<PAGE>
 
                       AMENDED AND RESTATED DECLARATION

                                   OF TRUST



                               Nuevo Financing I



                       Dated as of __________ [ ], 199_
<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                       Page
<S>            <C>                                                                                     <C>
ARTICLE 1      INTERPRETATION AND DEFINITION..........................................................  1
Section 1.01.  DEFINITIONS............................................................................  1
                                                                                    
ARTICLE 2      TRUST INDENTURE ACT....................................................................  7
Section 2.01.  TRUST INDENTURE ACT; APPLICATION.......................................................  7
Section 2.02.  LIST OF HOLDERS OF SECURITIES..........................................................  7
Section 2.03.  REPORTS BY THE INSTITUTIONAL TRUSTEE...................................................  8
Section 2.04.  PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE..............................................  8
Section 2.05.  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.......................................  8
Section 2.06.  EVENTS OF DEFAULT; WAIVER..............................................................  8
Section 2.07.  EVENT OF DEFAULT; NOTICE............................................................... 10
                                                                                    
ARTICLE 3      ORGANIZATION........................................................................... 10
Section 3.01.  NAME................................................................................... 11
Section 3.02.  OFFICE................................................................................. 11
Section 3.03.  PURPOSE................................................................................ 11
Section 3.04.  AUTHORITY.............................................................................. 11
Section 3.05.  TITLE TO PROPERTY OF THE TRUST......................................................... 11
Section 3.06.  POWERS AND DUTIES OF THE REGULAR TRUSTEES.............................................. 11
Section 3.07.  PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES................................... 14
Section 3.08.  LEGAL TITLE TO THE DEBENTURES.......................................................... 15
Section 3.09.  CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL TRUSTEE....................... 17
Section 3.10.  CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE................................................ 19
Section 3.11.  DELAWARE TRUSTEE....................................................................... 21
Section 3.12.  EXECUTION OF DOCUMENTS................................................................. 21
Section 3.13.  NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES................................. 21
Section 3.14.  DURATION OF TRUST...................................................................... 21
Section 3.15.  MERGERS................................................................................ 21
                                                                                    
ARTICLE 4      SPONSOR................................................................................ 23
Section 4.01.  SPONSOR'S PURCHASE OF COMMON SECURITIES................................................ 23
Section 4.02.  RESPONSIBILITIES OF THE SPONSOR........................................................ 23
                                                                                    
ARTICLE 5      TRUSTEES............................................................................... 24
Section 5.01.  NUMBER OF TRUSTEES..................................................................... 24
Section 5.02.  DELAWARE TRUSTEE....................................................................... 24
Section 5.03.  INSTITUTIONAL TRUSTEE; ELIGIBILITY..................................................... 24
Section 5.04.  CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND                       
               DELAWARE TRUSTEE GENERALLY............................................................. 25
Section 5.05.  REGULAR TRUSTEES....................................................................... 25
Section 5.06.  DELAWARE TRUSTEE....................................................................... 26
Section 5.07.  APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES....................................... 26
Section 5.08.  VACANCIES AMONG TRUSTEES............................................................... 27
Section 5.09.  EFFECT OF VACANCIES.................................................................... 28
Section 5.10.  MEETINGS............................................................................... 28
Section 5.11.  DELEGATION OF POWER.................................................................... 28
Section 5.12.  MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS............................ 29

ARTICLE 6      DISTRIBUTIONS.......................................................................... 29
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<S>            <C>                                                                                    <C>
Section 6.01.  DISTRIBUTIONS.......................................................................... 29
                                                                                    
ARTICLE 7      ISSUANCE OF SECURITIES................................................................. 29
Section 7.01.  GENERAL PROVISIONS REGARDING SECURITIES................................................ 29
Section 7.02.  EXECUTION AND AUTHENTICATION........................................................... 30
Section 7.03.  FORM AND DATING........................................................................ 30
Section 7.04.  PAYING AGENT AND CONVERSION AGENT...................................................... 31
                                                                                    
ARTICLE 8      TERMINATION OF TRUST................................................................... 31
Section 8.01.  TERMINATION OF TRUST................................................................... 31
                                                                                    
ARTICLE 9      TRANSFER OF INTEREST................................................................... 32
Section 9.01.  TRANSFER OF SECURITIES................................................................. 32
Section 9.02.  TRANSFER OF CERTIFICATES............................................................... 33
Section 9.03.  DEEMED SECURITY HOLDERS................................................................ 33
Section 9.04.  BOOK ENTRY INTERESTS................................................................... 34
Section 9.05.  NOTICES TO CLEARING AGENCY............................................................. 34
Section 9.06.  APPOINTMENT OF SUCCESSOR CLEARING AGENCY............................................... 35
Section 9.07.  DEFINITIVE TRUST PREFERRED SECURITY CERTIFICATES....................................... 35
Section 9.08.  MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES...................................... 35
                                                                                    
ARTICLE 10     LIMITATION OF LIABILITY OF HOLDERS OF  SECURITIES,                   
               TRUSTEES OR OTHERS..................................................................... 36
Section 10.01. LIABILITY.............................................................................. 36
Section 10.02. EXCULPATION............................................................................ 36
Section 10.03. FIDUCIARY DUTY......................................................................... 37
Section 10.04. INDEMNIFICATION........................................................................ 38
Section 10.05. OUTSIDE BUSINESS....................................................................... 41
                                                                                    
ARTICLE 11     ACCOUNTING............................................................................. 41
Section 11.01. FISCAL YEAR............................................................................ 41
Section 11.02. CERTAIN ACCOUNTING MATTERS............................................................. 41
Section 11.03. BANKING................................................................................ 42
Section 11.04. WITHHOLDING............................................................................ 42
                                                                                    
ARTICLE 12     AMENDMENTS AND MEETINGS................................................................ 43
Section 12.01. AMENDMENTS............................................................................. 43
Section 12.02. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN CONSENT....................... 44
                                                                                    
ARTICLE 13     REPRESENTATIONS OF INSTITUTIONAL TRUSTEE                             
               AND DELAWARE TRUSTEE................................................................... 46
Section 13.01. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE................................ 46
Section 13.02. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE..................................... 46
                                                                                    
ARTICLE 14     MISCELLANEOUS.......................................................................... 47
Section 14.01. NOTICES................................................................................ 47
Section 14.02. GOVERNING LAW.......................................................................... 48
Section 14.03. INTENTION OF THE PARTIES............................................................... 48
Section 14.04. HEADINGS............................................................................... 48
Section 14.05. SUCCESSORS AND ASSIGNS................................................................. 48
Section 14.06. PARTIAL ENFORCEABILITY................................................................. 49
Section 14.07. COUNTERPARTS........................................................................... 49

