<PAGE>
 
================================================================================





                       AMENDED AND RESTATED DECLARATION

                                   OF TRUST



                           Investors Capital Trust I


                         Dated as of January 31, 1997




================================================================================
<PAGE>
 
                       AMENDED AND RESTATED DECLARATION
                                   OF TRUST
                                        
                               TABLE OF CONTENTS
                               -----------------

<TABLE>
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                                                                                        ----
<S>                                                                                     <C>
ARTICLE I - INTERPRETATION AND DEFINITIONS..............................................   1

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

ARTICLE II - TRUST INDENTURE ACT........................................................   9

 SECTION 2.1 Trust Indenture Act; Application...........................................   9
 SECTION 2.2 Lists of Holders of Securities.............................................  10
 SECTION 2.3 Reports by the Property Trustee............................................  10
 SECTION 2.4 Periodic Reports to Property Trustee.......................................  10
 SECTION 2.5 Evidence of Compliance with Conditions Precedent...........................  10
 SECTION 2.6 Events of Default; Waiver..................................................  11
 SECTION 2.7 Event of Default; Notice...................................................  12

ARTICLE III - ORGANIZATION..............................................................  13

 SECTION 3.1 Name.......................................................................  13
 SECTION 3.2 Office.....................................................................  13
 SECTION 3.3 Purpose....................................................................  13
 SECTION 3.4 Authority..................................................................  13
 SECTION 3.5 Title to Property of the Trust.............................................  14
 SECTION 3.6 Powers and Duties of the Administrative Trustees...........................  14
 SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.......................  17
 SECTION 3.8 Powers and Duties of the Property Trustee..................................  18
 SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee................  20
 SECTION 3.10 Certain Rights of the Property Trustee....................................  21
 SECTION 3.11 Delaware Trustee..........................................................  23
 SECTION 3.12 Execution of Documents....................................................  23
 SECTION 3.13 Not Responsible for Recitals or Issuance of Securities....................  24
 SECTION 3.14 Duration of Trust.........................................................  24
 SECTION 3.15 Mergers...................................................................  24

ARTICLE IV - SPONSOR....................................................................  26

 SECTION 4.1 Sponsor's Purchase of Common Securities....................................  26
 SECTION 4.2 Responsibilities of the Sponsor............................................  26
 SECTION 4.3 Right to Proceed...........................................................  27

ARTICLE V - TRUSTEES....................................................................  27

 SECTION 5.1 Number of Trustees: Appointment of Co-Trustee..............................  27
 SECTION 5.2 Delaware Trustee...........................................................  28
 SECTION 5.3 Property Trustee; Eligibility..............................................  28
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                                      (i)
<PAGE>
 
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 SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee
  Generally.............................................................................  29
 SECTION 5.5 Administrative Trustees....................................................  29
 SECTION 5.6 Delaware Trustee...........................................................  30
 SECTION 5.7 Appointment, Removal and Resignation of Trustees...........................  30
 SECTION 5.8 Vacancies among Trustees...................................................  31
 SECTION 5.9 Effect of Vacancies........................................................  32
 SECTION 5.10 Meetings..................................................................  32
 SECTION 5.11 Delegation of Power.......................................................  32
 SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business...............  33

ARTICLE VI - DISTRIBUTIONS..............................................................  33

 SECTION 6.1 Distributions..............................................................  33

ARTICLE VII - ISSUANCE OF SECURITIES....................................................  33

 SECTION 7.1 General Provisions Regarding Securities....................................  33
 SECTION 7.2 Execution and Authentication...............................................  34
 SECTION 7.3 Form and Dating............................................................  35
 SECTION 7.4 Registrar, Paying Agent and Exchange Agent.................................  36
 SECTION 7.5 Paying Agent to Hold Money in Trust........................................  37
 SECTION 7.6 Replacement Securities.....................................................  37
 SECTION 7.7 Outstanding Capital Securities.............................................  37
 SECTION 7.8 Capital Securities in Treasury.............................................  38
 SECTION 7.9 Temporary Securities.......................................................  38
 SECTION 7.10 Cancellation..............................................................  39
 SECTION 7.11 CUSIP Numbers.............................................................  39

ARTICLE VIII - TERMINATION OF TRUST.....................................................  39

 SECTION 8.1 Termination of Trust.......................................................  39

ARTICLE IX - TRANSFER OF INTERESTS......................................................  41

 SECTION 9.1 Transfer of Securities.....................................................  41
 SECTION 9.2 Transfer Procedures and Restrictions.......................................  41
 SECTION 9.3 Deemed Security Holders....................................................  48
 SECTION 9.4 Book Entry Interests.......................................................  49
 SECTION 9.5 Notices to Clearing Agency.................................................  49
 SECTION 9.6 Appointment of Successor Clearing Agency...................................  49

ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS........  50

 SECTION 10.1 Liability.................................................................  50
 SECTION 10.2 Exculpation...............................................................  50
 SECTION 10.3 Fiduciary Duty............................................................  51
 SECTION 10.4 Indemnification...........................................................  52
 SECTION 10.5 Outside Businesses........................................................  54

ARTICLE XI - ACCOUNTING.................................................................  55
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                                     (ii)
<PAGE>
 
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 SECTION 11.1 Fiscal Year...............................................................  55
 SECTION 11.2 Certain Accounting Matters................................................  55
 SECTION 11.3 Banking...................................................................  55
 SECTION 11.4 Withholding...............................................................  56

ARTICLE XII - AMENDMENTS AND MEETINGS...................................................  56

 SECTION 12.1 Amendments................................................................  56
 SECTION 12.2 Meetings of the Holders; Action by Written Consent........................  58

ARTICLE XIII - REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE.................  59

 SECTION 13.1 Representations and Warranties of Property Trustee........................  59
 SECTION 13.2 Representations and Warranties of Delaware Trustee........................  60

ARTICLE XIV - REGISTRATION RIGHTS.......................................................  61

 SECTION 14.1 Registration Rights Agreement; Liquidated Damages.........................  61

ARTICLE XV - MISCELLANEOUS..............................................................  63

 SECTION 15.1 Notices...................................................................  63
 SECTION 15.2 Governing Law.............................................................  64
 SECTION 15.3 Intention of the Parties..................................................  64
 SECTION 15.4 Headings..................................................................  64
 SECTION 15.5 Successors and Assigns....................................................  64
 SECTION 15.6 Partial Enforceability....................................................  64
 SECTION 15.7 Counterparts..............................................................  65
 
 
ANNEX I       TERMS OF SECURITIES.......................................................  I-1
EXHIBIT A-1   FORM OF CAPITAL SECURITY CERTIFICATE...................................... A1-1
EXHIBIT A-2   FORM OF COMMON SECURITY CERTIFICATE....................................... A2-1
EXHIBIT B     PURCHASE AGREEMENT........................................................  B-1
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                                     (iii)
<PAGE>
 
                       AMENDED AND RESTATED DECLARATION
                                   OF TRUST


                                      OF


                           INVESTORS CAPITAL TRUST I


                               January 31, 1997



     AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of January 31, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration;


     WHEREAS, the Trustees and the Sponsor established Investors Capital Trust I
(the "Trust"), a trust created under the Business Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of January 17, 1997 (the "Original
Declaration") executed by the Sponsor, the Delaware Trustee (as defined herein)
and the Administrative Trustees (as defined herein), and a Certificate of Trust
executed by the Delaware Trustee and the Administrative Trustees and filed with
the Secretary of State of the State of Delaware on January 17, 1997, for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (each as hereinafter
defined);


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


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


     NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.


                                   ARTICLE I

                         INTERPRETATION AND DEFINITIONS


SECTION 1.1    Definitions.
               ----------- 


          Unless the context otherwise requires:
<PAGE>
 
          (a)  Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

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

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

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

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

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

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

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

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

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

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

               "Business Day" means any day other than a Saturday or a Sunday or
                ------------
a day on which banking institutions in the City of New York or Boston,
Massachusetts are authorized or required by law or executive order to close.

               "Business Trust Act" means Chapter 38 of Title 12 of the Delaware
                ------------------                                              
Code, 12 Del. C. (S)3801 et seq., as it may be amended from time to time, or any
         ------          -- ---                                                 
successor legislation.

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

                                     - 2 -
<PAGE>
 
               "Capital Securities Guarantee" means, collectively, the Series A
                ----------------------------                                   
Capital Securities Guarantee and the Series B Capital Securities Guarantee.

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

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

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

               "Closing Time" means the "Closing Time" under the Purchase
                ------------                                             
Agreement.

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

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

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

               "Common Securities Guarantee" means the guarantee agreement dated
                ---------------------------
as of January 31, 1997 of the Sponsor in respect of the Common Securities.

               "Common Securities Subscription Agreement" means the Common
                ----------------------------------------  
Securities Subscription Agreement, dated January 31, 1997, by and between the
Debenture Issuer and the Trust.

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

               "Corporate Trust Office" means the office of the Property Trustee
                ---------------------- 
at which the corporate trust business of the Property Trustee shall, at any
particular time, be principally 

                                     - 3 -
<PAGE>
 
administered, which office at the date of execution of this Agreement is located
at The Bank of New York, 101 Barclay Street, 21st Floor West, New York, New York
10286.

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

               "Debenture Issuer" means Investors Financial Services Corp., a
                ----------------                                             
Delaware corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.

               "Debenture Subscription Agreement" means the Debenture
                --------------------------------   
Subscription Agreement, dated January 31, 1997, by and between the Debenture
Issuer and the Trust.

               "Debenture Trustee" means The Bank of New York, a New York
                -----------------   
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.

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

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

               "Definitive Capital Securities" shall have the meaning set forth
                -----------------------------                                  
in Section 7.3(c).

               "Delaware Trustee" has the meaning set forth in Section 5.2.
                ----------------                                           

               "Direct Action" shall have the meaning set forth in Section
                -------------                                             
3.8(e).

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

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

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

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

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

                                     - 4 -
<PAGE>
 
               "Exchange Offer" means the offer that may be made pursuant to the
                --------------                                                  
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.

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

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

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

               "Global Capital Security" has the meaning set forth in Section
                -----------------------                                      
7.3(a).
                     
               "Holder" means a Person in whose name a Security is registered,
                ------   
such Person being a beneficial owner within the meaning of the Business Trust
Act.

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

               "Indenture" means the Indenture dated as of January 31, 1997,
among the Debenture Issuer and The Bank of New York, as amended from time to
time.


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

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

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

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

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

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

                                     - 5 -
<PAGE>
 
               "Officers' Certificate" means, with respect to any Person, a
                ---------------------                                      
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, or the Secretary or
an Assistant Secretary of such Person.  Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:

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

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

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

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

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

               "Participants" shall have the meaning set forth in Section
                ------------                                             
7.3(b).

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

               "Payment Amount" has the meaning set forth in Section 6.1.
                --------------                                           

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

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

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

               "Purchase Agreement" means the Purchase Agreement for the initial
                ------------------                                              
offering and sale of Capital Securities in the form of Exhibit B.

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

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

                                    - 6 - 
<PAGE>
 
               "Registrar" has the meaning set forth in Section 7.4.
                ---------                                           

               "Registration Rights Agreement" means the Registration Rights
                -----------------------------                               
Agreement dated as of January 31, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchaser named therein, as amended from time to time.

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

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

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

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

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

               "Restricted Securities Legend" has the meaning set forth in
                ----------------------------                              
Section 9.2.

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

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

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

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

                                     - 7 -
<PAGE>
 
               "Securities Act" means the Securities Act of 1933, as amended
                --------------                                              
from time to time, or any successor legislation.

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

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

               "Series A Capital Securities Guarantee" means the guarantee
                -------------------------------------
agreement of the Sponsor dated as of January 31, 1997 in respect of the Series A
Capital Securities.

               "Series A Debentures" means the 9.77% Series A Junior
                -------------------   
Subordinated Deferrable Interest Debentures due February 1, 2027 of the
Debenture Issuer issued pursuant to the Indenture.

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

               "Series B Capital Securities Guarantee" means the guarantee
                -------------------------------------  
agreement to be entered in connection with the Exchange Offer by the Sponsor in
respect of the Series B Capital Securities.

               "Series B Debentures" means the 9.77% Series B Junior
                -------------------
Subordinated Deferrable Interest Debentures due February 1, 2027 of the
Debenture Issuer to be issued in connection with the Exchange Offer pursuant to
the Indenture.

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

               "Sponsor" means Investors Financial Services Corp., a Delaware
                -------                                                      
corporation, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.

               "Subscription Agreements" means the Common Securities
                -----------------------    
Subscription Agreement and the Debenture Subscription Agreement.

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

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

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

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

               "10% in liquidation amount" means, with respect to the Trust
                -------------------------                                  
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) 

                                     - 8 -
<PAGE>
 
of outstanding Trust Securities voting together as a single class or, as the
context may require, Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.

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

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

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

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


                                   ARTICLE II
                              TRUST INDENTURE ACT

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

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

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

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

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

                                     - 9 -
<PAGE>
 
SECTION 2.2    Lists of Holders of Securities.
               ------------------------------ 

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

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

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

          Within 60 days after May 15 of each year, commencing May 15, 1997, the
Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by (S) 313 of the Trust Indenture Act, if any, in the
form and in the manner provided by (S) 313 of the Trust Indenture Act.  The
Property Trustee shall also comply with the requirements of (S) 313(d) of the
Trust Indenture Act.

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

          Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by (S) 314 of the Trust Indenture Act (if any) and
the compliance certificate required by (S) 314 of the Trust Indenture Act in the
form, in the manner and at the times required by (S) 314 of the Trust Indenture
Act.  Delivery of such reports, information and documents to the Property
Trustee is for informational purposes only and the Property Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein, including the Sponsor's and the Administrative Trustees' compliance
with any of their respective covenants hereunder (as to which the Property
Trustee is entitled to rely exclusively on Officers' Certificates).

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

          Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in (S) 314(c) of the Trust 

                                    - 10 -
<PAGE>
 
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to (S) 314(c) (1) of the Trust Indenture Act may be given in the form
of an Officers' Certificate.

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

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

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

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

The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.  Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon.  Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.

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

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

               (ii)   requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under 

                                    - 11 -
<PAGE>
 
the Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have waived
-------- -------                                                                
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities.  The foregoing provisions of this Section 2.6(b) shall be in lieu of
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.  Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.

          (c)  A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
(S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.

SECTION 2.7    Event of Default; Notice.
               ------------------------ 

          (a)  The Property Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders notice of all defaults with respect to the Securities actually known to
a Responsible Officer of the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
                                                            -------- ---- 
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.

