<PAGE>

                                                                    Exhibit 4.26

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                               GUARANTEE AGREEMENT

                                 by and between


                            STATE STREET CORPORATION
                                  as Guarantor


                                       and


                          BANK ONE TRUST COMPANY, N.A.
        (as successor in interest to The First National Bank of Chicago),
                              as Guarantee Trustee


                                   relating to

                          STATE STREET CAPITAL TRUST II


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

                          Dated as of January 21, 2003

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



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<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                           Page
<S>                                                                                        <C>
ARTICLE I DEFINITIONS .................................................................     2
        Section 1.1. Definitions. .....................................................     2
ARTICLE II Trust Indenture Act ........................................................     6
        Section 2.1. Trust Indenture Act; Application. ................................     6
        Section 2.2. List of Holders. .................................................     6
        Section 2.3. Reports by the Guarantee Trustee. ................................     6
        Section 2.4. Periodic Reports to the Guarantee Trustee. .......................     7
        Section 2.5. Evidence of Compliance with Conditions Precedent. ................     7
        Section 2.6. Events of Default; Waiver. .......................................     7
        Section 2.7. Event of Default; Notice. ........................................     7
        Section 2.8. Conflicting Interests. ...........................................     7
ARTICLE III Powers, Duties and Rights of the Guarantee Trustee ........................     8
        Section 3.1. Powers and Duties of the Guarantee Trustee. ......................     8
        Section 3.2. Certain Rights of Guarantee Trustee. .............................     9
        Section 3.3. Compensation; Indemnity; Fees. ...................................    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 ...................................................................    13
        Section 5.1. Guarantee. .......................................................    13
        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. .....................................................    15
        Section 5.7. Independent Obligations. .........................................    15
ARTICLE VI Covenants and Subordination ................................................    15
        Section 6.1. Subordination. ...................................................    15
        Section 6.2. Pari Passu Guarantees. ...........................................    15
ARTICLE VII Termination ...............................................................    16
        Section 7.1. Termination. .....................................................    16
ARTICLE VIII Miscellaneous ............................................................    16
        Section 8.1. Successors and Assigns. ..........................................    16
        Section 8.2. Amendments. ......................................................    16
        Section 8.3. Notices. .........................................................    16
        Section 8.4. Benefit. .........................................................    17
        Section 8.5. Governing Law. ...................................................    17
        Section 8.6. Counterparts. ....................................................    17
</TABLE>

<PAGE>

     GUARANTEE AGREEMENT, dated as of January 21, 2003, between STATE STREET
CORPORATION, a Massachusetts corporation (the "Guarantor"), having its principal
office at 225 Franklin Street, Boston, Massachusetts 02110, and BANK ONE TRUST
COMPANY, N.A. (as successor in interest to The First National Bank of Chicago),
a national banking association, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of STATE STREET CAPITAL TRUST II, a Delaware
statutory trust (the "Issuer Trust").

                                    Recitals

     Whereas, pursuant to an Amended and Restated Trust Agreement, of even date
herewith (the "Trust Agreement"), among State Street Corporation, as Depositor,
the Property Trustee, the Delaware Trustee, and the Administrative Trustees
(each as named therein) and the holders from time to time of undivided
beneficial interests in the assets of the Issuer Trust, the Issuer Trust is
issuing $345,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its Floating Rate Medium Term Capital Securities (liquidation
amount $1,000 per capital security) (the "Capital Securities"), representing
preferred undivided beneficial interests in the assets of the Issuer Trust and
having the terms set forth in the Trust Agreement; and

     Whereas, the Capital Securities will be issued by the Issuer Trust, and the
proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor, which
Debentures will be deposited with Bank One Trust Company, N.A. (as successor in
interest to The First National Bank of Chicago), as Property Trustee under the
Trust Agreement, as trust assets; and

     Whereas, as an incentive for the Holders to purchase Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Capital 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 of Capital Securities by
each Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time.

                                    ARTICLE I
                                   Definitions

Section 1.1. Definitions.

<PAGE>

     For all purposes of this Guarantee Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

     (a)  The terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;

     (b)  All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;

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

     (d)  All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;

     (e)  Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Guarantee Agreement; and

     (f)  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.