</TABLE> 
                                      ii
<PAGE>
 
<TABLE>
<CAPTION>

<S>                <C>                                   <C>
ANNEX I            TERMS OF SECURITIES                   I-1
EXHIBIT A-1        FORM OF TRUST PREFERRED SECURITY
                   CERTIFICATE                           A1-1
EXHIBIT A-2        FORM OF COMMON SECURITY CERTIFICATE   A2-1
EXHIBIT B          SPECIMEN OF DEBENTURE                 B-1
EXHIBIT C          UNDERWRITING AGREEMENT                C-1
</TABLE>

                                      iii
<PAGE>
 
                            CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>

Section of Trust Indenture Act     Section of
of 1939, as amended                Declaration
Declaration
     <S>                           <C>
     310(a)......................   5.03(a)
     310(c)......................   Inapplicable
     311(c)......................   Inapplicable
     312(a)......................   2.02(a)
     312(b)......................   2.02(b)
     313.........................   2.03
     314(a)......................   2.04
     314(b)......................   Inapplicable
     314(c)......................   2.05
     314(d)......................   Inapplicable
     314(f)......................   Inapplicable
     315(a)......................   3.09(b)
     315(c)......................   3.09(a)
     315(d)......................   3.09(a)
     316(a)......................   Annex I
     316(c)......................   3.06(e)
</TABLE>

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

                                      iv
<PAGE>
 
                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                               NUEVO FINANCING I


                         [                   ], 199[ ]

     AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of [              ], 199[ ], 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 Trust to be issued pursuant to this
Declaration;

     WHEREAS, certain of the Trustees and the Sponsor established Nuevo
Financing I (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Trust Agreement, dated as of [            ], 199[ ], (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on [        ], 199[ ], 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 Sponsor;

     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;

     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 1

                        INTERPRETATION AND DEFINITION

     Section 1.01. DEFINITIONS.

     Unless the context otherwise requires:

     (a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01;

     (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;
<PAGE>
 
     (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.

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

     "Agent" means any Paying Agent or Conversion Agent.

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

     "Base Indenture" means the Subordinated Indenture dated as of [ ],199[ ], 
between the Sponsor and the Debenture Trustee.

     "Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.04.

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in New York, New York or Houston, Texas are
permitted or required by any applicable law to close.

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

     "Certificate" means a Common Security Certificate or a Trust Preferred
Security Certificate.

     "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
Trust Preferred Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Trust Preferred 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 Date" means [              ], 199[ ].

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

                                       2
<PAGE>
 
     "Commission" means the Securities and Exchange Commission.

     "Common Security" has the meaning specified in Section 7.01 .

     "Common Securities Guarantee" means the guarantee agreement to be dated as
of [              ], 199[ ] of the Sponsor in respect of the Common Securities.

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

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

     "Conversion Agent" has the meaning specified in Section 7.04.

     "Corporate Trust Office" means the office of the Institutional Trustee at
which the corporate trust business of the Preferred Guarantee Trustee (as
defined in the Preferred Securities Guarantee Agreement dated as of [ ], 199[ ]
between the Sponsor and[            ]) shall, at any particular time,
be principally administered, which office at the date of execution of this
Declaration is located at ____________________________.

     "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 Trustee" means _________________, as trustee under the Indenture
until a successor is appointed thereunder, and thereafter means such successor
trustee.

     "Debentures" means the series of Debentures to be issued by the Sponsor
under the Indenture to be held by the Institutional Trustee, a specimen
certificate for such series of Debentures being Exhibit B.

     "Delaware Trustee" has the meaning set forth in Section 5.02.

     "Definitive Trust Preferred Security Certificates" has the meaning set
forth in Section 9.04.

     "Direct Action" has the meaning specified in Section 3.07.(e).

     "Distribution" has the meaning set forth in Section 6.01.

     "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) 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.

                                       3
<PAGE>
 
     "Fiduciary Indemnified Person" has the meaning set forth in Section
10.04(b).

     "Global Certificate" has the meaning set forth in Section 9.04.

     "Holder" means a Person in whose name a Certificate representing 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 Base Indenture as supplemented by the Supplemental
Indenture.

     "Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.03.

     "Institutional Trustee Account" has the meaning set forth in Section
3.08(c).

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

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

     "Investment Company Event" has the meaning set forth in Annex I hereto.

     "Legal Action" has the meaning set forth in Section 3.06(g).

     "Majority in liquidation amount" of the Securities means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Trust Preferred
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.

     "Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.

     "Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:

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

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

                                       4
<PAGE>
 
          (c) a statement that each such officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer to express an informed opinion as to whether or not such covenant
     or condition has been complied with; and

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

     "Paying Agent" has the meaning specified in Sections 3.08(h) and 7.04.

     "Payment Amount" has the meaning set forth in Section 6.01.

     "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.

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

     "Regular Trustee" has the meaning set forth in Section 5.01(b).

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

     "Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

     "Securities" means the Common Securities and the Trust Preferred
Securities.

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

     "Securities Guarantees" means the Common Securities Guarantee and the Trust
Preferred Securities Guarantee.

     "Special Event" has the meaning set forth in Annex I hereto.

     "Sponsor" means Nuevo Energy Company ("Nuevo"), a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.

                                       5
<PAGE>
 
     "Successor Delaware Trustee" has the meaning set forth in Section 5.07(b).

     "Successor Entity" has the meaning set forth in Section 3.15.

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

     "Successor Securities" has the meaning set forth in Section 3.15.

     "Super Majority" has the meaning set forth in Section 2.06(a)(ii).

     "Supplemental Indenture" means the First Supplemental Indenture dated as of
[          ], 199[ ] between the Sponsor and the Debenture Trustee pursuant to
which the Debentures are to be issued.

     "Tax Event" has the meaning set forth in Annex I hereto.

     "10% in liquidation amount of the Securities" means, except as provided in
the terms of the Trust Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Trust Preferred 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 Preferred Securities Guarantee" means the guarantee agreement to be
dated as of [              ], 199[ ], of the Sponsor in respect of the Trust
Preferred Securities.

     "Trust Preferred Security" has the meaning specified in Section 7.01.

     "Trust Preferred 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).

     "Trust Preferred Security Certificate" means a certificate representing a
Trust Preferred Security substantially in the form of Exhibit A-1.

     "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 

                                       6
<PAGE>
 
Trustee or the Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.

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

     "Underwriting Agreement" means the Underwriting Agreement for the offering
and sale of Trust Preferred Securities in the form of Exhibit C.


                                   ARTICLE 2

                              TRUST INDENTURE ACT

     Section 2.01.  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 Institutional 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 Section 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control.

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

     Section 2.02.  LIST OF HOLDERS OF SECURITIES.

     (a)  Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Institutional Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Institutional
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular 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 Institutional Trustee by the
Sponsor and the Regular 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 Institutional Trustee.  The Institutional 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 Institutional Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.