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

               (i)    a default under Sections 5.01(a) and 5.01(b) of the
Indenture; or

                                    - 12 -
<PAGE>
 
               (ii)   any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of the Declaration shall have actual
knowledge.

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


                                  ARTICLE III
                                 ORGANIZATION

SECTION 3.1    Name.
               ---- 

          The Trust is named "Investors Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders of Securities.  The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.

SECTION 3.2    Office.
               ------ 

          The address of the principal office of the Trust is c/o Investors
Financial Services Corp., 89 South Street, P.O. Box 1537, Boston, Massachusetts
02205-1537.  On ten Business Days written notice to the Property Trustee, the
Delaware Trustee and the Holders of Securities, the Administrative Trustees may
designate another principal office.

SECTION 3.3    Purpose.
               ------- 

          The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage in
only those other activities necessary, advisable or incidental thereto.  The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.

SECTION 3.4    Authority.
               --------- 

          Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust.  An
action taken by the Administrative Trustees in 

                                    - 13 -
<PAGE>
 
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee on behalf of the Trust in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration.

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

          Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust.  The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.

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

          The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

          (a)  to issue the Securities in accordance with this Declaration;
provided, however, that except, in the case of (i) and (ii), as contemplated in
--------  -------                                                              
Section 7.1(a), (i) the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, (ii) there shall be
no interests in the Trust other than the Securities, and (iii) the issuance of
Securities shall be limited to a simultaneous issuance of both Capital
Securities and Common Securities at any Closing Time;

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

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

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

                                    - 14 -
<PAGE>
 
               (iii)  execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange or any other national stock exchange or the
Nasdaq National Market or the NASD PORTAL system for listing or quotation of the
Capital Securities;

               (iv)   to execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital Securities; and

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

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

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

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

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

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

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

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

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

                                    - 15 -
<PAGE>
 
          (k)  to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;

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

          (m)  to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;

          (n)  to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;

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

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

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

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

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

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

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

          The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, 

                                    - 16 -
<PAGE>
 
and the Administrative Trustees shall not take any action that is inconsistent
with the purposes and functions of the Trust set forth in Section 3.3.

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

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

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

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

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

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

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

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

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

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

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

                                    - 17 -
<PAGE>
 
SECTION 3.8  Powers and Duties of the Property Trustee.
             ----------------------------------------- 

          (a)  The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders.  The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7.  Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.

          (b)  The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).

          (c)  The Property Trustee shall:

               (i)    establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders and, upon the
receipt of payments of funds made in respect of the Debentures held by the
Property Trustee, deposit such funds into the Property Trustee Account and make
payments to the Holders of the Capital Securities and Holders of the Common
Securities from the Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Property Trustee Account shall be
maintained by the Property Trustee with The Bank of New York (in its separate
corporate capacity and not in its capacity as Property Trustee) in its trust
department;

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

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

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

          (e)  Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act and if such Property Trustee shall have failed to take such Legal
Action, the Holders of the Capital Securities, to the fullest extent permitted
by applicable law, may take such Legal Action, to the same extent as if such
Holders of Capital Securities held an aggregate principal amount of Debentures
equal to the aggregate liquidation 

                                     -18-
<PAGE>
 
amount of such Capital Securities, without first proceeding against the Property
Trustee or the Trust; provided however, that if an Event of Default has occurred
and is continuing and such event is attributable to the failure of the Debenture
Issuer to pay the principal of or premium, if any, or interest on the Debentures
on the date such principal, premium, if any, or interest is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding against the Debenture Issuer for
enforcement of payment to such Holder of the principal of or premium, if any, or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such Holder (a "Direct Action")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of Capital Securities to the extent
of any payment made by the Debenture Issuer to such Holder of Capital Securities
in such Direct Action. Except as provided in the preceding sentences, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.

          (f)  The Property Trustee shall not resign as a Trustee unless either:

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

               (ii)   a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7.

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

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

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

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

          The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and 

                                     -19-
<PAGE>
 
the Property Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.

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

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

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

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

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

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

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

               (iii)  the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation amount
of the Securities relating to the time, method and 

                                     -20-
<PAGE>
 
place of conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property Trustee
under this Declaration;

               (iv)   no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if it 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 Declaration or indemnity reasonably
satisfactory to the Property Trustee against such risk or liability is not
reasonably assured to it;

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

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

               (vii)  the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee Account maintained
by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and

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

SECTION 3.10 Certain Rights of the Property Trustee.
             -------------------------------------- 

          (a)  Subject to the provisions of Section 3.9:

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

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

                                     -21-
<PAGE>
 
               (iii)  whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrative Trustees;

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

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

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

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

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

               (ix)   any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall 

                                     -22-
<PAGE>
 
be required to inquire as to the authority of the Property Trustee to so act or
as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Property Trustee's or its
agent's taking such action;

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

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

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

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

SECTION 3.11 Delaware Trustee.
             ---------------- 

          Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this
Declaration.  Except as set forth in Section 5.2, the Delaware Trustee shall be
a Trustee for the sole and limited purpose of fulfilling the requirements of
(S)3807 of the Business Trust Act.

SECTION 3.12 Execution of Documents.
             ----------------------   

          Except as otherwise required by the Business Trust Act, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that, the Registration Statement
                                 -------- ----                            
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.

                                     -23-
<PAGE>
 
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
             ------------------------------------------------------   

          The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness.  The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.  The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.

SECTION 3.14 Duration of Trust.
             -----------------   

          The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence up to February 1, 2028.

SECTION 3.15 Mergers.
             -------   

          (a)  The Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, except as described in
Section 3.15(b) and (c).

          (b)  The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, a trust organized as such under the
laws of any State; provided that:
                   -------- ---- 

               (i)    such successor entity (the "Successor Entity") either:

                      (A)  expressly assumes all of the obligations of the Trust
with respect to the Securities; or

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

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

                                     -24-
<PAGE>
 
               (iii)  the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital Securities
are then listed or quoted, if any;

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

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

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

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

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

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

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

          (c)  Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.

                                     -25-
<PAGE>
 
                                  ARTICLE IV
                                    SPONSOR

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

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

SECTION 4.2  Responsibilities of the Sponsor.
             -------------------------------   

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

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

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

          (c)  if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market or the NASD PORTAL system
for listing or quotation of the Capital Securities;

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

          (e)  to negotiate the terms of the Purchase Agreement, the
Registration Rights Agreement and the Subscription Agreements, and to enter into
and execute and deliver the same on behalf of the Trust.

                                     -26-
<PAGE>
 
SECTION 4.3  Right to Proceed.
             ----------------   

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


                                   ARTICLE V
                                   TRUSTEES

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

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

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

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

provided, however, that, the number of Trustees shall in no event be less than
--------  -------                                                             
two (2); provided further that (1) one Trustee, in the case of a natural person,
         -------- -------                                                       
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law (the
"Delaware Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Sponsor (an "Administrative Trustee");
and (3) one Trustee shall be the Property Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture
Act, and such Trustee may also serve as Delaware Trustee if it meets the
applicable requirements.  Notwithstanding the above, unless an Event of Default
shall have occurred and be continuing, at any time or times, for the purpose of
meeting the legal requirements of the Trust Indenture Act or of any jurisdiction
in which any part of the Trust's property may at the time be located, the
Holders of a Majority in liquidation amount of the Common Securities acting as a
class at a meeting of the Holders of the Common Securities, and the
Administrative Trustees shall have power to appoint one or more persons either
to act as a co-trustee, jointly with the Property Trustee, of all or any part of
the Trust's property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of this Declaration.  In case an Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make any such
appointment of a co-trustee.

                                     -27-
<PAGE>
 
SECTION 5.2  Delaware Trustee.
             ----------------   

          If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:

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

          (b)  if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,

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

SECTION 5.3  Property Trustee; Eligibility.
             -----------------------------   

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

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

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

          (b)  If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).

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

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

                                     -28-
<PAGE>
 
          (e)  The initial Property Trustee shall be:

               The Bank of New York
               101 Barclay Street
               21st Floor West
               New York, NY  10286
               Attention:  Corporate Trust Trustee Administration

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

          Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.

SECTION 5.5  Administrative Trustees.
             -----------------------   

               The initial Administrative Trustees shall be:

          Kevin J. Sheehan
          c/o Investors Financial Services Corp.
          89 South Street
          P.O. Box 1537
          Boston, MA  02205-1537

          Karen C. Keenan
          c/o Investors Financial Services Corp.
          89 South Street
          P.O. Box 1537
          Boston, MA  02205-1537

          Earl W. Zimmerman, Jr.
          c/o Investors Financial Services Corp.
          89 South Street
          P.O. Box 1537
          Boston, MA  02205-1537

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

               (b)    An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the 

                                     -29-
<PAGE>
 
purposes of signing any documents which the Administrative Trustees have power
and authority to cause the Trust to execute pursuant to Section 3.6.

SECTION 5.6  Delaware Trustee.
             ----------------  

          The initial Delaware Trustee shall be:

               The Bank of New York (Delaware)
               White Clay Center                     
               Route 273                             
               Newark, DE   19711                    
               Attention:  Corporate Trust Department 

SECTION 5.7  Appointment, Removal and Resignation of Trustees.
             ------------------------------------------------   

          (a)  Subject to Section 5.7(b), Trustees may be appointed or
removed without cause at any time:

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

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

               (iii)  if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the Property
Trustee or the Delaware Trustee only, by vote of Holders of a Majority in
liquidation amount of the Capital Securities voting as a class at a meeting of
Holders of the Capital Securities.

          (b)(i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.7(a) until a Successor Property Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Administrative Trustees and
the Sponsor; and

               (ii)   the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(b) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrative Trustees and the Sponsor.

          (c)  A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the 

                                     -30-
<PAGE>
 
Trustee and delivered to the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
--------  ------- 

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

                      (A)  until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the resigning
Property Trustee; or

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

               (ii)   no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.

          (d)  The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.

          (e)  If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee.  Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.

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

SECTION 5.8  Vacancies among Trustees.
             ------------------------   

          If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur.  A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy.  The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.

                                     -31-
<PAGE>
 
SECTION 5.9  Effect of Vacancies.
             -------------------   

          The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust.  Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.

SECTION 5.10 Meetings.
             --------   

          If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee.  Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting.  Notice
of any telephonic meetings of the Administrative Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting.  Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting.  The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened.  Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees.  In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.

SECTION 5.11 Delegation of Power.
             -------------------   

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

          (b)  the Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or 

                                     -32-
<PAGE>
 
otherwise as the Administrative Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.

SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business.
             -----------------------------------------------------------   

          Any corporation into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as the case
may be, may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Property Trustee, the Delaware Trustee or such an Administrative Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee, the
Delaware Trustee or such an Administrative Trustee, as the case may be, shall be
the successor of the Property Trustee, the Delaware Trustee or such an
Administrative Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.


                                  ARTICLE VI
                                 DISTRIBUTIONS

SECTION 6.1  Distributions.
             -------------   

          Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities.  If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee or Liquidated Damages (as defined in the Registration Rights Agreement)
or any other payments pursuant to the Registration Rights Agreement with respect
to the Debentures held by the Property Trustee (the amount of any such payment
being a "Payment Amount"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.


                                  ARTICLE VII
                            ISSUANCE OF SECURITIES

SECTION 7.1  General Provisions Regarding Securities.
             ---------------------------------------   

          (a)  The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"Series A Capital Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Administrative Trustees
shall on behalf of the Trust issue one class of capital securities representing
undivided beneficial interests in the assets of the Trust having such terms as
set forth in Annex I (the "Series B Capital 

                                     -33-
<PAGE>
 
Securities") in exchange for Series A Capital Securities accepted for exchange
in the Exchange Offer if an Exchange Offer is commenced, which Series B Capital
Securities shall not bear the legends required by Section 9.2(i) unless the
Holder of such Series A Capital Securities is either (A) a broker-dealer who
purchased such Series A Capital Securities directly from the Trust for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(B) a Person participating in the distribution of the Series A Capital
Securities or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Trust. The Trust shall issue no securities or other interests in the assets of
the Trust other than the Securities.

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

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

          (d)  Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.

SECTION 7.2  Execution and Authentication.
             ----------------------------   

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

          (b)  One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature.  Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.

          A Capital Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee.  The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.

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

                                     -34-
<PAGE>
 
          The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities.  An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so.  Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent.  An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate.

SECTION 7.3  Form and Dating.
             ---------------   

          The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof.  The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust).  The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing.  Each
Capital Security shall be dated the date of its authentication.  The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and
to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.

          (a)  Global Securities.  Securities offered and sold to QIBs in
               -----------------                                         
reliance on Rule 144A, as provided in the Purchase Agreement, shall be issued in
the form of one or more, permanent global Securities in definitive, fully
registered form without distribution coupons with the global legend and
Restricted Securities Legend set forth in Exhibit A-1 hereto (a "Global Capital
Security"), which shall be deposited on behalf of the purchasers of the Capital
Securities represented thereby with the Property Trustee, at its New York
office, as custodian for the Clearing Agency, and registered in the name of the
Clearing Agency or a nominee of the Clearing Agency, duly executed by the Trust
and authenticated by the Property Trustee as hereinafter provided.  The number
of Capital Securities represented by the Global Capital Security may from time
to time be increased or decreased by adjustments made on the records of the
Property Trustee and the Clearing Agency or its nominee as hereinafter provided.

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

          The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Global Capital Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such 
<PAGE>
 
Clearing Agency's written instructions or held by the Property Trustee as
custodian for the Clearing Agency.

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

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

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

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

                                     -36-
<PAGE>
 
or any of its Affiliates may act as Paying Agent, Registrar, or Exchange Agent.
The Trust shall act as Paying Agent, Registrar, co-registrar, and Exchange Agent
for the Common Securities.

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

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

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

SECTION 7.6  Replacement Securities.
             ----------------------   

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

          Every replacement Security is an additional beneficial interest in the
assets of the Trust.

SECTION 7.7  Outstanding Capital Securities.
             ------------------------------   

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

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

                                     -37-
<PAGE>
 
          If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.

