Exhibit 4.17

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                     SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.



                                       AND



 ____________, as Collateral Agent, Custodial Agent and Securities Intermediary



                                       AND



                     __________, as Purchase Contract Agent







                                     FORM OF

                                PLEDGE AGREEMENT







                             Dated as of ____, 2003


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                                      TABLE OF CONTENTS


                                                                                        PAGE
                                                                                        ----

                                    ARTICLE 1 DEFINITIONS

<S>               <C>                                                                   <C>
Section 1.01.     Definitions..............................................................1

                                      ARTICLE 2 PLEDGE

Section 2.01.     Pledge...................................................................5
Section 2.02.     Control; Financing Statement.............................................6
Section 2.03.     Termination..............................................................6

                        ARTICLE 3 DISTRIBUTIONS ON PLEDGED COLLATERAL

Section 3.01.     Income and Distributions.................................................6
Section 3.02.     Principal Payments Following Termination Event...........................6
Section 3.03.     Principal Payments Prior to or on Purchase Contract
                    Settlement Date .......................................................6
Section 3.04.     Payments to Purchase Contract Agent......................................7
Section 3.05.     Assets Not Properly Released.............................................7

                                      ARTICLE 4 CONTROL

Section 4.01.     Establishment of Collateral Account......................................7
Section 4.02.     Treatment as Financial Assets............................................8
Section 4.03.     Sole Control by Collateral Agent.........................................8
Section 4.04.     Securities Intermediary's Location.......................................8
Section 4.05.     No Other Claims..........................................................8
Section 4.06.     Investment and Release...................................................9
Section 4.07.     Statements and Confirmations.............................................9
Section 4.08.     Tax Allocations..........................................................9
Section 4.09.     No Other Agreements......................................................9
Section 4.10.     Powers Coupled with an Interest..........................................9
Section 4.11.     Waiver of Lien; Waiver of Set-off........................................9

                       ARTICLE 5 INITIAL DEPOSIT; CREATION OF TREASURY
                          UNITS AND RECREATION OF CORPORATE UNITS

Section 5.01.     Initial Deposit of Notes................................................10
Section 5.02.     Creation of Treasury Units..............................................10
Section 5.03.     Recreation of Corporate Units...........................................11
Section 5.04.     Termination Event.......................................................12
Section 5.05.     Cash Settlement.........................................................13
Section 5.06.     Early Settlement and Cash Merger Early Settlement.......................15
Section 5.07.     Application of Proceeds in Settlement of Purchase Contracts.............15
Section 5.08.     Special Event Redemption................................................17
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                           ARTICLE 6 VOTING RIGHTS - PLEDGED NOTES

Section 6.01.     Voting Rights...........................................................17

                                ARTICLE 7 RIGHTS AND REMEDIES

Section 7.01.     Rights and Remedies of the Collateral Agent.............................18
Section 7.02.     Special Event Redemption................................................19
Section 7.03.     Initial Remarketing.....................................................19
Section 7.04.     Second Remarketing......................................................19
Section 7.05.     Third Remarketing.......................................................19
Section 7.06.     Successful Remarketing..................................................20
Section 7.07.     Substitutions...........................................................20

                     ARTICLE 8 REPRESENTATIONS AND WARRANTIES; COVENANTS

Section 8.01.     Representations and Warranties..........................................20
Section 8.02.     Covenants...............................................................21

                        ARTICLE 9 THE COLLATERAL AGENT, THE CUSTODIAL
                           AGENT AND THE SECURITIES INTERMEDIARY

Section 9.01.     Appointment, Powers and Immunities......................................21
Section 9.02.     Instructions of the Company.............................................22
Section 9.03.     Reliance by Collateral Agent and Securities Intermediary................22
Section 9.04.     Certain Rights..........................................................23
Section 9.05.     Merger, Conversion, Consolidation or Succession to Business.............23
Section 9.06.     Rights in Other Capacities..............................................23
Section 9.07.     Non-Reliance on the Collateral Agent, the Custodial Agent
                    and the Securities Intermediary ......................................24
Section 9.08.     Compensation and Indemnity..............................................24
Section 9.09.     Failure to Act..........................................................25
Section 9.10.     Resignation of the Collateral Agent, the Custodial Agent
                    and the Securities Intermediary ......................................25
Section 9.11.     Right to Appoint Agent or Advisor.......................................27
Section 9.12.     Survival................................................................27
Section 9.13.     Exculpation.............................................................27