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

                                       7
<PAGE>
 
     Section 2.03.  REPORTS BY THE INSTITUTIONAL TRUSTEE.

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

     Section 2.04.  PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE.

     Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Institutional Trustee such documents, reports and information as
may be required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

     Delivery of such reports, information and documents to the Institutional
Trustee is for informational purposes only and the Institutional Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Sponsor's compliance with any of its covenants hereunder (as to which the
Institutional Trustee is entitled to rely exclusively on Officers'
Certificates).

     Section 2.05.  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

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

     Section 2.06.  EVENTS OF DEFAULT; WAIVER.

     (a)  The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of the Holders of all of the Trust Preferred
Securities, waive any past Event of Default in respect of the Trust Preferred
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
     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
     liquidation amount of the Trust Preferred Securities that the relevant
     Super Majority represents of the aggregate principal amount of the
     Debentures outstanding.

     The foregoing provisions of this Section 2.06(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust 

                                       8
<PAGE>
 
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 Trust
Preferred 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 Trust
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Trust Preferred Securities of an Event of Default with respect to
the Trust Preferred 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 2.06(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 2.06(b), the Event of Default under the Declaration may only be
     waived by the vote of the Holders of at least the proportion in 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 until all Events of Default with respect to the
Trust Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the
Holders of the Trust Preferred Securities and only the Holders of the Trust
Preferred Securities will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities.  The foregoing provisions of this
Section 2.06(b) shall be in lieu of Section 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such Section 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 2.06(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
Institutional Trustee at the direction of the Holders of the Trust Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing 

                                       9
<PAGE>
 
provisions of this Section 2.06(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act and such Section 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 2.07.  EVENT OF DEFAULT; NOTICE.

     (a)  The Institutional Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Institutional Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.07(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 or in the payment of any
sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.

     (b)  The Institutional Trustee shall not be deemed to have knowledge of any
default except:
 
          (i)  a default under Sections 501(1), 501(2) and 501(3) of the
     Indenture; or

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

                                   ARTICLE 3

                                 ORGANIZATION

     Section 3.01.  NAME.

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

     Section 3.02.  OFFICE.

     The address of the principal office of the Trust is c/o Nuevo Energy
Company, 1331 Lamar, Suite 1600, Houston, Texas 77010.  On ten Business Days'
written notice to the Holders of Securities and the other Trustees, the Regular
Trustees may designate another principal office.

                                       10
<PAGE>
 
     Section 3.03.  PURPOSE.

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

     Section 3.04.  AUTHORITY.

     Subject to the limitations provided in this Declaration and to the specific
duties of the Institutional Trustee, the Regular Trustees shall have exclusive
and complete authority to carry out the purposes of the Trust. An action taken
by the Regular Trustees in accordance with their powers shall constitute the act
of and serve to bind the Trust and an action taken by the Institutional 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 3.05.  TITLE TO PROPERTY OF THE TRUST.

     Except as provided in Section 3.08 with respect to the Debentures and the
Institutional 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 3.06.  POWERS AND DUTIES OF THE REGULAR TRUSTEES.

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

          (a) to issue and sell the Trust Preferred Securities and the Common
     Securities in accordance with this Declaration; provided, however, that the
     Trust may issue no more than one series of Trust Preferred Securities and
     no more than one series of Common Securities, and, provided further, that
     there shall be no interests in the Trust other than the Securities, and the
     issuance of Securities shall be limited to a simultaneous issuance of both
     Trust Preferred Securities and Common Securities on the Closing Date;

          (b)  in connection with the issue and sale of the Trust Preferred
     Securities, at the direction of the Sponsor, to:

     (i)  file with the Commission the registration statement on Form S-3
          prepared by the Sponsor, including any amendments thereto, pertaining
          to the Trust Preferred Securities;

                                       11
<PAGE>
 
     (ii) 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 Trust Preferred Securities in any State in
          which the Sponsor has determined to qualify or register such Trust
          Preferred Securities for sale;

     (iii)file an application, prepared by the Sponsor, to the New York Stock
          Exchange, Inc. or any other national stock exchange or the Nasdaq
          National Market for listing upon notice of issuance of any Trust
          Preferred Securities;

     (iv) 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 Trust Preferred Securities under Section 12(b)
          or 12(g) of the Exchange Act; and

     (v)  enter into the Underwriting Agreement providing for the sale of the
          Trust Preferred Securities;

     (c)  to acquire the Debentures with the proceeds of the sale of the Trust
     Preferred Securities and the Common Securities; provided, however, that the
     Regular Trustees shall cause legal title to the Debentures to be held of
     record in the name of the Institutional Trustee for the benefit of the
     Holders of the Trust Preferred Securities and the Holders of Common
     Securities;

     (d)  to give the Sponsor and the Institutional Trustee prompt written
     notice of the occurrence of a Special Event; provided that the Regular
     Trustees shall consult with the Sponsor and the Institutional Trustee
     before taking or refraining from taking any Ministerial Action in relation
     to a Special Event;

     (e)  subject to Section 2(c) of Annex I hereto, 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
     Section 316 (c) of the Trust Indenture Act, Distributions, voting rights,
     redemptions and exchanges, and to issue relevant notices to the Holders of
     Trust Preferred 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
     Regular 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 3.08(e), the Institutional
     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;

                                       12
<PAGE>
 
          (j)  to give the certificate required by Section 314(a)(4) of the
     Trust Indenture Act to the Institutional Trustee, which certificate may be
     executed by any Regular Trustee;

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

          (l)  to act as, or appoint another Person to act as, registrar and
     transfer agent for the Securities;

          (m) to give prompt written notice to the Holders of the Securities of
     any notice received from the Sponsor 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 Trust Preferred 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 Regular Trustees determine in their
     discretion to be necessary or desirable in carrying out the activities of
     the Trust as set out in this Section 3.06, 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 Sponsor to ensure that the Debentures
          will be treated as indebtedness of the Sponsor for United States
          federal income tax purposes,

          provided that such action does not adversely affect the interests of
     Holders; and

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

     The Regular Trustees must exercise the powers set forth in this Section
3.06 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.03, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.03.

                                       13
<PAGE>
 
     Subject to this Section 3.06, the Regular Trustees shall have none of the
powers or the authority of the Institutional Trustee set forth in Section 3.08.

     Any expenses incurred by the Regular Trustees pursuant to this Section 3.06
shall be reimbursed by the Sponsor.

     Section 3.07.  PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.

     (a)  The Trust shall not, and the Trustees (including the Institutional
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional 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 of
     Securities 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 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 counsel to the effect that such modification 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.

     Section 3.08.LEGAL TITLE TO THE DEBENTURES.