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

SECTION 7.8  Capital Securities in Treasury.
             ------------------------------   

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

SECTION 7.9  Temporary Securities.
             --------------------   

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

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

          (c)  Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to the
Property Trustee to be so transferred, in whole or from time to time in part,
without charge, and the Property Trustee shall authenticate and make available
for delivery, upon such transfer of each portion of such Global Capital
Security, an equal aggregate liquidation amount of Securities of authorized
denominations in the form of certificated Capital Securities. Any portion of a
Global Capital Security transferred pursuant to this Section shall be registered
in such names as the Clearing Agency shall direct. Any Capital Security in the
form of certificated Capital Securities delivered in exchange for an interest in
the Restricted Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.

                                     -38-
<PAGE>
 
          (d)  Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.

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

SECTION 7.10 Cancellation.
             ------------   

          The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation.  The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment.  The Property Trustee
shall promptly cancel all Capital Securities surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of cancelled Capital Securities as the Trust directs, provided that the
Property Trustee shall not be obligated to destroy Capital Securities.  The
Trust may not issue new Capital Securities to replace Capital Securities that it
has paid or that have been delivered to the Property Trustee for cancellation or
that any holder has exchanged.

SECTION 7.11 CUSIP Numbers.
             -------------   

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


                                 ARTICLE VIII
                             TERMINATION OF TRUST

SECTION 8.1  Termination of Trust.
             --------------------   

          (a)  The Trust shall automatically terminate:

               (i)    upon the bankruptcy of the Sponsor;

                                     -39-
<PAGE>
 
               (ii)   upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the revocation of
the Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;

               (iii)  after satisfaction of liabilities to creditors of the
Trust as required by applicable law, following the distribution of a Like Amount
of the Debentures to the Holders, provided that the Property Trustee has      
                                  -------- ----                         
received written notice from the Sponsor directing the Property Trustee to
terminate the Trust (which direction is optional, and except as otherwise
expressly provided below, within the discretion of the Sponsor) and provided,
                                                                    -------- 
further, that such direction and such distribution is conditioned on (i) the
-------                                                                     
receipt by the Sponsor or the Trust, as the case requires, of any required
regulatory approval, including prior approval of the Federal Reserve if then
required under the applicable Capital guidelines or policies of the Federal
Reserve, (ii) the Administrative Trustees' receipt of an opinion of an
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published rulings of the Internal Revenue
Service, to the effect that the Holders will not recognize any gain or loss for
United States federal income tax purposes as a result of the dissolution of the
Trust and the distribution of Debentures;

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

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

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

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

          (b)  As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), and after the completion of the winding up of the
Trust's affairs, the Administrative Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.

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

                                     -40-
<PAGE>
 
                                  ARTICLE IX
                             TRANSFER OF INTERESTS


SECTION 9.1  Transfer of Securities.
             ---------------------- 

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

          (b)  Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration.  Any transfer or purported transfer of any
security not made in accordance with this Declaration shall be null and void.

          (c)  Subject to applicable law, the Sponsor may not transfer the
Common Securities.

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


SECTION 9.2  Transfer Procedures and Restrictions.
             ------------------------------------ 


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

                                     -41-
<PAGE>
 
satisfactory evidence, the Property Trustee, at the written direction of the
Trust, shall authenticate and deliver Capital Securities that do not bear the
legend.

          (b)  Transfers After Effectiveness of a Registration Statement.  After
               ---------------------------------------------------------        
the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Global Capital Security.  No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global Capital Security
shall be effective unless the transferor delivers to the Trust a certificate in
a form substantially similar to that attached hereto as the "Form of Assignment"
in Exhibit A-1.  Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and the
Property Trustee, upon a written order of the Trust signed by one Administrative
Trustee, shall authenticate a Capital Security in global form without the
Restricted Securities Legend (the "Unrestricted Global Capital Security") to
deposit with the Clearing Agency to evidence transfers of beneficial interests
from the (i) Global Capital Security and (ii) Restricted Definitive Capital
Securities.

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

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

               (y)    to exchange such Definitive Capital Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive Capital Securities,

the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
--------  -------                                                        
transfer or exchange:

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

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

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

                      (B)  if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1, and
(ii) if the Trust or Registrar so requests, evidence 

                                     -42-
<PAGE>
 
reasonably satisfactory to them as to the compliance with the restrictions set
forth in the Restricted Securities Legend.

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

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

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

then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly.  If no Global Capital Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.

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


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

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

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

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

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

               (i)    there occurs a Default or an Event of Default which is
continuing, or


               (ii)    the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive Capital
Securities under this Declaration, then the Trust will execute, and the Property
Trustee, upon receipt of a written order of the Trust signed by one
Administrative Trustee requesting the authentication and delivery of Definitive
Capital Securities to the Persons designated by the Trust, will authenticate and
make available for delivery Definitive Capital Securities, equal in number to
the number of Capital Securities represented by the Global Capital Securities,
in exchange for such Global Capital Securities.

          (i)  Legend.
               ------ 

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

THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.  NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, 

                                     -44-
<PAGE>
 
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE CORPORATION OR ANY
"AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER
TO THE TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A
TO THE OFFERING MEMORANDUM DATED JANUARY 30, 1997.  SUCH HOLDER FURTHER AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  THE HOLDER OF THIS CAPITAL
SECURITY BY ITS ACCEPTANCE HEREOF IS DEEMED TO HAVE AGREED TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT AMONG THE CORPORATION, THE TRUST
AND THE INITIAL PURCHASER (A COPY OF WHICH IS AVAILABLE FROM THE CORPORATION
UPON REQUEST);

and in the case of the Regulation S Global Capital Security the following
additional legend:

                                     -45-
<PAGE>
 
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.


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

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

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

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

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

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

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

                                     -46-
<PAGE>
 
               (iii)  The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital Securities for
redemption and ending at the close of business on the day of such mailing; or
(b) any Capital Security so selected for redemption in whole or in part, except
the unredeemed portion of any Capital Security being redeemed in part.

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

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

          (l)  No Obligation of the Property Trustee.
               ------------------------------------- 

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

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

                                     -47-
<PAGE>
 
          (m)  Exchange of Series A Capital Securities for Series B Capital
               ------------------------------------------------------------
Securities.  The Series A Capital Securities may be exchanged for Series B
----------                                                                
Securities pursuant to the terms of the Exchange Offer, if commenced.  The
Trustee shall make the exchange as follows:

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

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

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

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

          If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in the
number and aggregate liquidation amount represented thereby as a result of the
Exchange Offer.

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

          (n)  Minimum Transfers.  Series A Capital Securities and Series B
               -----------------                                           
Capital Securities may only be transferred in minimum blocks of $100,000
aggregate liquidation amount.

SECTION 9.3  Deemed Security Holders.
             ----------------------- 

          The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security for purposes of 

                                     -48-
<PAGE>
 
receiving Distributions and for all other purposes whatsoever and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Security on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

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

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

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

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

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

          (d)  the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants.  DTC will make book entry transfers among the
Clearing Agency Participants.

SECTION 9.5  Notices to Clearing Agency.
             -------------------------- 

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

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

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

                                     -49-
<PAGE>
 
                                   ARTICLE X
                          LIMITATION OF LIABILITY OF
                   HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 10.1  Liability.
              --------- 

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

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

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

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

          (c)  Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

SECTION 10.2  Exculpation.
              ----------- 

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

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

                                     -50-
<PAGE>
 
SECTION 10.3  Fiduciary Duty.
              -------------- 

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

          (b)  Unless otherwise expressly provided herein:

               (i)    whenever a conflict of interest exists or arises between
any Covered Persons; or

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

the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles.  In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.

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

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

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

                                     -51-
<PAGE>
 
SECTION 10.4  Indemnification.
              --------------- 

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

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

               (iii)  To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

               (iv)   Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Administrative
Trustees by a 

                                     -52-
<PAGE>
 
majority vote of a quorum consisting of such Administrative Trustees who were
not parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.

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

               (vi)   The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 10.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Debenture Issuer or
Capital Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 10.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section 10.4(a) shall
not affect any rights or obligations then existing.

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

               (viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any

                                     -53-
<PAGE>
 
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.

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

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

SECTION 10.5  Outside Businesses.
              ------------------ 

          Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper.  No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity.  Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.

                                     -54-
<PAGE>
 
                                  ARTICLE XI
                                  ACCOUNTING

SECTION 11.1  Fiscal Year.
              ----------- 

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

SECTION 11.2  Certain Accounting Matters.
              -------------------------- 

          (a)  At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrative Trustees.

          (b)  The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss;

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

          (d)  The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.

SECTION 11.3  Banking.
              ------- 

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

                                     -55-
<PAGE>
 
such accounts shall be designated by the Administrative Trustees; provided,
                                                                  --------
however, that the Property Trustee shall designate the signatories for the
-------
Property Trustee Account.

SECTION 11.4  Withholding.
              ----------- 

          The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law.  The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations.  The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions.  To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction.  If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.


                                  ARTICLE XII
                            AMENDMENTS AND MEETINGS

SECTION 12.1  Amendments.
              ---------- 

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


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

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

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

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

               (i)    unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor 

                                     -56-
<PAGE>
 
that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);

               (ii)   unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:

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

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

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

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

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

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

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

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

          (d)  Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;

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

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

                                     -57-
<PAGE>
 
          (g)  Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:

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

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

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

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

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

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

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

                                     -58-
<PAGE>
 
liquidation amount that would be necessary to authorize or take such action at a
meeting at which all Holders having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be given
to the Holders entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative Trustees;

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

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

               (iv)   unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole discretion, shall establish
all other provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be voted on by
any Holders of Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.


                                 ARTICLE XIII
                      REPRESENTATIONS OF PROPERTY TRUSTEE
                             AND DELAWARE TRUSTEE

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

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

          (a)  The Property Trustee is a New York banking corporation with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;

                                     -59-
<PAGE>
 
          (b)  The execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);

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

          (d)  No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.

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

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

          (a)  The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;

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

          (c)  No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and

          (d)  The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.

                                     -60-
<PAGE>
 
                                  ARTICLE XIV
                              REGISTRATION RIGHTS


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

          The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee (collectively, the "Registrable Securities") are entitled
to the benefits of a Registration Rights Agreement.  Pursuant to the
Registration Rights Agreement, the Sponsor and the Trust have agreed for the
benefit of the Holders of Registrable Securities that (i) they will, at the
Sponsor's cost, within 150 days after January 31, 1997 (the "Issue Date"), use
their best efforts to file a shelf registration statement (the "Shelf
Registration Statement") with the Commission with respect to resales of the
Registrable Securities, (ii) they will use their best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission within
180 days after the Issue Date and (iii) they will use their best efforts to
maintain the Shelf Registration Statement continuously effective under the
Securities Act until the third anniversary of the effectiveness of the Shelf
Registration Statement or such earlier date as is provided in the Registration
Rights Agreement (the "Effectiveness Period").

          The Sponsor and the Trust will have the option, in lieu of effecting
the Shelf Registration Statement, (i) to file, at the Sponsor's cost, within 150
days after the Issue Date, a registration statement (the "Exchange Registration
Statement") with the Commission relating an Exchange Offer pursuant to which
each issuer of such respective Registrable Securities would issue amounts of
such Registrable Securities as are accepted in the Exchange Offer which shall be
identical in all respects to those exchanged, except they will have been
registered under the Securities Act and no longer will provide for additional
Distributions as described below and (ii) to use their best efforts to cause the
Exchange Registration Statement to be declared effective under the Securities
Act within 180 days after the Issue Date.  In addition, in the event that the
Company has filed a Shelf Registration Statement in accordance with the first
paragraph of Section 14.1 in lieu of conducting an Exchange Offer in accordance
with the foregoing sentence, the Company may, if permitted in accordance with
then applicable regulations and the then current interpretations of the staff of
the Commission, elect to conduct an Exchange Offer in accordance with the terms
set forth in the Registration Rights Agreement, other than with respect to the
specific timing requirements set forth in the foregoing sentence.  If the
Exchange Offer is consummated, the obligation to maintain the effectiveness of
the Shelf Registration Statement will terminate with respect to certain Holders
of Registrable Securities.  All references herein to such Registrable Securities
shall be deemed to include, as the context may require, the Registrable
Securities into which such Securities have been exchanged pursuant to the
Exchange Registration ("Exchange Securities") and all references to numbers or
amounts of such Securities shall be deemed to include, as the context may
require, such Exchanged Securities.

          If:  (i)  neither the Shelf Registration Statement nor an Exchange
Registration Statement is filed with the Commission on or prior to the 150th day
after the Issue 

                                     -61-
<PAGE>
 
Date, then, commencing on the day after the required filing date, additional
Distributions shall accumulate on the liquidation amount of the Capital
Securities at a rate of 0.25% per annum;

               (ii)      neither the Shelf Registration Statement nor an
Exchange Registration Statement is declared effective by the Commission on or
prior to the 30th day after the required filing date, then, commencing on the
31st day after the required filing date, additional Distributions shall
accumulate on the liquidation amount of the Capital Securities at a rate of
0.25% per annum; or

               (iii)     (A) the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective at any
time prior to the third anniversary of the Issue Date (other than (a) after such
time as all Capital Securities have been disposed of thereunder or otherwise
cease to be Registrable Securities or (b) if the Exchange Offer is consummated
and the Sponsor's and the Trust's obligation to maintain the effectiveness of
the Shelf Registration Statement has ceased), or (B) if applicable, the Trust
has not exchanged Exchange Capital Securities for all Capital Securities or the
Debenture Issuer has not exchanged Exchange Guarantees or Exchange Subordinated
Debentures for all Guarantees or Subordinated Debentures validly tendered, in
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date on which the Exchange Registration Statement was declared
effective, then additional Distributions shall accumulate on the liquidation
amount of the Capital Securities at a rate of 0.25% per annum commencing on (x)
the day such Shelf Registration Statement ceases to be effective in the case of
(A) above or (y) the 45th day after such effective date, in the case of (B)
above;

provided, however, that the additional Distribution rate on the liquidation
--------  -------                                                          
amount of the Capital Securities may not exceed in the aggregate 0.25% per
annum; provided, further, however, that (1) upon the filing of the Shelf
       --------  -------  -------                                       
Registration Statement or an Exchange Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Shelf Registration
Statement or an Exchange Registration Statement (in the case of clause (ii)
above), or (3) upon the effectiveness of the Shelf Registration Statement which
had ceased to remain effective (in the case of clause (iii)(A) above), or upon
the exchange of Exchange Capital Securities, Exchange Guarantees and Exchange
Subordinated Debentures for all Capital Securities, Guarantees and Subordinated
Debentures tendered (in the case of clause (iii) (B) above), additional
Distributions on the liquidation amount of the Capital Securities as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accumulate; provided, further, however, that each of the time periods set
             ----------  -------  -------                                   
forth in clauses (i) and (ii) above shall be extended by the number of days, if
any, which elapse from and including (x) the date on which the holders of a
Majority in liquidation amount of the Capital Securities or any broker-dealer
who acquired the Capital Securities for its own account as a result of
marketmaking or other trading activities (or their counsel or any managing
underwriter) shall have exercised their rights under the Registration Rights
Agreement to object to the filing of the Shelf Registration Statement as the
Exchange Registration Statement or any supplements or amendments thereto until
(y) the date on which any such objection is withdrawn.