     "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. 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.

     "Board of Directors" means the board of directors of the Guarantor or the
Executive Committee of the board of directors of the Guarantor (or any other
committee of the board of directors of the Guarantor performing similar
functions) or a committee designated by the board of directors of the Guarantor
(or such committee), comprised of two or more members of the board of directors
of the Guarantor or officers of the Guarantor, or both.

     "Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.

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

     "Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.

                                       -3-

<PAGE>

     "Guarantee Agreement" means this Guarantee Agreement, as modified, amended
or supplemented from time to time.

     "Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Capital Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time; (ii) the Redemption Price (as defined in the
Trust Agreement) with respect to any Capital Securities called for redemption by
the Issuer Trust, to the extent the Issuer Trust shall have funds on hand
available therefor at such time; and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer Trust, unless Debentures
are distributed to the Holders, the lesser of (a) the Liquidation Distribution
(as defined in the Trust Agreement) with respect to the Capital Securities, to
the extent that the Issuer Trust shall have funds on hand available therefor at
such time, and (b) the amount of assets of the Issuer Trust remaining available
for distribution to Holders on liquidation of the Issuer.

     "Guarantee Trustee" means Bank One Trust Company, N.A. (as successor in
interest to The First National Bank of Chicago), solely in its capacity as
Guarantee Trustee and not in its individual capacity, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.

     "Guarantor" has the meaning specified in the first paragraph of this
Guarantee Agreement.

     "Holder" means any Holder (as defined in the Trust Agreement) of any
Capital Securities; provided, however, that in determining whether the holders
of the requisite percentage of Capital Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor,
the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee
Trustee.

     "Indenture" means the Junior Subordinated Indenture, dated as of December
15, 1996, between State Street Corporation and Bank One Trust Company, N.A. (as
successor in interest to The First National Bank of Chicago), as trustee, as the
same may be modified, amended or supplemented from time to time.

     "Issuer Trust" has the meaning specified in the first paragraph of this
Guarantee Agreement.

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

     "Majority in Liquidation Amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, Capital Securities representing more than
50% of the aggregate

                                       -4-

<PAGE>

Liquidation Amount (as defined in the Trust Agreement) of all Capital Securities
then Outstanding (as defined in the Trust Agreement).

     "Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary (or Clerk) or an Assistant
Secretary (or Assistant Clerk) of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:

     (a)  a statement by each officer signing the Officers' Certificate that
such officer 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 such officer in rendering the Officers' Certificate;

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

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

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

     "Responsible Officer" means, with respect to the Guarantee Trustee, any
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 of the Corporate
Trust Department of the Guarantee Trustee and also means, with respect to a
particular matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.

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

     "Trust Agreement" means the Amended and Restated Trust Agreement of the
Issuer Trust referred to in the recitals to this Guarantee Agreement, as
modified, amended or supplemented from time to time.

     "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this Guarantee Agreement was executed; provided, however,
that in the event the Trust

                                       -5-

<PAGE>

Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.

     "Vice President," when used with respect to the Guarantor, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."

                                   ARTICLE II
                               Trust Indenture Act

Section 2.1. Trust Indenture Act; Application.

     (a)     This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.

     (b)     If and to the extent any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.2. List of Holders.

     (a)     The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before June 30 and December 31 of each
year, a list, in such form as the Guarantee Trustee may reasonably require, of
the names and addresses of the Holders (a "List of Holders") as of a date not
more than 15 days prior to the delivery thereof, and (b) at such other times as
the Guarantee Trustee may request in writing, within 30 days after the receipt
by the Guarantor of any such request, a List of Holders as of a date not more
than 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 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.

     (b)     The Guarantee Trustee shall comply with the requirements of Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3. Reports by the Guarantee Trustee.

     Within 60 days after May 15 of each year, commencing May 15, 2003, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. If this Guarantee Agreement
shall have been qualified under the Trust Indenture Act, the Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust Indenture
Act.

                                       -6-

<PAGE>

Section 2.4. Periodic Reports to the Guarantee Trustee.