     (a) The legal title to the Debentures shall be owned by and held of record
in the name of the Institutional Trustee in trust for the benefit of the Holders
of the Securities. The right, title and interest of the Institutional Trustee to
the Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 5.07. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.

                                       14
<PAGE>
 
     (b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Institutional Trustee does not also act as Delaware Trustee).

     (c) The Institutional Trustee shall:

          (i) establish and maintain a segregated non-interest bearing trust
     account (the "Institutional Trustee Account") in the name of and under the
     exclusive control of the Institutional Trustee on behalf of the Holders of
     the Securities and, upon the receipt of payments of funds made in respect
     of the Debentures held by the Institutional Trustee, deposit such funds
     into the Institutional Trustee Account and make payments to the Holders of
     the Trust Preferred Securities and Holders of the Common Securities from
     the Institutional Trustee Account in accordance with Section 6.01. Funds in
     the Institutional Trustee Account shall be held uninvested until disbursed
     in accordance with this Declaration. The Institutional Trustee Account
     shall be an account that is maintained with a banking institution (which
     may be with the Institutional Trustee) the rating on whose long-term
     unsecured indebtedness is at least equal to the rating assigned to the
     Trust Preferred Securities by a "nationally recognized statistical rating
     organization", as that term is defined for purposes of Rule 436(g)(2) under
     the Securities Act;

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

          (iii)  upon written notice of Distribution issued by the Regular
     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 special events (as may be defined in the terms of the
     Securities) arising from a change in law or a change in legal
     interpretation or other specified circumstances pursuant to the terms of
     the Securities.

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

     (e) The Institutional Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default of which a Responsible Officer of
the Institutional Trustee has actual knowledge or the Institutional Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
provided, however, that the holders of a majority in liquidation amount of the
Trust Preferred Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or to direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a Holder of
the Debentures. If the Institutional Trustee fails to enforce its rights under
the Debentures, a holder of Trust Preferred Securities, to the extent permitted
by law, may institute a legal proceeding directly against Nuevo to enforce the
Institutional Trustee's rights under the Debentures without first instituting
any legal proceeding against the Institutional Trustee or any other 

                                       15
<PAGE>
 
Person; provided further, that, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Sponsor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Trust Preferred Securities may directly institute a proceeding
for enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Trust Preferred 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 Trust Preferred Securities to the
extent of any payment made by the Sponsor to such Holder of Trust Preferred
Securities in such Direct Action. Except as provided in the preceding sentences,
the Holders of Trust Preferred Securities shall have no right or power to
exercise directly any other remedy available to the holders of the Debentures.

     (f) The Institutional Trustee shall continue to serve as a Trustee until
either:

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

          (ii) a Successor Institutional Trustee has been appointed and has
     accepted that appointment in accordance with Section 5.07.

     (g) The Institutional 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
Institutional Trustee occurs and is continuing, the Institutional Trustee shall,
for the benefit of Holders of the Securities, enforce its rights as holder of
the Debentures subject to the rights of the Holders pursuant to the terms of
such Securities.

     (h) The Institutional Trustee may authorize one or more Persons (each, a
"Paying Agent") 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 Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.

     (i) Subject to this Section 3.07, the Institutional Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.06.

     The Institutional Trustee must exercise the powers set forth in this
Section 3.07 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.03, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.03.

     Section 3.09.  CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE.

     (a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving 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 

                                       16
<PAGE>
 
no implied covenants or obligations shall be read into this Declaration against
the Institutional Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.06(c)) of which a Responsible
Officer of the Institutional Trustee has actual knowledge, the Institutional
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

     (b) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, 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 Institutional Trustee shall
          be determined solely by the express provisions of this Declaration and
          the Institutional Trustee shall not be liable except for the
          performance of such duties and obligations as are specifically set
          forth in this Declaration, and no implied covenants or obligations
          shall be read into this Declaration against the Institutional Trustee;
          and

               (B) in the absence of bad faith on the part of the Institutional
          Trustee, the Institutional 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
          Institutional Trustee and conforming to the requirements of this
          Declaration; but in the case of any such certificates or opinions that
          by any provision hereof are specifically required to be furnished to
          the Institutional Trustee, the Institutional 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 Institutional Trustee shall not be liable for any error of
     judgment made in good faith by a Responsible Officer of the Institutional
     Trustee, unless it shall be proved that the Institutional Trustee was
     negligent in ascertaining the pertinent facts;

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

          (iv) no provision of this Declaration shall require the Institutional
     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 Institutional Trustee against such risk or
     liability is not reasonably assured to it;

                                       17
<PAGE>
 
          (v) the Institutional Trustee's sole duty with respect to the custody,
     safe keeping and physical preservation of the Debentures and the
     Institutional Trustee Account shall be to deal with such property in a
     similar manner as the Institutional Trustee deals with similar property for
     its own account, subject to the protections and limitations on liability
     afforded to the Institutional Trustee under this Declaration and the Trust
     Indenture Act;

          (vi) the Institutional 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 Institutional Trustee shall not be liable for any interest
     on any money received by it except as it may otherwise agree in writing
     with the Sponsor, and money held by the Institutional Trustee need not be
     segregated from other funds held by it except in relation to the
     Institutional Trustee Account maintained by the Institutional Trustee
     pursuant to Section 3.08(c)(i) and except to the extent otherwise required
     by law; and

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

     Section 3.10.  CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE.

     (a) Subject to the provisions of Section 3.09:

          (i) the Institutional 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) a direction or act of the Sponsor or the Regular Trustees
     contemplated by this Declaration shall be sufficiently evidenced by an
     Officers' Certificate;

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

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

                                       18
<PAGE>
 
          (v) the Institutional Trustee may consult with counsel of its
     selection or other experts and the advice or opinion of such counsel and
     experts with respect to legal matters or advice within the scope of such
     experts' area of expertise shall be full and complete authorization and
     protection in respect of any action taken, suffered or omitted by it
     hereunder in good faith and in accordance with such advice or opinion; such
     counsel may be counsel to the Sponsor or any of its Affiliates, and may
     include any of its employees; and the Institutional 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 Institutional Trustee shall be under no obligation to
     exercise any of the rights or powers vested in it by this Declaration at
     the request or direction of any Holder, unless such Holder shall have
     provided to the Institutional Trustee security and indemnity, reasonably
     satisfactory to the Institutional Trustee, against the costs, expenses
     (including attorneys' fees and expenses and the expenses of the
     Institutional 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 Institutional
     Trustee;

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

          (viii) the Institutional 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 Institutional
     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 Institutional Trustee or its agents
     hereunder shall bind the Trust and the Holders of the  Securities, and the
     signature of the Institutional Trustee or its agents alone shall be
     sufficient and effective to perform any such action and no third party
     shall be required to inquire as to the authority of the Institutional
     Trustee to so act or as to its compliance with any of the terms and
     provisions of this Declaration, both of which shall be conclusively
     evidenced by the Institutional Trustee's or its agent's taking such action;

          (x) whenever in the administration of this Declaration the
     Institutional Trustee shall deem it desirable to receive written
     instructions with respect to enforcing any remedy or right or taking any
     other action hereunder, the Institutional Trustee (i) may request written
     instructions from the Holders of the Securities 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 Institutional Trustee under
     the terms of the Securities in respect of such remedy, right or action,
     (ii) may refrain from enforcing such remedy or right or taking such other
     action until such instructions are received, and (iii) shall be protected
     in conclusively relying on or acting in accordance with such instructions;

                                       19
<PAGE>
 
          (xi) except as otherwise expressly provided by this Declaration, the
     Institutional Trustee shall not be under any obligation to take any action
     that is discretionary under the provisions of this Declaration; and

          (xii)  the Institutional Trustee shall not be liable for any action
     taken, suffered, or omitted to be taken by it in good faith 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 Institutional Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.