                                     -62-
<PAGE>
 
          Any amounts of additional Distributions due pursuant to clauses (i),
(ii) or (iii) above will be payable in cash on February 1 and August 1 of each
year to the Holders on the date fifteen days prior to the relevant Distribution
date.


                                   ARTICLE XV
                                 MISCELLANEOUS

SECTION 15.1  Notices.
              ------- 

          All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:

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

               Investors Capital Trust I
               c/o Investors Financial Services Corp.
               89 South Street
               P.O. Box 1537
               Boston, MA  02205-1537
               Attention:  Kevin J. Sheehan, Administrative Trustee

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

               The Bank of New York (Delaware)
               White Clay Center
               Route 273
               Newark, DE  19711
               Attention:  Corporate Trust Department

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

               The Bank of New York
               101 Barclay Street
               21st Floor West
               New York, NY  10286
               Attention:  Corporate Trust Trustee Administration

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

                                     -63-
<PAGE>
 
               Investors Financial Services Corp.
               89 South Street
               P.O. Box 1537
               Boston, MA  02205-1537
               Attention:  Chief Financial Officer

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

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

SECTION 15.2  Governing Law.
              ------------- 

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

SECTION 15.3  Intention of the Parties.
              ------------------------ 

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

SECTION 15.4  Headings.
              -------- 

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

SECTION 15.5  Successors and Assigns.
              ---------------------- 

          Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

SECTION 15.6  Partial Enforceability.
              ----------------------  

          If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application 

                                     -64-
<PAGE>
 
of such provision to persons or circumstances other than those to which it is
held invalid, shall not be affected thereby.

SECTION 15.7  Counterparts.
              ------------ 

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

                                     -65-
<PAGE>
 
          IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.

                              /s/ Kevin J. Sheehan
                              ---------------------------------- 
                              Kevin J. Sheehan,
                              as Administrative Trustee

                              /s/ Karen C. Keenan
                              ---------------------------------- 
                              Karen C. Keenan,
                              as Administrative Trustee

                              /s/ Earl W. Zimmerman, Jr., 
                              ---------------------------------- 
                              Earl W. Zimmerman, Jr., 
                              as Administrative Trustee


                              THE BANK OF NEW YORK (DELAWARE),
                              as Delaware Trustee

                              By:   /s/ Mary Jane Morrissey
                                    ----------------------------
                                    Name:  Mary Jane Morrissey
                                    Title: Authorized Signatory


                              THE BANK OF NEW YORK,
                              as Property Trustee

                              By:   /s/ Mary Jane Morrissey
                                    ---------------------------- 
                                    Name:  Mary Jane Morrissey
                                    Title: Vice President       

                              INVESTORS FINANCIAL SERVICES CORP.,
                              as Sponsor


                              By:   /s/ John E. Henry
                                    ---------------------------- 
                                    Name:  John E. Henry
                                    Title: General Counsel & Secretary
<PAGE>
 
                                    ANNEX I


                                   TERMS OF

                  9.77% SERIES A/SERIES B CAPITAL SECURITIES
                            9.77% COMMON SECURITIES


          Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of January 31, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):

          1.   Designation and Number.
               ---------------------- 


          (a)  Capital Securities.  25,000 Series A Capital Securities of the
               ------------------                                            
Trust and 25,000 Series B Capital Securities of the Trust, each series with an
aggregate liquidation amount with respect to the assets of the Trust of Twenty-
Five Million Dollars ($25,000,000), and each with a liquidation amount with
respect to the assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "9.77% Series A Capital Securities"
and "9.77% Series B Capital Securities", respectively (collectively, the
"Capital Securities").  The certificates evidencing the Capital Securities shall
be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Capital Securities are listed.


          (b)  Common Securities.  774 Common Securities of the Trust with an
               -----------------                                             
aggregate liquidation amount with respect to the assets of the Trust of Seven
Hundred and Seventy-Four Thousand Dollars ($774,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "9.77% Common Securities"
(the "Common Securities").  The certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.


          2.   Distributions.
               ------------- 


          (a)  Distributions payable on each Security will be fixed at a rate
per annum of 9.77% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited 
<PAGE>
 
circumstances, the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes distributions of
any such interest and Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.

          (b)  Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from January 31, 1997, and will be payable
semi-annually in arrears on February 1 and August 1 of each year, commencing on
August 1, 1997 (each, a "Distribution Date"), except as otherwise described
below.  Distributions will be computed on the basis of a 360-day year consisting
of twelve 30-day months and for any period less than a full calendar month on
the basis of the actual number of days elapsed in such month.  As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall extend beyond
                           -------- ----                                        
the Maturity Date of the Debentures.  As a consequence of such deferral,
Distributions will also be deferred.  Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period.  Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
                                         -------- ----                       
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures.  Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.

          (c)  Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the date fifteen
days prior to the relevant Distribution Date, which Distribution Dates
correspond to the interest payment dates on the Debentures.  Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment in respect of the Capital Securities will be made as described under the
heading "Description of the Capital Securities -- Form, Denomination, Book-Entry
Procedures and Transfer" in the Offering Memorandum dated January 30, 1997, of
the Debenture Issuer and the Trust relating to the Securities and the
Debentures.  The relevant record dates for the Common Securities shall be the
same as the record dates for the Capital Securities.  Distributions payable on
any Securities that are not punctually paid on any Distribution Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other

                                      -2-
<PAGE>
 
specified date determined in accordance with the Indenture.  If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on such
date.

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

          3.   Liquidation Distribution Upon Dissolution.
               ----------------------------------------- 

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

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

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

          4.   Redemption and Distribution.
               --------------------------- 

          (a)  Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture Issuer
or pursuant to a Special Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property Trustee (subject to
the Property Trustee having received notice no later than 45 days prior to such
repayment) to redeem a Like Amount of the Securities at a redemption price equal
to (i) in the case of the repayment of the Debentures at maturity, the Maturity
Redemption Price (as defined below), (ii) in the case of the optional redemption
of the Debentures upon the 

                                      -3-
<PAGE>
 
occurrence and continuation of a Special Event, the Special Event Redemption
Price (as defined below) and (iii) in the case of the optional redemption of the
Debentures other than as a result of the occurrence and continuance of a Special
Event, the Optional Redemption Price (as defined below). The Maturity Redemption
Price, the Special Event Redemption Price and the Optional Redemption Price are
referred to collectively as the "Redemption Price". Holders will be given not
less than 30 nor more than 60 days notice of such redemption.

          (b)  (i)  The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.

          (ii)  In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Capital Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be determined
as described in Section 4(g)(ii) below.  Upon the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction, the Debentures
thereafter will be subject to optional repayment, in whole, but not in part, on
or after February 1, 2007 (the "Initial Optional Redemption Date").

          The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole or in part at any
time on or after the Initial Optional Redemption Date, subject to the Debenture
Issuer having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve, upon not
less than 30 days and not more than 60 days notice, at the Optional Redemption
Price and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Optional Redemption Price on a Pro
Rata basis.  "Optional Redemption Price" shall mean a price equal to the
percentage of the liquidation amount of Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning February 1 of the
years indicated below:

          Year                           Percentage
          ----                           ----------

          2007                        104.8850%
          2008                        104.3965%
          2009                        103.9080%
          2010                        103.4195%
          2011                        102.9310%
          2012                        102.4425%
          2013                        101.9540%
          2014                        101.4655%
          2015                        100.9770%
          2016                        100.4885%
          2017 and thereafter         100.0000%

                                      -4-
<PAGE>
 
          (c)  If a Tax Event occurs and in the opinion of counsel to the
Debenture Issuer experienced in such matters, there would in all cases, after
effecting a Tax Event Maturity Advancement (as defined below), be more than an
insubstantial risk that an Adverse Tax Consequence (as defined herein) would
continue to exist, or, if a Regulatory Capital Event (as defined below) occurs,
then the Debenture Issuer will have the right, within 90 days following the
occurrence of such Tax Event or Regulatory Capital Event, as the case may be, to
redeem the Debentures in whole (but not in part) and therefore to cause a
mandatory redemption of the Capital Securities at the Special Event Redemption
Price prior to the Maturity Date of the Debentures (the circumstances under
which the Debenture Issuer has the right to so redeem the Debentures in
connection with a Tax Event being referred to herein as a "Conditional Tax
Redemption Event").  Each of the Conditional Tax Redemption Event or a
Regulatory Capital Event are sometimes referred to herein as "Special Event."

          (d)  If a Tax Event occurs, then the Debenture Issuer will have the
right, in lieu of terminating the Trust, to advance the Maturity Date of the
Debentures to the minimum extent required in order to allow for the payments of
interest in respect of the Debentures to continue to be deductible by the
Debenture Issuer for U.S. federal income tax purposes, but in no event shall the
resulting maturity of the Debentures be less than 20 years from the date of
original issuance thereof.  Such maturity date shall be advanced only (i) if, in
the opinion of counsel to the Debenture Issuer experienced in such matters,
after advancing the maturity date, interest payable on the Debentures will be
deductible for federal income tax purposes and (ii) upon the receipt of prior
approval of the Federal Reserve Board if then required under applicable capital
guidelines or policies of the Federal Reserve Board (the action referred to
above being referred to herein as a "Tax Event Maturity Advancement").

          "Tax Event" shall occur upon receipt by the Sponsor and the
Administrative Trustee of an opinion of a nationally recognized tax counsel (a
"Tax Event Opinion") experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which (x) amendment or change is effective or
(y) which pronouncement or decision is announced, on or after the Issue Date,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by the Debenture
Issuer, in whole or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges (each of the circumstances referred to in clauses (i), (ii)
and (iii) being an "Adverse Tax Consequence").

          "Regulatory Capital Event" shall occur at any time, that the Debenture
Issuer shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules, 

                                      -5-
<PAGE>
 
guidelines or policies of the Federal Reserve Board or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which (i) amendment or change is effective or (ii) such
pronouncement or decision is announced, on or after the Issue Date, the Capital
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier I Capital (or its then equivalent); provided, however, that a
Regulatory Capital Event shall not occur by reason of the use of the proceeds of
the Debentures by the Sponsor.

          "Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of the principal amount and premium payable with respect to an optional
redemption of a Like Amount of the Debentures on the Initial Optional Redemption
Date, together with scheduled payments of interest on the Debentures from the
redemption date to and including the Initial Optional Redemption Date, in each
case, discounted to the redemption date on a semi-annual basis (assuming a 360-
day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as
defined in the Indenture), plus, in each case, accumulated and unpaid
Distributions thereon, if any, to the date of such redemption.

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

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

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

               (i)  Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder to be redeemed or exchanged
not fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures.  For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
Holders.  Each Redemption/Distribution Notice shall be addressed to the Holders
of Securities at the address of each such Holder appearing in the 

                                      -6-
<PAGE>
 
books and records of the Trust. No defect in the Redemption/Distribution Notice
or in the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.

               (ii)   In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Capital Securities, it being understood that, in
respect of Capital Securities registered in the name of and held of record by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such redemption
will be made to the Clearing Agency and disbursed by such Clearing Agency in
accordance with the procedures applied by such agency or nominee.

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

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

          Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for redemption or (ii) any
Securities selected for redemption except the unredeemed portion of any Security
being redeemed.  If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next 

                                      -7-
<PAGE>
 
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by the Property
Trustee or by the Sponsor as guarantor pursuant to the relevant Securities
Guarantee, Distributions on such Securities will continue to accumulate from the
original redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.

               (v)    Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if Definitive
Capital Security Certificates have been issued, to the Holder thereof, and (B)
in respect of the Common Securities to the Holder thereof.

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

          5.   Voting Rights - Capital Securities.
               ---------------------------------- 

          (a)  Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.

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

                                      -8-
<PAGE>
 
          If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures.  In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action.  Except as
provided in the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.

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

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

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

          6.   Voting Rights - Common Securities.
               --------------------------------- 

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

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

                                      -9-
<PAGE>
 
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.

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

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

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

                                     -10-
<PAGE>
 
          No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.

          7.   Amendments to Declaration and Indenture.
               --------------------------------------- 

          In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders of the Securities (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other
provisions, or to make any other provisions with respect to matters or questions
arising under the Declaration which shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or to ensure
that the Trust will not be required to register as an "Investment Company" under
the Investment Company Act; provided, however, that such action shall not
                            --------  -------                            
adversely affect in any material respect the interests of any Holder of
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of the Securities.  The Declaration may
be amended by the Trustees and the Sponsor (i) with the consent of Holders
representing a majority in liquidation amount of all outstanding Securities, and
(ii) upon receipt by the Trustees of an Opinion of Counsel to the effect that
such amendment or the exercise of any power granted to the Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an Investment Company under the Investment Company Act, provided
                                                                       --------
that, without the consent of each Holder of the Securities, the Declaration may
----                                                                           
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution or other
payment required to be made in respect of the Securities as of a specified date
or (ii) restrict the right of a holder of Securities to institute suit for the
enforcement of any such payment on or after such date.

          8.   Pro Rata.
               -------- 

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

                                     -11-
<PAGE>
 
the relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.

          9.   Ranking.
               ------- 

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

          10.  Acceptance of Securities Guarantee and Indenture.
               ------------------------------------------------ 

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

          11.  No Preemptive Rights.
               -------------------- 

          The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.

          12.  Miscellaneous.
               ------------- 

          These terms constitute a part of the Declaration.

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

                                     -12-
<PAGE>
 
                                  EXHIBIT A-1


                     FORM OF CAPITAL SECURITY CERTIFICATE


                          [FORM OF FACE OF SECURITY]


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

          UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK), A NEW YORK CORPORATION, TO THE TRUST OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF IS DEEMED
TO HAVE AGREED TO BE BOUND BY THE PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT
AMONG THE TRUST, INVESTORS FINANCIAL SERVICES CORP. (THE "SPONSOR") AND KEEFE,
BRUYETTE & WOODS, INC. DATED JANUARY 31, 1997 (THE "REGISTRATION RIGHTS
AGREEMENT").  THE SPONSOR WILL PROVIDE A COPY OF THE REGISTRATION RIGHTS
AGREEMENT TO A HOLDER WITHOUT CHARGE UPON WRITTEN REQUEST TO THE TRUST AT ITS
PRINCIPAL PLACE OF BUSINESS.

          THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS OR ANY OTHER 
<PAGE>
 
APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

          THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.  SUCH HOLDER FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

          THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION 

                                      -2-
<PAGE>
 
AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION
406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.

                                      -3-
<PAGE>
 
Certificate Number                  Number of Capital Securities


                             CUSIP NO. __________


                   Certificate Evidencing Capital Securities

                                      of

                           Investors Capital Trust I


                      9.77% Series __ Capital Securities
               (liquidation amount $1,000 per Capital Security)

          Investors Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of __________ securities
of the Trust representing preferred undivided beneficial interests in the assets
of the Trust designated the 9.77% Series __ Capital Securities (liquidation
amount $1,000 per Capital Security) (the "Capital Securities").  The Capital
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer.  The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of January 31, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration.  Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration.  The
Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Trust
at its principal place of business.

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

          By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
<PAGE>
 
          IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of __________, ____.


                              INVESTORS CAPITAL TRUST I


                              By:_____________________________________
                                 Name:
                                 Title:   Administrative Trustee


          PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Dated:______________,_____


                              THE BANK OF NEW YORK,
                              as Property Trustee


                              By:_____________________________________
                                 Authorized Signatory

                                      -2-
<PAGE>
 
                         [FORM OF REVERSE OF SECURITY]

          Distributions payable on each Capital Security will be fixed at a rate
per annum of 9.77% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee.  Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law).  Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures.  The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated.  A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.

          Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from January 31, 1997 and will be payable
semi-annually in arrears, on February 1 and August 1 of each year, commencing on
August 1, 1997, except as otherwise described below.  Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month.  As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
                                                    -------- ----             
Period shall extend beyond the Maturity Date of the Debentures.  As a
consequence of such deferral, Distributions will also be deferred.  Despite such
deferral, semi-annual Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate exceeding
the rate of interest then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period.  Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
                                                                 -------- ----
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures.  Payments of accumulated
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.

          Subject to the prior obtaining of any regulatory approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
<PAGE>
 
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.

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

          The Capital Securities and the rights of the Holders shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.


                             _____________________

                                      -2-
<PAGE>
 
                                   ASSIGNMENT

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

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



________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
                   (Insert address and zip code of assignee)



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


Date: _______________________

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

Signature Guarantee/1/  ___________________________________





_____________________
/1/   Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
<PAGE>
 
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:

CHECK ONE BOX BELOW

[_]   (1)  exchanged for the undersigned's own account without transfer; or

[_]   (2)  transferred pursuant to and in compliance with Rule 144A under the
           Securities Act of 1933; or

[_]   (3)  transferred pursuant to and in compliance with Regulation S under the
           Securities Act of 1933; or

[_]   (4)  transferred to an institutional "accredited investor" within the
           meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
           Securities Act of 1933 that is acquiring the Capital Securities for
           its own account, or for the account of such an institutional
           "accredited investor," for investment purposes and not with a view
           to, or for offer or sale in connection with, any distribution in
           violation of the Securities Act of 1933; or

[_]   (5)  transferred pursuant to another available exemption from the
           registration requirements of the Securities Act of 1933; or

[_]   (6)  transferred pursuant to an effective registration statement.

Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Capital Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
                                                 --------  -------             
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Capital Securities such legal opinions, certifications
and other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as
the exemption provided by Rule 144 under such Act; provided, further, that (i)
                                                   --------  -------          
if box (2) is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A by executing the Certificate of
Qualified Institutional Buyer attached hereto or (ii) if box (4) is checked, the
transferee must also provide to the Exchange Agent a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated January 30, 1997; provided, further, that after the date that a
                        --------  -------                            
Registration Statement has been filed and so long as such Registration Statement
continues to be effective, the Exchange Agent may only permit transfers for
which box (6) has been checked.


                                        ________________________________________
                                        Signature

                                      -2-
<PAGE>
 
                 CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER

     The undersigned transferee of Capital Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii) the
undersigned is aware that the transfer of the Capital Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned is
acquiring the Capital Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment discretion.

     The undersigned also understands and acknowledges that the Capital
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act, and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Capital Securities and the
terms of the Amended and Restated Declaration of Trust of Investors Capital
Trust I dated January 31, 1997, as the same may be amended from time to time.


                                        ________________________________________
                                        Signature

                                      -3-
<PAGE>
 
                                  EXHIBIT A-2

                      FORM OF COMMON SECURITY CERTIFICATE

          THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW.  NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

          THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS COMMON SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE TRUST.  SUCH HOLDER FURTHER AGREES THAT IT WILL 
<PAGE>
 
DELIVER TO EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
 
                                      -2-
<PAGE>
 
Certificate Number:                 Number of Common Securities:


                   Certificate Evidencing Common Securities

                                      of

                           Investors Capital Trust I


                            9.77% Common Securities
                (liquidation amount $1,000 per Common Security)


          Investors Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that Investors
Financial Services Corp. (the "Holder") is the registered owner of ____________
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 9.77% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities").  Subject to the
limitation in Section 9.1(c) of the Declaration, the Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer.  The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of January 31,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration.  Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration.  The Sponsor will provide a copy
of the Declaration, the Common Securities Guarantee and the Indenture (including
any supplemental indenture) to a Holder without charge upon written request to
the Sponsor at its principal place of business.

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

          By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
<PAGE>
 
          IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _____________, _____.



                                   INVESTORS CAPITAL TRUST I


                                   By:_____________________________
                                      Name:
                                      Title: Administrative Trustee

                                      -2-
<PAGE>
 
                         [FORM OF REVERSE OF SECURITY]

          Distributions payable on each Common Security will be fixed at a rate
per annum of 9.77% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee.  Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law).  Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures.  The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated.  A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.

          Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from January 31, 1997 and will be payable semi-
annually in arrears, on February 1 and August 1 of each year, commencing on
August 1, 1997, except as otherwise described below.  Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month.  As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
                                                    -------- ----             
Period shall extend beyond the Maturity Date of the Debentures.  As a
consequence of such deferral, Distributions will also be deferred.  Despite such
deferral, Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period.  Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
                                         -------- ----                       
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures.  Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period.  Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.

          Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
<PAGE>
 
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.

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

          The Common Securities and the rights of the holders thereof hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.


                             _____________________

                                      -2-
<PAGE>
 
                                  ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
       (Insert assignee's social security or tax identification number)

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
                   (Insert address and zip code of assignee)


and irrevocably appoints________________________________________________________
________________________________________________________________________________
______________________________________________ agent to transfer this Common
Security Certificate on the books of the Trust.  The agent may substitute
another to act for him or her.


Date: _______________________

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


Signature Guarantee/1/:  ___________________________________





____________________
/1/ Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
<PAGE>
 
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:


CHECK ONE BOX BELOW


[_]  (1)  exchanged for the undersigned's own account without transfer; or

[_]  (2)  transferred pursuant to and in compliance with Rule 144A under the
          Securities Act of 1933; or

[_]  (3)  transferred pursuant to and in compliance with Regulation S under the
          Securities Act of 1933; or

[_]  (4)  transferred 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 Preferred Security for its own
          account, or for the account of such an institutional "accredited
          investor," for investment purposes and not with a view to, or for
          offer or sale in connection with, any distribution in violation of the
          Securities Act; or

[_]  (5)  transferred pursuant to another available exemption from the
          registration requirements of the Securities Act of 1933; or

[_]  (6)  transferred pursuant to an effective Registration Statement.

Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Common Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
                                                 --------  -------             
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Preferred Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption  provided by Rule 144 under such Act; provided,
                                                                     -------- 
further, that (i) if box (2) is checked, the transferee must also certify that
-------                                                                       
it is a qualified institutional buyer as defined in Rule 144A by executing the
Certificate of Qualified Institutional Buyer attached hereto or (ii) if box (4)
is checked, the transferee must also provide a Transferee Representation Letter
in the form attached to the Offering Memorandum of the Trust, dated January 30,
1997; provided, further, that after the date that a Registration Statement has
      --------  -------                                                       
been filed and so long as such Registration Statement continues to be effective,
the Exchange Agent may only permit transfers for which box (6) has been checked.


                                        ________________________________________
                                        Signature

                                      -2-
<PAGE>
 
                 CERTIFICATE OF QUALIFIED INSTITUTIONAL BUYER

     The undersigned transferee of Common Securities hereby certifies that (i)
the undersigned is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933, (ii) the
undersigned is aware that the transfer of the Common Securities to the
undersigned is being made in reliance on Rule 144A and (iii) the undersigned is
acquiring the Common Securities for its own account or for the account of
another QIB over which the undersigned exercises its sole investment discretion.

     The undersigned also understands and acknowledges that the Common
Securities have not been registered under the Securities Act or any other
applicable securities law, are being offered for resale in transactions not
requiring registration under the Securities Act, and may not be offered, sold,
pledged or otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws,
pursuant to an exemption therefrom or in a transaction not subject thereto and,
in each case, in compliance with the terms of the Common Securities and the
terms of the Amended and Restated Declaration of Trust of Investors Capital
Trust I dated January 31, 1997, as the same may be amended from time to time.

                                        ________________________________________
                                        Signature

                                      -3-
<PAGE>
                                   EXHIBIT B

                                  $25,000,000

                           Investors Capital Trust I

                           9.77% Capital Securities

               (Liquidation Amount $1,000 per Capital Security)

                                 guaranteed by

                      Investors Financial Services Corp.

                              PURCHASE AGREEMENT
                              ------------------

                                                                January 30, 1997

KEEFE, BRUYETTE & WOODS, INC.
as the Initial Purchaser
Two World Trade Center
New York, New York 10048


Ladies and Gentlemen:

     Investors Capital Trust I (the "Trust"), a statutory business trust created
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code, 12 Del. C. ((S) 3801, et seq.)) and
Investors Financial Services Corp., a Delaware corporation (the "Company" and
together with the Trust, the "Offerors"), confirm their agreement (the
"Agreement") with Keefe, Bruyette & Woods, Inc. (the "Initial Purchaser"), with
respect to the issue and sale by the Trust and the purchase by the Initial
Purchaser of 25,000 9.77% Capital Securities (liquidation amount of $1,000 per
security) of the Trust (the "Capital Securities"). The Capital Securities will
be guaranteed by the Company, to the extent described in the Offering Memorandum
(as defined below), with respect to distributions and payments upon liquidation,
redemption and otherwise pursuant to the Capital Securities Guarantee Agreement
(the "Capital Securities Guarantee"), to be dated as of January 31, 1997,
between the Company and The Bank of New York, as Trustee (the "Guarantee
Trustee"). The Capital Securities issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to an
additional or supplemented letter agreement, to be dated on or prior to the
Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among the
Trust, the Guarantee Trustee and DTC.
<PAGE>
 
     The Company is a registered bank holding company under the provisions of
the Bank Holding Company Act of 1956, as amended, whose subsidiary, Investors
Bank & Trust Company, is a Massachusetts chartered trust company (the "Bank").
The entire proceeds from the sale of the Capital Securities will be combined
with the entire proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities"), as guaranteed by the Company, to the
extent set forth in the Offering Memorandum, with respect to distributions and
payments upon liquidation, redemption and otherwise pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee" and, together
with the Capital Securities Guarantee, the "Guarantees"), to be dated as of
January 31, 1997, made by the Company, and will be used by the Trust to purchase
$25,774,000 of 9.77% Junior Subordinated Deferrable Interest Debentures due
February 1, 2027 (the "Subordinated Debentures") issued by the Company. The
Capital Securities and the Common Securities will be issued pursuant to the
Amended and Restated Declaration of Trust, to be dated as of January 31, 1997
(the "Declaration"), among the Company, as sponsor, Kevin J. Sheehan, Karen C.
Keenan and Earl W. Zimmerman, Jr., as administrative trustees (the
"Administrative Trustees"), The Bank of New York , as property trustee (the
"Property Trustee"), and The Bank of New York (Delaware), as Delaware trustee
(the "Delaware Trustee," and, together with the Property Trustee and the
Administrative Trustees, the "Trustees"). The Subordinated Debentures will be
issued pursuant to an indenture, to be dated as of January 31, 1997 (the
"Indenture"), between the Company and The Bank of New York, as trustee (the
"Debenture Trustee").

     The Capital Securities, the Capital Securities Guarantee and the
Subordinated Debentures are hereinafter collectively referred to as the "Initial
Securities."

     The Initial Securities will be subject to the registration rights set forth
in the registration rights agreement (the "Registration Rights Agreement"), to
be executed on and dated as of the Closing Time. Pursuant to the Registration
Rights Agreement, the Offerors will agree, among other things, to file with the
Securities and Exchange Commission (the "Commission") (i) a shelf registration
statement (the "Shelf Registration Statement") pursuant to Rule 415 of the rules
and regulations (the "1933 Act Regulations") under the United States Securities
Act of 1933, as amended (the "1933 Act"), relating to the resale by certain
holders of the Capital Securities and/or (ii) a registration statement (the
"Exchange Offer Registration Statement") under the 1933 Act, relating to another
series of capital securities (liquidation amount $1,000 per security) of the
Trust (the "Exchange Capital Securities"), another capital securities guarantee
(the "Exchange Capital Securities Guarantee"), and another series of Junior
Subordinated Deferrable Interest Debentures due February 1, 2027 (the "Exchange
Subordinated Debentures" and, collectively with the Exchange Capital Securities
and the Exchange Capital Securities Guarantee, the "Exchange Securities"), to be
offered in exchange for the Initial Securities (such offer to exchange being
referred to as the "Exchange Offer"). The Registration Rights Agreement shall be
in a form, and shall contain terms and provisions, customary for similar Rule
144A transactions, and shall otherwise be in form and substance reasonably
satisfactory to the Initial Purchaser.

                                       2
<PAGE>
 
     The Initial Securities and the Exchange Securities are jointly referred to
as the "Securities". The Indenture, the Declaration, the Guarantees, the
Registration Rights Agreement, the DTC Agreement and this Agreement are
hereinafter referred to collectively as the "Operative Documents."

