th) Business Day prior to the next succeeding  Interest Payment Date on which
interest on this Security would be payable but for such deferral.

         During any such Extension Period,  the Company shall not (i) declare or
pay any dividends or distributions  on, or redeem,  purchase,  acquire or make a
liquidation payment with respect to, any of the Company's Equity Interests, (ii)
vote in favor of or permit or otherwise allow any of its Subsidiaries to declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation   payment  with  respect  to  or  otherwise  retire,   any  of  such
Subsidiary's  Equity Interests entitling the holders thereof to a stated rate of
return (for the avoidance of doubt,  whether such Equity Interests are perpetual
or  otherwise),  or (iii) make any payment of  principal  of or any  interest or
premium on or repay,  repurchase  or redeem any debt  securities  of the Company
that rank pari passu in all respects with or junior in interest to this Security
(other  than (a)  repurchases,  redemptions  or  other  acquisitions  of  Equity
Interests of the Company in connection with (1) any employment contract, benefit
plan or other  similar  arrangement  with or for the  benefit of any one or more
employees,  officers,  directors or consultants,  (2) a dividend reinvestment or
stockholder  stock purchase or similar plan with respect to any Equity Interests
or  (3)  the  issuance  of  Equity  Interests  of  the  Company  (or  securities
convertible  into or exercisable for such Equity  Interests) as consideration in
an

<PAGE>

acquisition  transaction entered into prior to the applicable  Extension Period,
(b) as a result  of an  exchange  or  conversion  of any  class or series of the
Company's  Equity  Interests  (or any Equity  Interests of a  Subsidiary  of the
Company)  for any class or series of the  Company's  Equity  Interests or of any
class or series  of the  Company's  indebtedness  for any class or series of the
Company's Equity Interests,  (c) the purchase of fractional  interests in Equity
Interests of the Company  pursuant to the  conversion or exchange  provisions of
such Equity  Interests or the security  being  converted or  exchanged,  (d) any
declaration  of a dividend in connection  with any Rights Plan,  the issuance of
rights,  Equity  Interests  or other  property  under any  Rights  Plan,  or the
redemption or repurchase of rights  pursuant  thereto or (e) any dividend in the
form of Equity Interests,  warrants,  options or other rights where the dividend
Equity  Interests  or the  Equity  Interests  issuable  upon  exercise  of  such
warrants,  options or other rights is the same Equity Interests as that on which
the  dividend  is being paid or ranks  pari passu with or junior to such  Equity
Interests).

         Payment of principal of, premium, if any, and interest on this Security
shall be made in such coin or currency of the United States of America as at the
time of  payment  is legal  tender for  payment  of public  and  private  debts.
Payments of principal, premium, if any, and interest due at the Maturity of this
Security  shall be made at the office or agency of the  Company  maintained  for
that purpose in the Place of Payment upon  surrender of such  Securities  to the
Paying Agent, and payments of interest shall be made,  subject to such surrender
where  applicable,  by wire  transfer  at such  place and to such  account  at a
banking  institution in the United States as may be designated in writing to the
Paying  Agent at least ten (10)  Business  Days prior to the date for payment by
the Person  entitled  thereto unless proper  written wire transfer  instructions
have not been received by the relevant  record date, in which case such payments
shall be made by check  mailed to the  address  of such  Person as such  address
shall appear in the Security Register. Notwithstanding the foregoing, so long as
the  Holder  of this  Security  is the  Property  Trustee,  the  payment  of the
principal  of  (and  premium,  if  any)  and  interest  (including  any  overdue
installment  of interest and  Additional Tax Sums, if any) on this Security will
be made at such place and to such account as may be  designated  by the Property
Trustee.

         The indebtedness  evidenced by this Security is, to the extent provided
in the  Indenture,  subordinate  and  junior  in right of  payment  to the prior
payment in full of all Senior Debt,  and this Security is issued  subject to the
provisions of the Indenture with respect thereto.  Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions,  (b)
authorizes  and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the  subordination so provided and
(c)  appoints  the  Trustee  his or her  attorney-in-fact  for any and all  such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the  subordination  provisions  contained herein and in the
Indenture by each holder of Senior Debt,  whether now  outstanding  or hereafter
incurred, and waives reliance by each such holder upon said provisions.

         Unless the  certificate of  authentication  hereon has been executed by
the  Trustee by manual  signature,  this  Security  shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

<PAGE>

         IN WITNESS WHEREOF, the Company has duly executed this certificate this
____ day of ____________, 2006.

                           FIRST LITCHFIELD FINANCIAL CORPORATION

                           By:
                               ----------------------------------------
                           Name: Joseph J. Greco
                           Title: President and Chief Executive Officer

         This  represents   Securities  referred  to  in  the   within-mentioned
Indenture.

Dated: _______________, 2006

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

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

<PAGE>

                               REVERSE OF SECURITY

         This  Security is one of a duly  authorized  issue of securities of the
Company (the "Securities") issued under the Junior Subordinated Indenture, dated
as of June 16, 2006 (the "Indenture"),  between the Company and Wilmington Trust
Company,  as Trustee (in such capacity,  the "Trustee,"  which term includes any
successor  trustee under the  Indenture),  to which Indenture and all indentures
supplemental  thereto reference is hereby made for a statement of the respective
rights,  limitations of rights, duties and immunities thereunder of the Company,
the Trustee,  the holders of Senior Debt and the Holders of the Securities,  and
of the terms upon which the  Securities  are, and are to be,  authenticated  and
delivered.