     Section 3.11.  DELAWARE TRUSTEE.

     Notwithstanding any other provision of this Declaration other than Section
5.02, 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
Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.02, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.

     Section 3.12.  EXECUTION OF DOCUMENTS.

     Except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.06.

     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 8
hereof, shall have existence for thirty-five (35) years from the Closing Date.

     Section 3.15.  MERGERS.

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

                                       20
<PAGE>
 
          (b) The Trust may, with the consent of the Regular Trustees or, if
     there are more than two, a majority of the Regular Trustees and without the
     consent of the Holders of the Securities, the Delaware Trustee or the
     Institutional Trustee, consolidate, amalgamate, merge with or into, or be
     replaced by a trust organized as such under the laws of any State; provided
     that:

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

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

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

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

          (iii)  the Trust Preferred Securities or any 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 Trust Preferred Securities are then listed or quoted;

          (iv) such merger, consolidation, amalgamation or replacement does not
     cause the Trust Preferred Securities (including any Successor Securities)
     to be downgraded by any nationally recognized statistical rating
     organization;

          (v) such merger, consolidation, amalgamation or replacement does not
     adversely affect the rights, preferences and privileges of the Holders of
     the Securities (including any Successor Securities) in any material respect
     (other than with respect to any dilution of such Holders' interests in the
     Trust Preferred Securities as a result of such merger, consolidation,
     amalgamation or replacement);

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

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

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

                                       21
<PAGE>
 
               (B) following such merger, consolidation, amalgamation or
          replacement, neither the Trust nor the Successor Entity will be
          required to register as an Investment Company; and

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

          (viii)  the Sponsor guarantees the obligations of such Successor
     Entity under the Successor Securities at least to the extent provided by
     the Securities Guarantees.

     (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 any other Person or permit any
other Person to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.

                                   ARTICLE 4

                                    SPONSOR

     Section 4.01.  SPONSOR'S PURCHASE OF COMMON SECURITIES.

     On the Closing Date the Sponsor will purchase all of the Common Securities
issued by the Trust, in an amount at least equal to 3% of the capital of the
Trust, at the same time as the Trust Preferred Securities are sold.

     Section 4.02.  RESPONSIBILITIES OF THE SPONSOR.

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

     (a) to prepare for filing by, and execute on behalf of, the Trust with the
Commission a registration statement on Form S-3 in relation to the Trust
Preferred Securities and the Trust Preferred Securities Guarantees, including
any amendments thereto;

     (b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Trust Preferred Securities and the Trust
Preferred Securities Guarantees 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 filing and execute 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) to prepare for filing by, and execute on behalf of, the Trust an
application to the New York Stock Exchange, Inc. or any other national stock
exchange or the Nasdaq National Market for listing upon notice of issuance of
any Trust Preferred Securities;

                                       22
<PAGE>
 
     (d) to prepare for filing by, and execute on behalf of, the Trust of
documents or instruments to be delivered to DTC relating to the Trust Preferred
Securities;

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

     (f) to negotiate the terms of, and execute on behalf of the Trust, the
Underwriting Agreement providing for the sale of the Trust Preferred Securities.

                                   ARTICLE 5

                                   TRUSTEES

     Section 5.01.  NUMBER OF TRUSTEES.

     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 shall
satisfy the requirements of Section 5.02; (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional 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.

     Section 5.02.  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 Institutional Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Institutional Trustee shall also be the Delaware
Trustee and Section 3.11 shall have no application.

     Section 5.03.  INSTITUTIONAL TRUSTEE; ELIGIBILITY.

     (a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:

                                       23
<PAGE>
 
          (i) not be an Affiliate of the Sponsor; and

          (ii) be a corporation or bank 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, bank or other 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
     Person 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 5.03(a)(ii), the combined
     capital and surplus of such Person shall be deemed to be its combined
     capital and surplus as set forth in its most recent report of condition so
     published.

     (b) If at any time the Institutional Trustee shall cease to be eligible to
so act under Section 5.03(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 5.07(c).

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

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

     (e) The initial Institutional Trustee shall be:  [                ]

     Section 5.04.  CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.

     Each Regular Trustee and the Delaware Trustee (unless the Institutional
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 5.05.  REGULAR TRUSTEES.

     The initial Regular Trustees shall be:

     Michael D. Watford

     Robert L. Gerry III

     Robert M. King


     (a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees 

                                       24
<PAGE>
 
have power to act, any power of the Regular Trustees may be exercised by, or
with the consent of, any one such Regular Trustee.

     (b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.06; and

     (c) a Regular Trustee may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purposes of signing any documents which the Regular Trustees have power
and authority to cause the Trust to execute pursuant to Section 3.06.

     Section 5.06.  DELAWARE TRUSTEE.

     The initial Delaware Trustee shall be: [                       ]

     Section 5.07.  APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.

     (a) Subject to Section 5.07(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; and

          (ii) 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.

     (b)  (i)  the Trustee that acts as Institutional Trustee shall not be
     removed in accordance with Section 5.07(a) until a successor Institutional
     Trustee (a "Successor Institutional Trustee") has been an appointed and has
     accepted such appointment by written instrument executed by such Successor
     Institutional Trustee and delivered to the Regular Trustees and the
     Sponsor; and

          (ii) the Trustee that acts as Delaware Trustee shall not be removed in
     accordance with Section 5.07(a) until a successor Trustee possessing the
     qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (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 Regular Trustees and the Sponsor.

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

                                       25
<PAGE>
 
               (A) Until a Successor Institutional Trustee has been appointed
          and has accepted such appointment by instrument executed by such
          Successor Institutional Trustee and delivered to the Trust, the
          Sponsor and the resigning Institutional 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 appointment a Successor Delaware Trustee or Successor Institutional
Trustee, as the case may be, if the Institutional Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.07.

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

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

     Section 5.08.  VACANCIES AMONG TRUSTEES.