     The Offerors understand that the Initial Purchaser proposes to make an
offering of the Capital Securities (as guaranteed by the Capital Securities
Guarantee) on the terms and in the manner set forth herein and agree that the
Initial Purchaser may resell, subject to the conditions set forth herein, all or
a portion of the Capital Securities to purchasers ("Subsequent Purchasers") at
any time after the date of this Agreement. The Capital Securities are to be
offered and sold through the Initial Purchaser without being registered under
the 1933 Act, in reliance upon exemptions therefrom. Pursuant to the terms of
the Capital Securities, investors that acquire Capital Securities may only
resell or otherwise transfer such Capital Securities if such Capital Securities
are hereafter registered under the 1933 Act or if an exemption from the
registration requirements of the 1933 Act is available (including the exemption
afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the 1933
Act Regulations).

     The Offerors have prepared and delivered to the Initial Purchaser copies of
a preliminary offering memorandum dated January 20, 1997 (the "Preliminary
Offering Memorandum") and have prepared and will deliver to the Initial
Purchaser, as soon as practicable, but not later than January 31, 1997, copies
of a final offering memorandum, dated January 30, 1997 (the "Final Offering
Memorandum"), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Capital Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document), including annexes and exhibits thereto and any documents
incorporated therein by reference, which has been prepared and delivered by the
Offerors to the Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Capital Securities.

          All references in this Agreement to financial statements and schedules
and other information which is "contained," "included," "disclosed" or "stated"
in the Offering Memorandum (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act") which is
incorporated by reference in the Offering Memorandum.

                                       3
<PAGE>
 
     SECTION 1.  Representations and Warranties.
                 ------------------------------ 

     (a)  The Offerors jointly and severally represent and warrant to the
Initial Purchaser as of the date hereof and as of the Closing Time, and agree
with the Initial Purchaser as follows:

          (i)    The Offerors have not, directly or indirectly, solicited any
offer to buy or offered to sell, and will not, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United States
citizen or resident, any security which is or would be integrated with the sale
of the Capital Securities in a manner that would require the Capital Securities
to be registered under the 1933 Act.

          (ii)   The Offering Memorandum does not, and at the Closing Time will
not, include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to statements in or
omissions from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Offerors in writing by or on behalf of the
Initial Purchaser expressly for use in the Offering Memorandum.

          (iii)  The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum at the time they were or hereafter are
filed with the Commission conformed and will conform in all material respects to
the requirements of the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and, when read together with the other
information in the Offering Memorandum, at the date of the Offering Memorandum
and at the Closing Time, do not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

          (iv)   The consolidated financial statements of the Company (together
with the related notes) included or incorporated by reference in the Offering
Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the consolidated results of
operations and cash flows of such entities for the periods specified; except as
otherwise stated in the Offering Memorandum or in the notes to such financial
statements, such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved; and the supporting schedules for the Company
and its consolidated subsidiaries incorporated by reference in the Offering
Memorandum present fairly the information required to be stated therein. The
selected consolidated financial data included in the Offering Memorandum present
fairly the information shown therein and have been compiled on a basis
consistent with that of the financial statements included in the Offering
Memorandum.

                                       4
<PAGE>
 
          (v)    The accountants who certified the financial statements and
supporting schedules of the Company and its consolidated subsidiaries included
in or incorporated by reference in the Offering Memorandum are independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.

          (vi)   Since the respective dates as of which information is given in
the Offering Memorandum, except as may otherwise be stated in, or referred to
therein: (1) there has not been any material adverse change in the results of
operations, condition (financial or otherwise), business affairs or business
prospects of the Trust or of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (2) there
have not been any transactions entered into by the Trust or by the Company or
any of its subsidiaries other than in the ordinary course of business which are
material to the Trust or the Company and its consolidated subsidiaries
considered as one enterprise, and (3) except for regular quarterly dividends on
the Company's outstanding shares of common stock and Class A Common Stock, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on its capital stock or by the Trust on any class of its securities.

          (vii)  The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum and to enter
into and perform its obligations under this Agreement; the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in Massachusetts; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not have a material adverse effect on the results
of operations, condition (financial or otherwise), business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise; and
the Company is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended.

          (viii) The Bank has been duly incorporated and is validly existing as
a trust company in good standing under the laws of the Commonwealth of
Massachusetts, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum
and is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not have a material adverse effect on the results of operations, condition
(financial or otherwise), business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise; all of the issued and
outstanding capital stock of the Bank has been duly authorized and validly
issued, is fully paid and non-assessable and is directly owned by the Company,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,

                                       5
<PAGE>
 
claim or equity; none of the outstanding shares of capital stock of the Bank was
issued in violation of the preemptive or similar rights of any stockholder of
the Bank arising by operation of law, under the charter or by-laws of the Bank
or under any agreement to which the Company or the Bank is a party. Except for
the shares of capital stock of the Bank owned by the Company, neither the
Company nor the Bank owns any shares of stock or any other equity securities of
any corporation or has any equity interest in any firm, partnership, association
or other entity, except (a) securities held in the ordinary course of business
and (b) as described in the Offering Memorandum.

          (ix)   Each of the Company's subsidiaries other than the Bank has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation or organization (to the
extent that such concepts apply in the relevant jurisdiction) and, to the extent
applicable, each subsidiary is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, except for such jurisdictions where the failure to be
so qualified would not have a material adverse effect on the results of
operations, condition (financial or otherwise), business affairs or business
prospects of the Company and its consolidated subsidiaries considered as one
enterprise; all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued and is fully paid and
nonassessable (to the extent that such concepts apply); except as set forth or
incorporated by reference in the Offering Memorandum, the capital stock of each
such subsidiary is owned by the Company, free and clear of any pledge, lien,
encumbrance, claim or equity.

          (x)    The Company and its subsidiaries have good and marketable title
to all properties (real and personal) described in the Offering Memorandum as
owned by the Company and its subsidiaries, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Offering Memorandum or (b) are not
material in amount nor significant in relation to the business of the Company
and its subsidiaries taken as a whole; and all properties described in the
Offering Memorandum as held under lease by the Company or its subsidiaries are
held under leases which are in full force and effect.

          (xi)   The description of the authorized, issued and outstanding
capital stock of the Company set forth in the Offering Memorandum under the
heading "Capitalization" is accurate in all material respects as of the date
indicated in such document; and the shares of such issued and outstanding
capital stock have been duly authorized and validly issued and are fully paid
and non-assessable and such capital stock conforms in all material respects to
all statements relating thereto contained in the Offering Memorandum.

          (xii)  The Trust has been duly created and is validly existing in good
standing as a statutory business trust under the Delaware Act; the Trust, at the
Closing Time, will have the power and authority to own property and to conduct
its business as described in the Offering Memorandum and to enter into and
perform its obligations under the Operative Documents, as applicable, and the
Capital Securities; the Trust is not a party to or otherwise 

                                       6
<PAGE>
 
bound by any material agreement other than those described in the Offering
Memorandum; the Trust is and will, under current law, be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation; the Trust does not have any consolidated or
unconsolidated subsidiaries; the Trust is and will be treated as a consolidated
subsidiary of the Company pursuant to GAAP; and the Trust is not required to be
authorized to do business in any jurisdiction other than the State of Delaware.

          (xiii) At the Closing Time, the Common Securities will have been duly
authorized by the Declaration and, when issued and delivered by the Trust to the
Company against payment therefor as described in the Offering Memorandum, will
be validly issued and will represent undivided beneficial interests in the
assets of the Trust; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and at the Closing Time all of the issued
and outstanding Common Securities of the Trust will be directly owned by the
Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.

          (xiv)  As of the Closing Time, the Capital Securities will have been
duly authorized by the Trust and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and non-
assessable undivided beneficial interests in the assets of the Trust and the
issuance of the Capital Securities will not be subject to preemptive or other
similar rights; and as of the Closing Time, the Exchange Capital Securities will
have been duly authorized by the Trust, and when and if issued in accordance
with the Declaration, will be validly issued and fully paid and non-assessable
undivided beneficial interests in the assets of the Trust.

          (xv)   The execution and delivery by the Trust and the Company of this
Agreement and the performance by the Trust and the Company of their respective
obligations hereunder, have been duly authorized by all necessary business trust
action on the part of the Trust and corporate action on the part of the Company;
and this Agreement has been duly executed and delivered by the Trust and the
Company.

          (xvi)  The Declaration has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company and
the Administrative Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware Trustee,
the Declaration will, at the Closing Time, be a valid and binding obligation of
the Company and the Trustees, enforceable against the Company and the Trustees
in accordance with its terms, except to the extent that enforcement thereof may
be limited by the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by general principles of equity (regardless of whether enforcement
is considered in a proceeding at law or in equity) and the availability of
equitable remedies (collectively, the "Enforceability Exceptions"); and at the
time the Exchange Offer is consummated (if so 

                                       7
<PAGE>
 
consummated), the Declaration will have been duly qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").

          (xvii) Each of the Guarantees and the Exchange Capital Securities
Guarantee has been duly authorized by the Company and, at the Closing Time, each
of the Guarantees will have been duly executed and delivered by the Company, and
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Enforceability Exceptions; at or prior
to the time the Exchange Offer is consummated (if so consummated), the Exchange
Capital Securities Guarantee will have been duly executed and delivered by the
Company, and will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by the Enforceability Exceptions;
and at the time the Exchange Offer is consummated (if so consummated), the
Exchange Capital Securities Guarantee will have been duly qualified under the
1939 Act.

          (xviii) The Indenture has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company and
will constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Enforceability Exceptions; and at the
time the Exchange Offer is consummated (if so consummated), the Indenture will
have been duly qualified under the 1939 Act.

          (xix)  The Subordinated Debentures have been duly authorized by the
Company and, at the Closing Time, will have been duly executed by the Company
and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Offering Memorandum, will
constitute valid and binding obligations of the Company, and the Exchange
Subordinated Debentures have been duly authorized by the Company and, if the
Exchange Offer is consummated, when duly executed by the Company and
authenticated in the manner provided in the Indenture, will constitute valid and
binding obligations of the Company, in each case, enforceable against the
Company in accordance with their terms, except to the extent that enforcement
thereof may be limited by the Enforceability Exceptions; and the Subordinated
Debentures will be in the form contemplated by, and entitled to the benefits of,
the Indenture and will conform in all material respects to the description
thereof in the Offering Memorandum.

          (xx)   The Registration Rights Agreement has been duly authorized by
each of the Offerors and, at the Closing Time, will have been duly executed and
delivered and will constitute a valid and binding agreement of each of the
Offerors, enforceable against each of the Offerors in accordance with its terms,
except to the extent enforcement thereof may be limited by (i) the
Enforceability Exceptions and (ii) the Commission's position that
indemnification for liabilities under the 1933 Act is against public policy.

                                       8
<PAGE>
 
          (xxi)  The Operative Documents, the Capital Securities and the Common
Securities each conform in all material respects to the descriptions thereof
contained in the Offering Memorandum.

          (xxii) Each of the Administrative Trustees is an officer or employee
 of the Company and has been duly authorized by the Company to execute and
 deliver the Declaration.

          (xxiii) At the Closing Time, the Property Trustee will be the record
holder of the Subordinated Debentures and no security interest, mortgage,
pledge, lien, encumbrance, claim or equity will be noted thereon or on the
Subordinated Debenture register maintained by or on behalf of the Company.

          (xxiv) Neither the Trust nor the Company is, and following
consummation of the transactions contemplated hereby will not be, an "investment
company" or a company "controlled" by an "investment company" which is required
to be registered under the Investment Company Act of 1940, as amended (the "1940
Act").

          (xxv)  The Trust is not in violation of the Trust Certificate (defined
below) or the Declaration, and neither the Company nor the Bank is in violation
of its charter or by-laws and none of the Trust, the Company or any of the
Company's subsidiaries is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, loan agreement, or any contract, note, lease or other instrument to
which it is a party or by which it or its properties may be bound, which
violation or default, singly or in the aggregate, would have a material adverse
effect on the properties, results of operations, condition (financial or
otherwise), business affairs or business prospects of the Trust or the Company
and its subsidiaries considered as one enterprise; the execution and delivery of
this Agreement and the Operative Documents by the Trust or the Company, as the
case may be, and the consummation by the Offerors of the transactions herein and
therein contemplated and the compliance with the terms of this Agreement and the
issuance and delivery of the Capital Securities have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Trust, the Company or the Bank under, any contract,
indenture, mortgage, deed of trust or other material agreement or instrument to
which the Trust, the Company or the Bank is a party or by which it or any of
their respective properties are bound, except for such conflicts, breaches and
defaults as, in the aggregate, would not be material to the properties, results
of operations, condition (financial or otherwise), business affairs or business
prospects of the Trust or the Company and its subsidiaries considered as one
enterprise, nor will such action result in any violation of the charter or 
by-laws of the Company or the Bank or the Declaration or the trust certificate
of the Trust filed with the State of Delaware on January 17, 1997 (the "Trust
Certificate"), or any existing applicable law, rule, regulation, judgment, order
or decree of any government, 

                                       9
<PAGE>
 
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Trust, the Company or the Bank or any of their respective properties.

          (xxvi) No filing with, or approval, authorization or consent of, any
court or governmental authority or agency is required for the performance by the
Company or the Trust of their respective obligations hereunder in connection
with the offering, issuance or sale of the Capital Securities under this
Agreement or the consummation of the transactions contemplated by the Operative
Documents, except such as have been obtained or will have been obtained prior to
the Closing Time or as may be required under state or foreign securities laws.

          (xxvii) There is no action, suit or proceeding, or, to the knowledge
of the Company, inquiry or investigation before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or its subsidiaries which
is not disclosed in the Offering Memorandum which might reasonably be expected
to have a material adverse effect on the results of operations, condition
(financial or otherwise), business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, or which might reasonably be
expected to materially and adversely affect the consummation of this Agreement
or the performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company or and of its
subsidiaries is a party or of which any of their respective property or assets
is the subject which are not described in the Offering Memorandum, including
ordinary routine litigation incidental to the business could not reasonably be
expected to have a material adverse effect on the results of operations,
condition (financial or otherwise), business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise.

          (xxviii) The Company and its subsidiaries have filed all federal,
state, local and foreign tax returns that are required to be filed or have duly
requested extensions thereof and have paid all taxes required to be paid by any
of them and any related assessments, fines or penalties, except for any such
tax, assessment, fine or penalty that is being contested in good faith and by
appropriate proceedings; and adequate charges, accruals and reserves have been
provided for in the financial statements referred to in Section 1(a)(iv) above
in respect of all federal, state, local and foreign taxes for all periods as to
which the tax liability of the Company or its subsidiaries has not been finally
determined or remains open to examination by applicable taxing authorities.