         All terms used in this Security that are defined in the Indenture or in
the  Amended  and  Restated  Trust  Agreement,  dated  as of June  16,  2006 (as
modified,  amended or  supplemented  from time to time, the "Trust  Agreement"),
relating  to First  Litchfield  Statutory  Trust  II (the  "Trust"),  among  the
Company,  as Depositor,  the trustees named therein and the holders from time to
time of the Trust Securities  issued pursuant  thereto,  shall have the meanings
assigned to them in the Indenture or the Trust Agreement, as the case may be.

         The Company may, on any Interest Payment Date, at its option,  upon not
less than thirty (30) days' nor more than sixty (60) days' written notice to the
Holders of the Securities  (unless a shorter notice period shall be satisfactory
to the  Trustee)  on or  after  June 30,  2011  and  subject  to the  terms  and
conditions of Article XI of the Indenture,  redeem this Security in whole at any
time or in part from time to time at a  Redemption  Price  equal to one  hundred
percent (100%) of the principal amount hereof, together, in the case of any such
redemption,  with accrued interest,  including any Additional  Interest,  to but
excluding the date fixed for redemption;  provided,  that the Company shall have
received the prior approval of the Federal Reserve if then required.

         In  addition,  upon the  occurrence  and during the  continuation  of a
Special  Event,  the Company may, at its option,  upon not less than thirty (30)
days' nor more than  sixty  (60)  days'  written  notice to the  Holders  of the
Securities  (unless  a  shorter  notice  period  shall  be  satisfactory  to the
Trustee),  redeem this Security,  in whole but not in part, subject to the terms
and  conditions of Article XI of the  Indenture at the Special Event  Redemption
Price; provided,  that the Company shall have received the prior approval of the
Federal Reserve if then required.

         In the  event  of  redemption  of this  Security  in part  only,  a new
Security or Securities for the  unredeemed  portion hereof will be issued in the
name of the Holder  hereof upon the  cancellation  hereof.  If less than all the
Securities are to be redeemed, the particular Securities to be redeemed shall be
selected  not more than  sixty  (60) days  prior to the  Redemption  Date by the
Trustee from the Outstanding Securities not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the  selection for  redemption  of a portion of the principal  amount of any
Security.

         The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a  supplemental  indenture  or
indentures for the purpose of modifying in any manner the rights and obligations
of the  Company and of the  Holders of the  Securities,  with the consent of the
Holders  of not less than a  majority  in  principal  amount of the  Outstanding
Securities.  The  Indenture  also  contains  provisions  permitting  Holders  of
specified

<PAGE>

percentages in principal  amount of the Securities,  on behalf of the Holders of
all Securities,  to waive  compliance by the Company with certain  provisions of
the  Indenture  and  certain  past  defaults   under  the  Indenture  and  their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive  and  binding  upon such  Holder and upon all future  Holders of this
Security and of any Security issued upon the  registration of transfer hereof or
in exchange  herefor or in lieu hereof,  whether or not notation of such consent
or waiver is made upon this Security.

         No reference  herein to the Indenture and no provision of this Security
or of the Indenture  shall alter or impair the obligation of the Company,  which
is  absolute  and  unconditional,  to pay the  principal  of and any premium and
interest,  including  any  Additional  Interest,  on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth,  the  transfer of this  Security  is  registrable  in the  Securities
Register,  upon surrender of this Security for  registration  of transfer at the
office or agency of the Company  maintained for such purpose,  duly endorsed by,
or accompanied by a written  instrument of transfer in form  satisfactory to the
Company and the Securities  Registrar and duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Securities,  of like  tenor,  of  authorized  denominations  and  for  the  same
aggregate  principal  amount,  will be issued to the  designated  transferee  or
transferees.

         The Securities are issuable only in registered  form without coupons in
minimum  denominations of $100,000 and any integral multiple of $1,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein
set forth,  Securities are exchangeable for a like aggregate principal amount of
Securities  and  of  like  tenor  of a  different  authorized  denomination,  as
requested by the Holder surrendering the same.

         No service charge shall be made for any such  registration  of transfer
or exchange,  but the Company may require  payment of a sum  sufficient to cover
any tax or other governmental charge payable in connection therewith.

         The  Company,  the  Trustee and any agent of the Company or the Trustee
may treat the  Person in whose name this  Security  is  registered  as the owner
hereof for all purposes,  whether or not this  Security be overdue,  and neither
the  Company,  the Trustee nor any such agent shall be affected by notice to the
contrary.

         The Company  and, by its  acceptance  of this  Security or a beneficial
interest  herein,  the  Holder of, and any  Person  that  acquires a  beneficial
interest in, this  Security  agree that,  for United States  federal,  state and
local tax purposes, it is intended that this Security constitute indebtedness.

         This Security  shall be construed  and enforced in accordance  with and
governed by the laws of the State of New York, without reference to its conflict
of laws provisions (other than Section 5-1401 of the General Obligations Law).

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