     If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.01, or if the number of Trustees
is increased pursuant to Section 5.01, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.07.

     Section 5.09.  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 Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.07, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.

                                       26
<PAGE>
 
     Section 5.10.  MEETINGS

     If there is more than one Regular Trustee, meetings of the Regular Trustees
shall be held from time to time upon the call of any Regular Trustee. Regular
meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustee or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular 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 Regular Trustees may
be taken at a meeting by vote of a majority of the Regular 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 Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.

     Section 5.11.  DELEGATION OF POWER.

     (a) Any Regular 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
3.06; and

     (b) the Regular 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 Regular Trustees or otherwise as the Regular 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 or bank into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation or bank resulting from any
merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation or
bank succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, provided such corporation or bank 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; provided, however,
such successor shall notify the Sponsor and the Trust promptly of its
succession.

                                       27
<PAGE>
 
                                   ARTICLE 6

                                 DISTRIBUTIONS

                         Section 6.01.  DISTRIBUTIONS.

     Holders shall receive Distributions (as defined herein) in accordance with
the applicable terms of the relevant Holder's Securities. Distributions shall be
made on the Trust Preferred Securities and the Common Securities in accordance
with the preferences set forth in their respective terms. If and to the extent
that the Sponsor 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
Institutional Trustee (the amount of any such payment being a "Payment Amount"),
the Institutional Trustee shall and is directed, to the extent funds are
available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders.

                                   ARTICLE 7

                             ISSUANCE OF SECURITIES

     Section 7.01.  GENERAL PROVISIONS REGARDING SECURITIES.

     (a) The Regular Trustees shall on behalf of the Trust issue one class of
convertible preferred securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"Trust Preferred Securities") and one class of convertible 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 Trust
shall issue no securities or other interests in the assets of the Trust other
than the Trust Preferred Securities and the Common Securities.

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

     (c) Upon issuance of the Trust Preferred Securities as provided in this
Declaration, the Trust Preferred 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 Trust Preferred
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 7.02.  EXECUTION AND AUTHENTICATION.

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

                                       28
<PAGE>
 
Security, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee.

     (b) One Regular Trustee shall sign the Trust Preferred 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 Trust Preferred Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Institutional Trustee. The
signature shall be conclusive evidence that the Trust Preferred Security has
been authenticated under this Declaration.

     Upon a written order of the Trust signed by one Regular Trustee, the
Institutional Trustee shall authenticate the Trust Preferred Securities for
original issue.

     The Institutional Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Trust Preferred Securities. An authenticating agent
may authenticate Trust Preferred Securities whenever the Institutional Trustee
may do so. Each reference in this Declaration to authentication by the
Institutional Trustee includes authentication by such agent. An authenticating
agent has the same rights as the Institutional Trustee to deal with the Company
or an Affiliate of the Company.

     Section 7.03.  FORM AND DATING.

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

     Section 7.04.  PAYING AGENT AND CONVERSION AGENT.

     In the event that the Trust Preferred Securities are not in book-entry only
form, the Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where the Trust Preferred Securities may
be presented for payment ("Paying Agent"). The Trust shall maintain an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Trust may appoint the Paying Agent and the Conversion Agent and may appoint
one or more additional paying agents and one or more additional conversion
agents in such other locations as it shall determine. The 

                                       29
<PAGE>
 
term "Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent. The Trust may
change any Paying Agent or Conversion Agent without prior notice to any Holder.
The Trust shall notify the Institutional Trustee in writing 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 Paying Agent or Conversion Agent, the
Institutional Trustee shall act as such. The Trust or any of its Affiliates may
act as Paying Agent or Conversion Agent. The Trust shall act as Paying Agent and
Conversion Agent for the Common Securities. The Paying Agent and Conversion
Agent shall be entitled to the rights and protections extended to the
Institutional Trustee when acting in such capacity.

     The Trust initially appoints the Institutional Trustee as Conversion Agent
for the Trust Preferred Securities, and the Trust initially appoints
________________ as Paying Agent for the Trust Preferred Securities.

                                   ARTICLE 8

                              TERMINATION OF TRUST


     Section 8.01.  TERMINATION OF TRUST.

     (a)  The Trust shall terminate:

          (i) upon the bankruptcy of the Sponsor;

          (ii) upon the filing of a certificate of dissolution or its equivalent
     with respect to the Sponsor; the filing of a certificate of cancellation
     with respect to the Trust after having obtained the consent of a majority
     in liquidation amount of the Securities voting together as a single class
     to file such certificate of cancellation or the revocation of the Sponsor's
     charter and the expiration of 90 days after the date of revocation without
     a reinstatement thereof;

          (iii)  upon the entry of a decree of judicial dissolution of the
     Sponsor or the Trust;

          (iv) 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;

          (v) upon the occurrence and continuation of a Special Event pursuant
     to which the Trust shall have been dissolved in accordance with the terms
     of the Securities and, after satisfaction of liabilities of creditors
     (whether by payment or reasonable provision for payment), all of the
     Debentures held by the Institutional Trustee shall have been distributed to
     the Holders of Securities in exchange for all of the Securities;

          (vi) upon the distribution of the Sponsor's common stock to all
     Securities Holders upon conversion of all outstanding Trust Preferred
     Securities;

          (vii)  the expiration of the term of the Trust on [________], [    ];
     or

                                       30
<PAGE>
 
          (viii)  before the issuance of any Securities, with the consent of all
     of the Regular Trustees and the Sponsor.

     (b) As soon as is practicable after the occurrence of an event referred to
in Section 8.01(a), after satisfaction of liabilities of creditors (whether by
payment or reasonable provision for payment), the Trustees shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.

     (c) The provisions of Sections 3.09 and 3.10 and Article 10 shall survive
the termination of the Trust.

                                   ARTICLE 9

                             TRANSFER OF INTERESTS


     Section 9.01.  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 9, Trust Preferred Securities shall be freely
transferable.

     (c) Subject to this Article 9, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the Sponsor;
provided that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:

          (i) the Trust would not be classified for United States federal income
     tax purposes as a grantor trust; and

          (ii) the Trust would be an Investment Company required to register
     under the Investment Company Act or the transferee would become an
     Investment Company required to register under the Investment Company Act.

     Section 9.02.  TRANSFER OF CERTIFICATES.

     The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any Certificate, the
Regular Trustees shall cause one or more new Certificates to be issued in the
name of the designated transferee or transferees. Every Certificate surrendered
for registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered 

                                       31
<PAGE>
 
for registration of transfer shall be canceled by the Regular Trustees. A
transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Certificate. By acceptance of a Certificate, each transferee shall be deemed to
have agreed to be bound by this Declaration.

     Section 9.03.  DEEMED SECURITY HOLDERS.