          (xxix) The Company and its subsidiaries carry or are entitled to the
benefits of insurance in such amounts and covering such risks as is generally
maintained by companies of established repute engaged in the same or similar
business, and all such insurance is in full force and effect.

          (xxx) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are 

                                      10
<PAGE>
 
executed in accordance with management's general and specific authorizations;
(ii) transactions are recorded as necessary to permit preparations of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's general
or specific authorizations; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

          (xxxi) The Company and its subsidiaries possess such certificates,
authorities, permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
have a material adverse effect on the results of operations, condition
(financial or otherwise), business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a material adverse effect on the results of
operations, condition (financial or otherwise), business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the results
of operations, condition (financial or otherwise), business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.

          (xxxii) The Company and its subsidiaries own, possess, have rights to
or can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively, "patent
and proprietary rights") presently employed by them in connection with the
business now operated by them as described in the Offering Memorandum, except
where lack thereof would not have a material adverse effect on the results of
operations, condition (financial or otherwise), business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise, and
the Company and its subsidiaries have not received any notice or do not
otherwise have knowledge of any infringement of or conflict with asserted rights
of others with respect to any patent or proprietary rights or of any facts or
circumstances which would render any patent and proprietary rights invalid or
inadequate to protect the interest of the Company and its subsidiaries therein,
and which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would have a material adverse effect on the results of operations, condition
(financial or otherwise), business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.

                                      11
<PAGE>
 
          (xxxiii) The Trust, the Company and its subsidiaries are in compliance
with, and conduct their respective businesses in conformity with, all applicable
laws and governmental regulations, the violation of which would have a material
adverse effect on the condition, financial or otherwise, or on the earnings,
business affairs or business prospects of the Trust, or the Company and its
subsidiaries considered as one enterprise.

          (xxxiv) Other than such agreements, contracts and other documents as
are described in the Offering Memorandum or otherwise filed as Exhibits to the
Company's annual report on Form 10-K, Transition Report on Form 10-K, or
quarterly reports on Form 10-Q incorporated by reference in the Offering
Memorandum, there are no agreements, contracts or documents of a character
described in Item 601 of Regulation S-K under the 1933 Act to which the Company
or any of the Principal Subsidiaries is a party.

          (xxxv) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Capital
Securities.

          (xxxvi) The Capital Securities will, at the Closing Time, be eligible
for resale pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities listed on a national securities exchange registered
under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer
quotation system.

          (xxxvii) None of the Trust, the Company, or any of their affiliates,
as such term is defined in Rule 501(b) under the 1933 Act ("Affiliates"), or any
person acting on its or any of their behalf (other than the Initial Purchaser,
as to whom the Offerors make no representation) has engaged or will engage, in
connection with the offering of the Capital Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
1933 Act.

          (xxxviii) Subject to compliance by the Initial Purchaser with the
representations and warranties set forth in Section 2 hereof and the procedures
set forth in Section 6 hereof, prior to the Exchange Offer, it is not necessary
in connection with the offer, sale and delivery of the Capital Securities to the
Initial Purchaser and to each Subsequent Purchaser in the manner contemplated by
this Agreement and the Offering Memorandum to register the Capital Securities
under the 1933 Act or to qualify any indenture or any guarantee under the 1939
Act.

          (xxxix) With respect to those Capital Securities, if any, sold in
reliance on Regulation S, (A) none of the Trust, the Company, its Affiliates or
any person acting on its or their behalf (other than the Initial Purchaser, as
to whom the Offerors make no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S and (B) each of the
Trust, the Company and its Affiliates and any person acting on its or their
behalf (other than the Initial Purchaser, as to whom the Offerors make no
representation) has complied and will comply with the offering restrictions
requirement of Regulation S.

                                      12
<PAGE>
 
     (b)  Any certificate signed by any Trustee of the Trust or any duly
authorized officer of the Company or the Bank and delivered to you or to counsel
for the Initial Purchaser shall be deemed a representation and warranty by the
Trust or the Company, as the case may be, to the Initial Purchaser as to the
matters covered thereby.


     SECTION 2.  Sale and Delivery to Initial Purchaser; Closing.

     (a)  On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to the Initial Purchaser and the Initial Purchaser agrees to purchase from
the Trust, at a price of $1,000 per Capital Security, 25,000 Capital Securities.

     (b)  Deliveries of certificates for the Capital Securities shall be made at
the office of the Initial Purchaser in New York (or at the offices of Brown &
Wood llp specified below in the case of Capital Securities registered in the
name of Cede & Co.), and payment of the purchase price for the Capital
Securities shall be made by the Initial Purchaser to the Trust by wire transfer
of immediately available funds contemporaneous with closing at the offices of
Brown & Wood llp, One World Trade Center, New York, New York 10048, at 10:00
A.M. on January 31, 1997, or such other time not later than ten business days
after such date as shall be agreed upon by the Initial Purchaser and the
Offerors (such time and date of payment and delivery being herein called the
"Closing Time").

     Payment for the Capital Securities purchased by the Initial Purchaser shall
be made to the Trust by wire transfer of immediately available funds, against
delivery for the account of the Initial Purchaser of certificates for the
Capital Securities. Certificates for the Capital Securities shall be in such
denominations and registered in such names as the Initial Purchaser may request
in writing at least one business day before the Closing Time. The certificates
representing the Capital Securities which are not resold to institutional
"accredited investors" shall be registered in the name of Cede & Co. pursuant to
the DTC Agreement and shall be made available for examination and packaging by
the Initial Purchaser in The City of New York not later than 10:00 A.M. on the
last business day prior to the Closing Time.

     (c)  As compensation to the Initial Purchaser for its commitment hereunder
and in view of the fact that the proceeds of the sale of the Capital Securities
will be used to purchase Subordinated Debentures of the Company, the Company
hereby agrees to pay at the Closing Time to the Initial Purchaser in immediately
available funds $22.50 per Capital Security to be delivered by the Company
hereunder at the Closing Time.

     (d)  The Initial Purchaser represents and warrants to, and agrees with, the
Company that it is a Qualified Institutional Buyer (as defined in Section
6(a)(i)) and an Institutional Accredited Investor (as defined in Section
6(a)(i)).

                                      13
<PAGE>
 
     SECTION 3.  Covenants of the Offerors.  The Offerors covenant with the
                 -------------------------                                 
Initial Purchaser as follows:

     (a)  The Offerors, as promptly as possible, will furnish to the Initial
Purchaser, without charge, such number of copies of the Offering Memorandum and
any amendments and supplements thereto and documents incorporated by reference
therein as the Initial Purchaser may reasonably request.

     (b)  The Offerors will immediately notify the Initial Purchaser, and
confirm such notice in writing, of (x) any filing made by the Offerors of
information relating to the offering of the Capital Securities with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (y) prior to the completion of the placement of the
Capital Securities by the Initial Purchaser as evidenced by a notice in writing
from the Initial Purchaser to the Offerors, any material changes in or affecting
the results of operations, condition (financial or otherwise), business affairs
or business prospects of the Trust, or the Company and its subsidiaries
considered as one enterprise, which (i) make any statement in the Offering
Memorandum false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of the Company, its
counsel or counsel for the Initial Purchaser, to amend or supplement the
Offering Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in the light of the circumstances
then existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to the Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Offering Memorandum (in
form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchaser) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.

     (c)  The Offerors will advise the Initial Purchaser promptly of any
proposal to amend or supplement the Offering Memorandum and will not effect such
amendment or supplement without the consent of the Initial Purchaser, which
consent shall not be unreasonably withheld. Neither the consent of the Initial
Purchaser, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.

     (d)  The Offerors will cooperate with the Initial Purchaser and use their
reasonable best efforts to permit the Capital Securities to be eligible for
clearance and settlement through the facilities of DTC.

     (e)  The Trust will use the proceeds received by it from the sale of the
Capital Securities in the manner specified in the Offering Memorandum under "Use
of Proceeds", and 

                                      14
<PAGE>
 
the Company will use the net proceeds received by it from the
sale of the Subordinated Debentures substantially in the manner specified or
contemplated in the Offering Memorandum under "Use of Proceeds".

     (f)  Prior to the thirtieth day after the date of the Closing Time, neither
the Trust nor the Company will, without the prior written consent of the Initial
Purchaser, directly or indirectly, issue, sell, offer or agree to sell, grant
any option for the sale of, or otherwise dispose of, Capital Securities, any
security convertible into exchangeable or exercisable for Capital Securities or
the Subordinated Debentures or any debt securities substantially similar
(including provisions with respect to the deferral of interest) to the
Subordinated Debentures or any equity security substantially similar to the
Capital Securities (except for the Securities issued pursuant to this
Agreement).

     SECTION 4.  Payment of Expenses.
                 ------------------- 

     (a)  Expenses. The Company will pay all expenses incident to the
performance of its obligations and the obligations of the Trust under this
Agreement, including (i) the preparation, printing and any filing of the
Preliminary Offering Memorandum, the Final Offering Memorandum (including
financial statements and any schedules or exhibits and any document incorporated
therein by reference) and of each amendment or supplement thereto, (ii) the
preparation, printing and delivery to the Initial Purchaser of this Agreement,
the Operative Documents and such other documents as may be required in
connection with the offering, purchase, sale and delivery of the Securities,
(iii) the preparation, issuance and delivery of the certificates for the
Securities to the Initial Purchaser, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, and (v) the fees and expenses
of any trustee appointed under any of the Operative Documents, including the
fees and disbursements of counsel for such trustees in connection with the
Operative Documents.

     (b)  Termination of Agreement. If this Agreement is terminated by the
Initial Purchaser in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchaser for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
Brown & Wood llp, counsel for the Initial Purchaser.

     SECTION 5.  Conditions of the Initial Purchaser's Obligations.  The
                 -------------------------------------------------      
obligations of the Initial Purchaser hereunder are subject to the accuracy of
the representations and warranties of the Offerors contained in Section 1 hereof
or in certificates of any Trustee of the Trust, officer of the Company or any of
its subsidiaries delivered pursuant to the provisions hereof, to the performance
in all material respects by the Offerors of their obligations hereunder, and to
the following further conditions:

     (a)  Opinion of Outside Counsel for Offerors. At the Closing Time, the
Initial Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Testa, Hurwitz & Thibeault, LLP, counsel for the Company, to
the effect set forth in Exhibit A hereto.

                                      15
<PAGE>
 
     (b)  Opinion of Special Delaware Counsel for Offerors. At the Closing Time,
the Initial Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Richards, Layton & Finger P.A., special Delaware counsel to the
Offerors to the effect set forth in Exhibit B hereto.

     (c)  Opinion of Counsel for The Bank of New York. At the Closing Time, the
Initial Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Emmet, Marvin & Martin, LLP, counsel to The Bank of New York,
as Property Trustee under the Declaration, and Guarantee Trustee under the
Capital Securities Guarantee Agreement, to the effect set forth as Exhibit C
hereto.

     (d)  Tax Opinion of Counsel for the Offerors. At the Closing Time, the
Initial Purchaser shall have received an opinion, dated as of the Closing Time,
of Testa, Hurwitz & Thibeault, LLP, counsel to the Offerors, to the effect set
forth in Exhibit D hereto.

     (e)  Opinion of Counsel for Initial Purchaser. At the Closing Time, the
Initial Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Brown & Wood llp, counsel for the Initial Purchaser, with
respect to the incorporation and legal existence of the Company, the Series A
Capital Securities, the Indenture, the Series A Capital Securities Guarantee
Agreement, this Agreement, the Registration Rights Agreement, the Offering
Memorandum and other related matters as the Initial Purchaser may require. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of Trustees
of the Trust, officers of the Company and its subsidiaries and certificates of
public officials.

     (f)  Certificates. At the Closing Time, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the Offering Memorandum, any material adverse change in the results of
operations, condition (financial or otherwise), business affairs or business
prospects of the Trust, or the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchaser shall have received a certificate of any Chairman, any Vice
Chairman, the Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President of the Company or the Company's General Counsel
and Secretary and of the chief financial officer or the chief accounting officer
of the Company and a certificate of an Administrative Trustee of the Trust,
dated as of the Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section 1
hereof were true and correct when made and are true and correct with the same
force and effect as though expressly made at and as of the Closing Time, and
(iii) the Offerors have complied in all material respects with all agreements
and satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Time.

     (g)  Accountant's Comfort Letter. At the time of execution of this
Agreement, the Initial Purchaser shall have received from Deloitte & Touche LLP
a letter dated such date, in form and substance satisfactory to the Initial
Purchaser, containing statements and information 

                                      16
<PAGE>
 
of the type ordinarily included in accountants' "comfort letters" to initial
purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum.

     (h)  Bring-down Comfort Letter. At the Closing Time, the Initial Purchaser
shall have received from Deloitte & Touche LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.

     (i)  Additional Documents. At the Closing Time, counsel for the Initial
Purchaser shall have been furnished with the Registration Rights Agreement,
executed by the Company and the Trust, and such other documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Capital Securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties of the
Offerors, or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Offerors in connection with the issuance and sale of
the Capital Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Initial Purchaser and counsel for the Initial
Purchaser.

     (j)  Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchaser by written notice to the
Offerors at any time at or prior to the Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 7, 8 and 9 shall survive any such termination
and remain in full force and effect.

     SECTION 6.  Subsequent Offers and Sales of the Capital Securities.
                 ----------------------------------------------------- 

     (a)  Offer and Sale Procedures. The Initial Purchaser and the Offerors
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the Capital Securities:

          (i)   Offers and Sales only to Institutional Accredited Investors,
                ------------------------------------------------------------
Qualified Institutional Buyers and Non-U.S. Persons.  Offers and sales of the
---------------------------------------------------                          
Capital Securities will be made only by the Initial Purchaser or Affiliates
thereof qualified to do so in the jurisdictions in which such offers or sales
are made. Each such offer or sale shall only be made (A) to persons whom the
offeror or seller reasonably believes to be qualified institutional buyers (as
defined in Rule 144A under the Securities Act) ("Qualified Institutional
Buyers"), or (B) to a limited number of other institutional accredited investors
(as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D)
that the offeror or seller reasonably believes to be and, with respect to sales
and deliveries, that are accredited investors ("Institutional Accredited
Investors"), or (C) non-U.S. persons outside the United States to whom the
offeror or seller 

                                      17
<PAGE>
 
reasonably believes offers and sales of the Capital Securities may be made in
reliance upon Regulation S under the 1933 Act.