                                    ARTICLE 10 AMENDMENT

Section 10.01.    Amendment Without Consent of Holders....................................27
Section 10.02.    Amendment with Consent of Holders.......................................28
Section 10.03.    Execution of Amendments.................................................29
Section 10.04.    Effect of Amendments....................................................29
Section 10.05.    Reference of Amendments.................................................29
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                                  ARTICLE 11 MISCELLANEOUS

Section 11.01.    No Waiver...............................................................29
Section 11.02.    Governing Law; Submission to Jurisdiction...............................29
Section 11.03.    Notices.................................................................30
Section 11.04.    Successors and Assigns..................................................30
Section 11.05.    Counterparts............................................................30
Section 11.06.    Severability............................................................30
Section 11.07.    Expenses, Etc...........................................................30
Section 11.08.    Security Interest Absolute..............................................31
Section 11.09.    Notice of Special Event, Special Event Redemption
                    and Termination Event ................................................31
Section 11.10.    Regarding the Purchase Contract Agent...................................32
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Exhibit A      -      Instruction  from  Purchase  Contract  Agent to Collateral
                      Agent (Creation of Treasury Units)

Exhibit B      -      Instruction    from   Collateral   Agent   to   Securities
                      Intermediary (Creation of Treasury Units)

Exhibit C      -      Instruction  from  Purchase  Contract  Agent to Collateral
                      Agent (Recreation of Corporate Units)

Exhibit D      -      Instruction    from   Collateral   Agent   to   Securities
                      Intermediary (Recreation of Corporate Units)

Exhibit E      -      Notice of Cash Settlement from Securities  Intermediary to
                      Purchase Contract Agent (Cash Settlement Amounts)

Exhibit F      -      Instruction to Custodial Agent (Regarding Remarketing)

Exhibit G      -      Instruction   to   Custodial   Agent    (Withdrawal   from
                      Remarketing)

                                       iv

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                                PLEDGE AGREEMENT


               PLEDGE AGREEMENT dated as of _____, 200__ by and between SCOTTISH
ANNUITY  &  LIFE  HOLDINGS,   LTD.,  a  Cayman  Islands  exempted  company  (the
"Company"),  ______,  as collateral  agent (in such capacity,  together with its
successors in such capacity,  the  "Collateral  Agent"),  as custodial agent (in
such capacity,  together with its  successors in such  capacity,  the "Custodial
Agent"), as securities  intermediary (as defined in Sections 8-102(a)(14) of the
UCC) with respect to the Collateral Account (in such capacity, together with its
successors in such capacity,  the  "Securities  Intermediary"),  and as purchase
contract agent and as  attorney-in-fact  of the Holders from time to time of the
Units (in such  capacity,  together with its  successors in such  capacity,  the
"Purchase Contract Agent") under the Purchase Contract Agreement.

               Capitalized  terms used  herein and not  defined  herein have the
meanings  assigned  to them  in the  Purchase  Contract  Agreement  (as  defined
herein).

                                    RECITALS

               WHEREAS,  the Company and the Purchase Contract Agent are parties
to the Purchase Contract  Agreement dated as of the date hereof (as modified and
supplemented   and  in  effect  from  time  to  time,  the  "Purchase   Contract
Agreement"),  pursuant  to  which  _____  Corporate  Units  (or  ______  if  the
over-allotment  option granted to the Underwriters  pursuant to the Underwriting
Agreement is exercised in full) will be issued;

               WHEREAS,  each  Corporate  Unit, at issuance,  consists of a unit
comprised of (a) a stock purchase contract (a "Purchase  Contract")  pursuant to
which the  Holder  will  purchase  from the  Company  on the  Purchase  Contract
Settlement Date, for an amount equal to $_____ (the "Stated  Amount"),  a number
of shares of the  Company's  ordinary  shares,  par value  $0.01 per share  (the
"Ordinary  Shares"),  equal to the  Settlement  Rate and (b) either a Note or an
Applicable Ownership Interest in the Treasury Portfolio; and

               WHEREAS, pursuant to the terms of the Purchase Contract Agreement
and the Purchase Contracts, the Holders of the Units have irrevocably authorized
the Purchase Contract Agent, as  attorney-in-fact  of such Holders,  among other
things,  to execute and deliver this  Agreement on behalf of such Holders and to
grant the pledge provided herein of the Collateral to secure the Obligations.