     The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

     Section 9.04.  BOOK ENTRY INTERESTS.

     Unless otherwise specified in the terms of the Trust Preferred Securities,
the Trust Preferred Securities Certificates, on original issuance, will be
issued in the form of one or more, fully registered, global Trust Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Trust Preferred Security
Beneficial Owner will receive a definitive Trust Preferred Security Certificate
representing such Trust Preferred Security Beneficial Owner's interests in such
Global Certificates, except as provided in Section 9.07. Unless and until
definitive, fully registered Trust Preferred Security Certificates (the
"Definitive Trust Preferred Security Certificates") have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 9.07:

     (a) the provisions of this Section 9.04 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 Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Trust Preferred Securities and the sole
holder of the Global Certificates and shall have no obligation to the Trust
Preferred Security Beneficial Owners;

     (c) to the extent that the provisions of this Section 9.04 conflict with
any other provisions of this Declaration, the provisions of this Section 9.04
shall control; and

     (d) the rights of the Trust Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants,
including receiving and transmitting payments of Distributions on the Global
Certificates to such Clearing Agency Participants. DTC will make book entry
transfers among the Clearing Agency Participants; provided, that solely for the
purposes of determining whether the Holders of the requisite amount of Trust
Preferred Securities have voted on any matter provided for in this Declaration,
so long as Definitive Trust Preferred Security Certificates have not been
issued, the Trustees 

                                       32
<PAGE>
 
may conclusively rely on, and shall be protected in relying on, any written
instrument (including a proxy) delivered to the Trustees by the Clearing Agency
setting forth the Trust Preferred Security Beneficial Owners' votes or assigning
the right to vote on any matter to any other Persons either in whole or in part.

     Section 9.05.  NOTICES TO CLEARING AGENCY.

     Whenever a notice or other communication to the Trust Preferred Security
Holders is required under this Declaration, unless and until Definitive Trust
Preferred Security Certificates shall have been issued to the Trust Preferred
Security Beneficial Owners pursuant to Section 9.07, the Regular Trustees shall
give all such notices and communications specified herein to be given to the
Trust Preferred Security Holders to the Clearing Agency, and shall have no
notice obligations to the Trust Preferred Security Beneficial Owners.

     Section 9.06.  APPOINTMENT OF SUCCESSOR CLEARING AGENCY.

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

     Section 9.07.  DEFINITIVE TRUST PREFERRED SECURITY CERTIFICATES.

     If:

     (a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Trust Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.06; or

     (b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Trust Preferred Securities,

     then:

     (c) Definitive Trust Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Trust Preferred
Securities; and

     (d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Trust Preferred Security Certificates to be delivered to Trust
Preferred Security Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be liable for any
delay in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing Agency.
The Definitive Trust Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to 

                                       33
<PAGE>
 
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Trust Preferred Securities
may be listed, or to conform to usage.

     Section 9.08.  MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

     If:

     (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and

     (b) there shall be delivered to the Institutional Trustee or the Regular
Trustees such security or indemnity as may be required by them to keep each of
them harmless, then, in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Institutional Trustee or any Regular
Trustee on behalf of the Trust shall execute and deliver, in exchange for, or in
lieu of, any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 9.08, the Institutional Trustee or the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.

                                   ARTICLE 10

                     LIMITATION OF LIABILITY OF HOLDERS OF
                        SECURITIES, TRUSTEES OR OTHERS.

     Section 10.01.  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; or

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

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

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

                                       34
<PAGE>
 
     Section 10.02.  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.

     Section 10.03.  FIDUCIARY DUTY.

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

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

                                       35
<PAGE>
 
     (c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:

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

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

     Section 10.04.  INDEMNIFICATION.

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

          (ii) The Sponsor shall indemnify, to the full extent permitted by law,
     any Company Indemnified Person who was or is a party or is threatened to be
     made a party to any threatened, pending or completed action or suit by or
     in the right of the Trust to procure a judgment in its favor by reason of
     the fact that he is or was a Company Indemnified Person against expenses
     (including attorneys' fees) 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.

                                       36
<PAGE>
 
          (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 10.04(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
     10.04(a) (unless ordered by a court) shall be made by the Sponsor only as
     authorized in the specific case upon a determination that indemnification
     of the Company Indemnified Person is proper in the circumstances because he
     has met the applicable standard of conduct set forth in paragraphs (i) and
     (ii). Such determination shall be made (1) by the Regular Trustees by a
     majority vote of a quorum consisting of such Regular 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 Regular
     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) 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 10.04(a) shall be paid by the Sponsor in advance of
     the final disposition of such action, suit or proceeding upon receipt of an
     undertaking by or on behalf of such Company Indemnified Person to repay
     such amount if it shall ultimately be determined that he is not entitled to
     be indemnified by the Sponsor as authorized in this Section 10.04(a).
     Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
     determination is reasonably and promptly made (i) by the Regular Trustees
     by a majority vote of a quorum of disinterested Regular Trustees, (ii) if
     such a quorum is not obtainable, or, even if obtainable, if a quorum of
     disinterested Regular 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 Regular 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
     Regular Trustees, independent legal counsel or Common Security Holder
     reasonably determine that such person deliberately breached his duty to the
     Trust or its Common or Trust Preferred Security Holders.

          (vi) The indemnification and advancement of expenses provided by, or
     granted pursuant to, the other paragraphs of this Section 10.04(a) shall
     not be deemed exclusive of any other rights to which those seeking
     indemnification and advancement of expenses may be entitled under any
     agreement, vote of stockholders or disinterested directors of the Sponsor
     or Trust Preferred 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
     10.04(a) shall be deemed to be provided by a contract between the Sponsor
     and each Company Indemnified Person who serves in such capacity at 

                                       37
<PAGE>
 
     any time while this Section 10.04(a) is in effect. Any repeal or
     modification of this Section 10.04(a) shall not affect any rights or
     obligations then existing.

          (vii)  The Sponsor or the Trust may purchase and maintain insurance on
     behalf of any Person who is or was a Company Indemnified Person against any
     liability asserted against him and incurred by him in any such capacity, or
     arising out of his status as such, whether or not the Sponsor would have
     the power to indemnify him against such liability under the provisions of
     this Section 10.04(a)

          (viii)  For purposes of this Section 10.04(a), references to "the
     Trust" shall include, in addition to the resulting or surviving entity, any
     constituent entity (including any constituent of a constituent) absorbed in
     a consolidation or merger, so that any person who is or was a director,
     trustee, officer or employee of such constituent entity, or is or was
     serving at the request of such constituent entity as a director, trustee,
     officer, employee or agent of another entity, shall stand in the same
     position under the provisions of this Section 10.04(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 10.04(a) shall, unless otherwise provided
     when authorized or ratified, continue as to a person who has ceased to be a
     Company Indemnified Person and shall inure to the benefit of the heirs,
     executors and administrators of such a person.