          (ii)   No General Solicitation.  No general solicitation or general
                 -----------------------                                     
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used
in the United States in connection with the offering of the Capital Securities.

          (iii)  Purchases by Non-Bank Fiduciaries.  In the case of a non-bank
                 ---------------------------------                            
Subsequent Purchaser of a Capital Security acting as a fiduciary for one or more
third parties in connection with an offer and sale to such purchaser pursuant to
clause (a) above, each third party shall, in the judgment of the applicable
Initial Purchaser, be an Institutional Accredited Investor or a Qualified
Institutional Buyer or a non-U.S. person outside the United States.

          (iv)   Subsequent Purchaser Notification.  The Initial Purchaser will
                 ---------------------------------                             
take reasonable steps to inform, and cause each of its U.S. Affiliates to take
reasonable steps to inform, persons acquiring Capital Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States that
the Capital Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933 Act in
reliance on Rule 144A or in accordance with another exemption from registration
under the 1933 Act, as the case may be, and (C) may not be offered, sold or
otherwise transferred except (1) to the Company, (2) outside the United States
in accordance with Regulation S, or (3) inside the United States in accordance
with (x) Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for its own
account or for the account of a Qualified Institutional Buyer to whom notice is
given that the offer, sale or transfer is being made in reliance on Rule 144A or
(y) an exemption from registration under the 1933 Act (including the exemption
provided by Rule 144), if available.

          (v)    Minimum Amount.  No sale of the Capital Securities to any one
                 --------------                                               
Subsequent Purchaser will be in blocks of less than U.S. $100,000 liquidation
amount.

          (vi)   Restrictions on Transfer.  The transfer restrictions and the 
                 ------------------------   
other provisions of the Declaration, including the legend required thereby,
shall apply to the Capital Securities except as otherwise agreed by the Offerors
and the Initial Purchaser. Following the sale of the Capital Securities by the
Initial Purchaser to Subsequent Purchasers pursuant to the terms hereof, the
Initial Purchaser shall not be liable or responsible to the Offerors for any
losses, damages or liabilities suffered or incurred by the Offerors, including
any losses, damages or liabilities under the 1933 Act, arising from or relating
to any resale or transfer of any Capital Security.

          (vii)  Delivery of Offering Memorandum.  The Initial Purchaser will
                 -------------------------------                             
deliver to each purchaser of the Capital Securities from the Initial Purchaser,
in connection with its original distribution of the Capital Securities, a copy
of the Offering Memorandum, as amended and supplemented at the date of such
delivery.

                                      18
<PAGE>
 
     (b)  Covenants of the Offerors.  Each of the Offerors, jointly and
severally, covenants with the Initial Purchaser as follows:

          (i)    Due Diligence.  In connection with the original distribution of
                 -------------                                                  
the Capital Securities, the Offerors agree that, prior to any offer or sale of
the Capital Securities by the Initial Purchaser, the Initial Purchaser and
counsel for the Initial Purchaser shall have the right to make reasonable
inquiries into the business of the Trust, the Company and its subsidiaries. The
Offerors also agree to provide information to each prospective Subsequent
Purchaser of Capital Securities who so requests concerning the Trust, the
Company and its subsidiaries (to the extent that such information is available
or can be acquired and made available to prospective Subsequent Purchasers
without unreasonable effort or expense and to the extent the provision thereof
is not prohibited by applicable law) and the terms and conditions of the
offering of the Securities, as provided in the Offering Memorandum.

          (ii)   Integration.  The Offerors agree that they will not and will 
                 ----------- 
cause their Affiliates not to make any offer or sale of securities of the
Offerors of any class if, as a result of the doctrine of "integration" referred
to in Rule 502 under the 1933 Act, such offer or sale would render invalid (for
the purpose of (i) the sale of the Capital Securities by the Trust to the
Initial Purchaser or (ii) the resale of the Capital Securities by the Initial
Purchaser to Subsequent Purchasers) the exemption from the registration
requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A or
by Regulation S thereunder or otherwise.

          (iii)  Rule 144A Information.  The Company agrees that, in order to
                 ---------------------                                       
render the Capital Securities eligible for resale pursuant to Rule 144A under
the 1933 Act, while any of the Capital Securities remain outstanding, the
Company will make available, upon request, to any holder of Capital Securities
or prospective purchasers of Capital Securities the information specified in
Rule 144A(d)(4), unless such information is furnished to the Commission pursuant
to Section 13 or 15(d) of the 1934 Act (such information, whether made available
to holders or prospective purchasers or furnished to the Commission, is herein
referred to as "Additional Information").

          (iv)   Restriction on Repurchases.  Until the expiration of three 
                 --------------------------  
years (or such shorter period as may hereafter be referred to in Rule 144(k) (or
similar successor rule)) after the original issuance of the Capital Securities,
the Offerors will not, and will cause their Affiliates not to, purchase or agree
to purchase or otherwise acquire any Capital Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the 1933 Act),
whether as beneficial owner or otherwise unless, immediately upon any such
purchase, the Offerors or any Affiliate shall submit such securities to the
Trustee for cancellation.

     (c)  Resale Pursuant to Rule 903 of Regulation S or Rule 144A. The Initial
Purchaser understands that the Capital Securities have not been and will not be
registered under the 1933 Act and may not be offered or sold within the United
States or to, or for the account or benefit of U.S. persons except in accordance
with Regulation S under the 1933 Act or 

                                      19
<PAGE>
 
pursuant to an exemption from the registration requirements of the 1933 Act. The
Initial Purchaser represents and agrees, that, except as permitted below, it has
offered and sold Capital Securities and will offer and sell Capital Securities
(i) as part of their distribution at any time and (ii) otherwise until forty
days after the later of the date upon which the offering of the Capital
Securities commences and the Closing Time, only in accordance with Rule 903 of
Regulation S or Rule 144A under the 1933 Act or to Institutional Accredited
Investors. Accordingly, neither the Initial Purchaser, its affiliates nor any
persons acting on its behalf have engaged or will engage in any directed selling
efforts with respect to Capital Securities, and the Initial Purchaser, its
affiliates and any person acting on its behalf have complied and will comply
with the offering restriction requirements of Regulation S. The Initial
Purchaser agrees that, at or prior to confirmation of a sale of Capital
Securities (other than a sale of Capital Securities pursuant to Rule 144A or to
Institutional Accredited Investors), it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Securities from it or through it during the restricted period a
confirmation or notice to substantially the following effect:

               "The Securities covered hereby have not been
               registered under the United States Securities
               Act of 1933 (the "Securities Act") and may
               not be offered or sold within the United
               States or to or for the account or benefit of
               U.S. persons (i) as part of their
               distribution at any time and (ii) otherwise
               until forty days after the later of the date
               upon which the offering of the Securities
               commenced and the date of closing, except in
               either case in accordance with Regulation S
               or Rule 144A under the Securities Act. Terms
               used above have the meaning given to them by
               Regulation S."

Terms used in the above paragraph have the meanings given to them by Regulation
S.

The Initial Purchaser represents and agrees that it has not entered and will not
enter into any contractual arrangements with respect to the distribution of the
Capital Securities, except with its affiliates or with the prior written consent
of the Offerors.

     (d)  Compliance with United Kingdom Law. The Initial Purchaser represents
and agrees that (i) it has not offered or sold and, prior to the expiry of the
period of six months from the date hereof, will not offer or sell any Capital
Securities to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has only issued or passed on and
will only issue or pass on 

                                      20
<PAGE>
 
in the United Kingdom any document received by it in connection with the issue
of the Capital Securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on, and (iii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to any Capital Securities in, from or otherwise
involving the United Kingdom.

     (e)  Compliance with Other Laws. The Initial Purchaser acknowledges that no
action has been taken to permit a public offering of the Capital Securities in
any jurisdiction outside of the United States where action would be required for
such purpose. The Initial Purchaser agrees that it will not offer or sell any
Capital Securities in any jurisdiction outside of the United States except under
circumstances that will result in compliance with all applicable laws thereof.

     SECTION 7.  Indemnification.
                 --------------- 

     (a)  Indemnification of Initial Purchaser. The Offerors agree to jointly
and severally indemnify and hold harmless the Initial Purchaser and each person,
if any, who controls the Initial Purchaser within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:

          (i)    against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact included in the Final Offering
     Memorandum (or any amendment or supplement thereto) or the omission or
     alleged omission therefrom of a material fact necessary to make the
     statements therein, in the light of the circumstances under which they were
     made, not misleading;

          (ii)   against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, to the extent of the aggregate amount paid in
     settlement of any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission; provided that (subject to Section
     7(d) below) any such settlement is effected with the written consent of the
     Offerors; and

          (iii)  against any and all expense whatsoever, as incurred (including,
     subject to the third sentence of Section 7(c) hereof, the fees and
     disbursements of counsel chosen by the Initial Purchaser), reasonably
     incurred in investigating, preparing or defending against any litigation,
     or any investigation or proceeding by any governmental agency or body,
     commenced or threatened, or any claim whatsoever based upon any such untrue
     statement or omission, or any such alleged untrue 

                                      21
<PAGE>
 
     statement or omission, to the extent that any such expense is not paid
     under (i) or (ii) above;

provided, however, that (i) this indemnity agreement shall not apply to any
--------  -------                                                          
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Offerors by the Initial Purchaser expressly for use in the Final Offering
Memorandum (or any amendment thereto) and (ii) the Offerors shall not be liable
to the Initial Purchaser or any controlling person with respect to any untrue
statement or alleged untrue statement or omission or alleged omission in the
Final Offering Memorandum to the extent that any such loss, liability, claim,
damage or expense of the Initial Purchaser or controlling person results from
the fact that the Initial Purchaser sold Capital Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of an amendment or supplement thereto if the Company had previously
furnished copies of such amendment or supplement to the Initial Purchaser and
the loss, liability, claim, damage or expense of the Initial Purchaser or
controlling person results from an untrue statement or omission of a material
fact contained in the Final Offering Memorandum which was corrected in such
amendment or supplement.

     (b)  Indemnification of Offerors, Directors and Officers. The Initial
Purchaser agrees to indemnify and hold harmless the Company, its directors and
officers, the Trust, each of the Administrative Trustees and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Offering Memorandum in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser expressly for use in the Offering Memorandum.

     (c)  Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by 

                                      22
<PAGE>
 
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification could be sought under this
Section 7 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

     (d)  Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided that an indemnifying party shall not be liable for any such
settlement effected without its consent if such indemnifying party, prior to the
date of such settlement, (1) reimburses such indemnified party in accordance
with such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable and (2) provides
written notice to the indemnified party that the indemnifying party disputes in
good faith the reasonableness of the unpaid balance of such fees and expenses.

     SECTION 8. Contribution.  In order to provide for just and equitable
                ------------                                             
contribution in circumstances under which the indemnification provided for in
Section 7 hereof is judicially determined to be unenforceable by an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors on the one
hand and the Initial Purchaser on the other hand from the offering of the
Capital Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Offerors, on the one hand, and of the
Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

     The relative benefits received by the Offerors on the one hand and the
Initial Purchaser on the other hand in connection with the offering of the
Capital Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Capital Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total commission received by the Initial
Purchaser, bear to the aggregate initial offering price of the Capital
Securities.

                                      23
<PAGE>
 
     The relative fault of the Offerors, on the one hand, and the Initial
Purchaser, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statements of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Initial Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     The Offerors and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 8, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Capital Securities purchased by it and distributed
to the public were offered to the public exceeds the amount of any damages which
the Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 8, each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Initial
Purchaser, and each officer and director of the Company, each Administrative
Trustee of the Trust, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company and the Trust.

     SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
                --------------------------------------------------------------  
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or trustees of the Trust submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Initial Purchaser or
controlling person, or by or on behalf of the Trust or the Company, and shall
survive delivery of the Capital Securities to the Initial Purchaser.

                                      24
<PAGE>
 
     SECTION 10. Termination of Agreement.
                 ------------------------ 

     (a)  The Initial Purchaser may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time (i) if there has been,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the Offering Memorandum, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Trust or the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or elsewhere, any outbreak of hostilities
or escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Initial Purchaser, impracticable to market the Capital
Securities or to enforce contracts for the sale of the Capital Securities, or
(iii) if trading in any securities of the Company has been suspended or limited
by the Commission, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the over-the-counter market has been suspended or
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal, New York or Massachusetts authorities.

     (b)  If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 7 and 8
shall survive such termination and remain in full force and effect.

     SECTION 11.  Notices.  All notices and other communications hereunder shall
                  -------                                                       
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchaser shall be directed to the Initial Purchaser c/o Keefe, Bruyette &
Woods, Inc. at Two World Trade Center, New York, New York 10048, Attention of
John G. Duffy, with a copy to Brown & Wood llp, One World Trade Center, 58th
Floor, New York, New York 10048, Attention of Mitchell Kleinman, Esq.; notices
to the Offerors shall be directed to Investors Financial Services Corp., 89
South Street, P.O. Box 1537, Boston, Massachusetts 02205-1537, Attention of
General Counsel, with a copy to Testa, Hurwitz & Thibeault, LLP, High Street
Tower, 125 High Street, Boston, Massachusetts, 02110, Attention of Steven C.
Browne, Esq.

     SECTION 12.  Parties.  This Agreement shall each inure to the benefit of
                  -------                                                    
and be binding upon the Initial Purchaser and the Offerors and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchaser and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy

                                      25
<PAGE>
 
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchaser and the
Offerors and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
the Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.

     SECTION 13.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
                  -------------                                          
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     SECTION 14.  Effect of Headings.  The Article and Section headings herein
                  ------------------                                          
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

                                      26
<PAGE>
 
     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchaser and the Offerors in accordance with its terms. The
execution and delivery of this Agreement by the Offerors and its acceptance,
execution and delivery by or on behalf of the Initial Purchaser may be evidenced
by an exchange of telecopied or other written communications.

                              Very truly yours,

                              INVESTORS FINANCIAL SERVICES CORP.


                              By__________________________________
                                Name:
                                Title:

                              INVESTORS CAPITAL TRUST I


                              By INVESTORS FINANCIAL SERVICES CORP.
                                 as Sponsor


                              By__________________________________
                                Name:
                                Title:


     CONFIRMED AND ACCEPTED,
     as of the date first above written:


     KEEFE, BRUYETTE & WOODS, INC.

     By______________________________________
          Authorized Signatory

                                      27