     The Guarantor shall provide to the Guarantee Trustee and the Holders such
documents, reports and information, if any, as required by Section 314 of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act, in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act, provided that such documents, reports
and information shall be required to be provided to the Securities and Exchange
Commission only if this Guarantee Agreement shall have been qualified under the
Trust Indenture Act.

Section 2.5. Evidence of Compliance with Conditions Precedent.

     The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.

Section 2.6. Events of Default; Waiver.

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

Section 2.7. Event of Default; Notice.

     (a)     The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default known to the Guarantee Trustee, transmit by mail, first
class postage prepaid, to the Holders, notice of any such Event of Default known
to the Guarantee Trustee, unless such Event of Default has been cured 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 determines that the withholding of such notice
is in the interests of the Holders.

     (b)     The Guarantee Trustee shall not be deemed to have knowledge of any
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 obtained written notice, of such Event of
Default.

Section 2.8. Conflicting Interests.

                                       -7-

<PAGE>

     The Trust Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

                                   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 to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder 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)     If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.

     (c)     The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

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

             (i)   Prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

                   (A)   the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this Guarantee Agreement
(including pursuant to Section 2.1), and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including pursuant to
Section 2.1); and

                                       -8-

<PAGE>

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

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

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

             (iv)  Subject to Section 3.1(b), no provision of this Guarantee
Agreement shall require the Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.

Section 3.2. Certain Rights of Guarantee Trustee.

     (a)     Subject to the provisions of Section 3.1:

             (i)   The Guarantee Trustee may 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
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) 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

                                       -9-

<PAGE>

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.

          (iv)   The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good faith and in
accordance with such advice or opinion. Such legal counsel may be legal counsel
to 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.

          (v)    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 such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee against the costs,
expenses (including 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)(v) 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.

          (vi)   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.

          (vii)  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 or attorneys, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney appointed by
it with due care hereunder.

          (viii) 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 or taking any other action hereunder, the
Guarantee Trustee (A) may request instructions from the Holders, (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.

     (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

                                      -10-

<PAGE>

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; Indemnity; Fees.

The Guarantor agrees:

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

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

     (c)     to indemnify the Guarantee Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence, wilful
misconduct or bad faith on the part of the Guarantee Trustee, 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 connection with the exercise or performance of any of its 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.

The provisions of this Section 3.3 shall survive the termination of this
Guarantee Agreement or the resignation or removal of the Guarantee Trustee.

                                   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 Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation

                                      -11-

<PAGE>

publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then, for the purposes
of this Section 4.1 and to the extent permitted by the Trust Indenture Act, 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)     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 and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.

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

     (a)     Subject to Section 4.2(c), the Guarantee Trustee may be appointed
or removed at any time by the action of the Holders of a Majority in Liquidation
Amount of the Capital Securities delivered to the Guarantee Trustee and the
Guarantor (i) for cause or (ii) if a Debenture Event of Default (as defined in
the Trust Agreement) shall have occurred and be continuing at any time.

     (b)     Subject to Section 4.2(c), the Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by giving written
notice thereof to the Holders and the Guarantor and by appointing a successor
Guarantee Trustee. The Guarantee Trustee shall appoint a successor by requesting
from at least three Persons meeting the requirements of Section 4.1(a) their
expenses and charges to serve as the Guarantee Trustee, and selecting the Person
who agrees to the lowest expenses and charges.

     (c)     The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed and shall have accepted
such appointment. No removal or resignation of a Guarantee Trustee shall be
effective 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 and, in the case of any
resignation, 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 60 days after
delivery to the Holders and the Guarantor of a notice 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.