     (b) The Sponsor agrees to indemnify, to the fullest extent permitted by
law, (i) the Institutional Trustee, (ii) the Delaware Trustee, (iii) the Paying
Agent, (iv) the Conversion Agent, (v) any Affiliate of the Institutional
Trustee, and the Delaware Trustee, and (vi) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee, the Paying Agent, the
Conversion Agent and the Delaware Trustee (each of the Persons in (i) through
(vi) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration or 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 Sponsor also agrees to advance expenses (including legal fees)
incurred by a Fiduciary Indemnified Person in defending any claim, demand,
action, suit or proceeding, from time to time, prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Fiduciary Indemnified Person to repay such
amount if it shall be determined that the Fiduciary Indemnified Person is not
entitled to be indemnified as authorized in the preceding subsection. The
obligation to indemnify as set forth in this Section 10.04(b) shall survive the
satisfaction and discharge of this Declaration.

                                       38
<PAGE>
 
     Section 10.05.  OUTSIDE BUSINESS.

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

                                   ARTICLE 11

                                   ACCOUNTING

     Section 11.01.  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 11.02.  CERTAIN ACCOUNTING MATTERS.

     (a)  At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books, records and supporting documents,
which shall reflect in detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting in compliance
with generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for the 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 Regular
Trustees.

     (b) The Regular Trustees shall cause to be prepared and delivered to each
of the Holders of Securities and the other Trustees, 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 income or loss.

     (c) The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Securities, 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 

                                       39
<PAGE>
 
Regular Trustees shall endeavor to deliver all such statements within 30 days
after the end of each Fiscal Year of the Trust.

     (d) The Regular 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 Regular
Trustees on behalf of the Trust with any state or local taxing authority.

     Section 11.03.  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 Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.

     Section 11.04.  WITHHOLDING.
 
     The Trust and the Regular 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 Regular 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 12

                            AMENDMENTS AND MEETINGS


     Section 12.01.  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 Regular Trustees (or, if there are more than two Regular
     Trustees a majority of the Regular Trustees);

                                       40
<PAGE>
 
          (ii) if the amendment affects the rights, powers, duties, obligations
     or immunities of the Institutional Trustee, the Institutional 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 Institutional
     Trustee shall have first received an Officers' Certificate from each of the
     Trust and the Sponsor that such amendment is permitted by, and conforms to,
     the terms of this Declaration (including the terms of the Securities);

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

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

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

          (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
          Institutional 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 9.01(c) and this Section 12.01 shall not be amended without the
consent of all of the Holders of the Securities;

     (e) Article 4 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 5 to
increase or decrease the number of and appoint and remove Trustees shall not be
amended 

                                       41
<PAGE>
 
without the consent of the Holders of a Majority in liquidation amount of the
Common Securities; and

     (g) notwithstanding Section 12.01(c), this Declaration may be amended
without the consent of the Holders of the Securities to:

          (i)  cure any ambiguity;

          (ii) correct or supplement any provision in this Declaration that may
     be defective or inconsistent with any other provision of this Declaration;

          (iii)  add to the covenants, restrictions or obligations of the
     Sponsor; and

          (iv) to conform to any change in Rule 3a-5 or written change in
     interpretation or application of Rule 3a-5 by any legislative body, court,
     government agency or regulatory authority which amendment does not have a
     material adverse effect on the right, preferences or privileges of the
     Holders.

     Section 12.02.  MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.

     (a) Meetings of the Holders of any class of Securities may be called at any
time by the Regular 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 Trust Preferred Securities are
listed or admitted for trading. The Regular 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 Regular Trustees one or more calls 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
of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities 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 to all the Holders of
     Securities having a right to vote thereat at least 7 days and not more than
     60 days before the date of such meeting. Whenever a vote, consent or
     approval of the Holders of Securities is permitted or required under this
     Declaration or the rules of any stock exchange on which the Trust Preferred
     Securities are listed or admitted for trading, such vote, consent or
     approval may be given at a meeting of the Holders of Securities. 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 liquidation amount that would be necessary to
     authorize or take such action at a meeting at which all Holders of
     Securities having a right to vote thereon were present and voting. Prompt
     notice of the taking of action without a meeting shall be given to the
     Holders of Securities entitled to vote 

                                       42
<PAGE>
 
     who have not consented in writing. The Regular 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 Regular Trustees;

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

          (iii)  each meeting of the Holders of the Securities shall be
     conducted by the Regular Trustees or by such other Person that the Regular
     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 Trust Preferred Securities are then listed or
     trading, otherwise provides, the Regular Trustees, in their sole
     discretion, shall establish all other provisions relating to meetings of
     Holders of Securities, including notice of the time, place or purpose of
     any meeting at which any matter is to be voted on by any Holders of
     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 13

                        REPRESENTATIONS OF INSTITUTIONAL
                          TRUSTEE AND DELAWARE TRUSTEE

     Section 13.01.  REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.

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

     (a) the Institutional Trustee is a Michigan banking corporation with trust
powers, duly organized, validly existing and in good standing, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;

     (b) the execution, delivery and performance by the Institutional Trustee of
the Declaration has been duly authorized by all necessary corporate action on
the part of the 

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

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

     (d) no consent, approval or authorization of, or registration with or
notice to, any Michigan or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.

     Section 13.02.  REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.

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

     (a) The Delaware Trustee is a Delaware corporation [with trust powers],
duly organized, validly existing and in good standing, with full power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Declaration.

     (b) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration under
Delaware law 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 Delaware or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the Declaration.

     (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. The Delaware Trustee satisfies for the
Trust the requirements set forth in Section 3807(a) of the Business Trust Act.

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<PAGE>
 
                                   ARTICLE 14

                                 MISCELLANEOUS

     Section 14.01.  NOTICESALL 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 Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):

          Nuevo Financing I
          c/o Nuevo Energy Company
          1221 Lamar, Suite 1600
          Houston, Texas 77010
          Attention: Chief Financial Officer

     (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 of the Securities):

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

     (c) if given to the Institutional Trustee, at its Corporate Trust Office to
the attention of Corporate Trust Administration (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities);

     (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):

          Nuevo Energy Company
          1221 Lamar, Suite 1600
          Houston, Texas 77010
          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.

                                       45
<PAGE>
 
     Section 14.02.  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 14.03.  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 14.04.  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 14.05.  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 14.06.  PARTIAL ENFORCEABILITY.

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

     Section 14.07.  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.

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

 
                     [______________], as Regular Trustee

 
                     [______________], as Regular Trustee

 
                     [______________], as Regular Trustee


                      _______________, as Delaware Trustee



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



                    ____________________, as Institutional Trustee



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



                     Nuevo Energy Company, as Sponsor



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

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