     (e)     If a resigning Guarantee Trustee shall fail to appoint a successor,
or if a Guarantee Trustee shall be removed or become incapable of acting as
Guarantee Trustee and a replacement

                                      -12-

<PAGE>

shall not be appointed prior to such resignation or removal, or if a vacancy
shall occur in the office of Guarantee Trustee for any cause, the Holders of the
Capital Securities, by the action of the Holders of record of not less than 25%
in aggregate Liquidation Amount (as defined in the Trust Agreement) of the
Capital Securities then Outstanding (as defined in the Trust Agreement)
delivered to such Guarantee Trustee, may appoint a Successor Guarantee Trustee
or Trustees. If no successor Guarantee Trustee shall have been so appointed by
the Holders of the Capital Securities and accepted appointment, any Holder, on
behalf of such Holder and all others similarly situated, or any other Guarantee
Trustee, may petition any court of competent jurisdiction for the appointment of
a successor Guarantee Trustee.

                                    ARTICLE V
                                    Guarantee

Section 5.1. Guarantee.

     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 Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust may have or
assert, except the defense of payment. 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 Trust to pay such amounts
to the Holders.

Section 5.2. Waiver of Notice and Demand.

     The Guarantor hereby waives notice of acceptance of this 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, the Issuer Trust 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 Trust of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer Trust;

     (b)     the extension of time for the payment by the Issuer Trust 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 Debentures as provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the

                                      -13-

<PAGE>

Capital Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Capital Securities;

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

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

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

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

     (g)     any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), 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: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and (iv) 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 Trust
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 Trust) or upon the distribution of Debentures to Holders as
provided in the Trust Agreement.

                                      -14-

<PAGE>

Section 5.6. Subrogation.

     The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which 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.

Section 5.7. Independent Obligations.

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

                                   ARTICLE VI
                           Covenants and Subordination

Section 6.1. 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 Indebtedness (as defined in the
Indenture) of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior
Indebtedness (as defined in the Indenture) of the Guarantor.

Section 6.2. Pari Passu Guarantees.

     The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under (i) any similar guarantee
agreements issued by the Guarantor on behalf of the holders of preferred or
capital securities issued by any Issuer Trust (as defined in the Indenture),
(ii) the Indenture and the Securities (as defined therein) issued thereunder;
(iii) any similar expense agreements entered into by the Guarantor in connection
with the offering of Capital Securities (as defined in the Indenture) by any
Issuer Trust (as defined in the Indenture), and (iv) any other security,
guarantee or other agreement or obligation that is expressly stated to rank pari
passu with the obligations of the Guarantor under this Guarantee Agreement or
with any obligation that ranks pari passu with the obligations of the Guarantor
under this Guarantee Agreement.

                                      -15-

<PAGE>

                                   ARTICLE VII
                                   Termination

Section 7.1. Termination.

     This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price (as defined in the Trust
Agreement) of all Capital Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Capital Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. 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 is required to repay any sums paid with respect to
Capital Securities or this Guarantee Agreement.

                                  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 Capital
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 obligations hereunder, and any purported assignment other than in accordance
with this provision shall be void.

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 Holders of not less than a Majority in Liquidation Amount of the
Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings 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 telecopy number set
forth below or such other address or telecopy number as the Guarantor may give
notice to the Guarantee Trustee and the Holders:

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<PAGE>

                   State Street Corporation
                   225 Franklin Street
                   Boston, Massachusetts 02110
                   Attention: Secretary
                   Telecopy: 617-664-4006

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

                   Bank One Trust Company, N.A.
                   153 West 51st Street,
                   New York, New York 10019
                   Telecopy: 212-373-1384
with a copy to:

                   State Street Capital Trust II
                   c/o State Street Bank and Trust Company, N.A.
                   61 Broadway, 15th Floor
                   New York, New York  10006

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

     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 Capital Securities.

Section 8.5. Governing Law.

THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

Section 8.6. Counterparts.

     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.

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<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Guarantee
Agreement as of the day and year first above written.

                                  State Street Corporation,
                                  as Guarantor


                                  By: /s/ Frederick P. Baughman
                                     --------------------------------
                                     Name:  Frederick P. Baughman
                                     Title: Senior Vice President,
                                            Controller &
                                            Chief Financial Officer


                                  Bank One Trust Company, N.A.
                                  (as successor in interest to
                                  The First National Bank of Chicago),
                                  as Guarantee Trustee


                                  By: /s/ Melissa Wilman
                                     --------------------------------
                                     Name: Melissa Wilman
                                     Title: Authorized Officer