               NOW, THEREFORE,  the Company, the Collateral Agent, the Custodial
Agent,  the  Securities  Intermediary  and the Purchase  Contract Agent agree as
follows:

                                    ARTICLE 1

                                   DEFINITIONS

               Section 1.01.  Definitions.  For all purposes of this  Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

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               (a) the words "HEREIN,"  "HEREOF" and "HEREUNDER" and other words
of similar  import refer to this  Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;

               (b) the  following  terms which are defined in the UCC shall have
the meanings set forth therein:  "CERTIFICATED  SECURITY," "CONTROL," "FINANCIAL
ASSET," "ENTITLEMENT  ORDER," "SECURITIES  ACCOUNT" and "SECURITY  ENTITLEMENT";
and

               (c) the following  terms have the meanings  given to them in this
Section 1.01(c):

               "AGREEMENT"  means  this  Pledge  Agreement,  as the  same may be
amended, modified or supplemented from time to time.

               "CASH" means any coin or currency of the United States of America
as at the time shall be legal tender for payment of public and private debts.

               "COLLATERAL" means the collective reference to:

                              (i) the  Collateral  Account  and  all  investment
               property and other financial assets from time to time credited to
               the Collateral Account,  including,  without limitation,  (A) the
               Notes  and  security  entitlements  relating  thereto  that are a
               component  of the  Corporate  Units  from  time to time,  (B) the
               Applicable Ownership Interests (as specified in clause (i) of the
               definition  of such  term) of the  Holders  with  respect  to the
               Treasury  Portfolio  which are a component of the Corporate Units
               from  time to time;  (C) any  Treasury  Securities  and  security
               entitlements  relating  thereto  delivered from time to time upon
               creation of Treasury Units in accordance with Section 5.02 hereof
               and (D) payments made by Holders pursuant to Section 5.05 hereof;

                              (ii) all Proceeds of any of the foregoing (whether
               such  Proceeds  arise  before  or after the  commencement  of any
               proceeding under any applicable  bankruptcy,  insolvency or other
               similar  law, by or against  the  pledgor or with  respect to the
               pledgor); and

                              (iii) all powers and rights now owned or hereafter
               acquired under or with respect to the Collateral.

               "COLLATERAL   ACCOUNT"  means  the  securities   account  of  the
Collateral  Agent,  maintained by the  Securities  Intermediary  and  designated
"______,  as  Collateral  Agent of Scottish  Annuity & Life  Holdings,  Ltd., as
pledgee  of  ______,  as  the  Purchase  Contract  Agent  on  behalf  of  and as
attorney-in-fact for the Holders".

               "COMPANY"  means the Person  named as the  "Company" in the first
paragraph of this  instrument  until a successor shall have become such pursuant
to the applicable provisions of the Purchase Contract Agreement,  and thereafter
"Company" shall mean such successor.

                                       2
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               "CORPORATE UNIT" means the collective rights and obligations of a
Holder of a Corporate  Units  Certificate in respect of a Note or an appropriate
Applicable  Ownership Interests in the Treasury  Portfolio,  as the case may be,
subject in each case to the Pledge thereof,  and the related Purchase  Contract;
provided that the appropriate  Applicable  Ownership  Interests (as specified in
clause (ii) of the definition of such term) in the Treasury  Portfolio shall not
be subject to the Pledge.

               "CORPORATE UNITS CERTIFICATE" means a certificate  evidencing the
rights and  obligations of a Holder in respect of the number of Corporate  Units
specified on such certificate.

               "OBLIGATIONS" means, with respect to each Holder, all obligations
and  liabilities  of such Holder  under such  Holder's  Purchase  Contract,  the
Purchase  Contract  Agreement  and this  Agreement or any other  document  made,
delivered or given in connection herewith or therewith,  in each case whether on
account of principal, interest (including, without limitation, interest accruing
before and after the filing of any petition in bankruptcy,  or the  commencement
of any insolvency,  reorganization or like proceeding,  relating to such Holder,
whether or not a claim for post-filing or  post-petition  interest is allowed in
such proceeding),  fees,  indemnities,  costs, expenses or otherwise (including,
without limitation,  all fees and disbursements of counsel to the Company or the
Collateral Agent or the Securities  Intermediary that are required to be paid by
the Holder pursuant to the terms of any of the foregoing agreements).

               "PERMITTED  INVESTMENTS" means any one of the following,  in each
case maturing on the Business Day following the date of acquisition:

                              (1) any evidence of indebtedness  with an original
               maturity  of 365  days or less  issued,  or  directly  and  fully
               guaranteed  or  insured,  by the United  States of America or any
               agency or  instrumentality  thereof (provided that the full faith
               and credit of the United  States of America is pledged in support
               of the timely payment thereof or such indebtedness  constitutes a
               general obligation of it);

                              (2)   deposits,   certificates   of   deposit   or
               acceptances with an original  maturity of 365 days or less of any
               institution  which  is a member  of the  Federal  Reserve  System
               having combined capital and surplus and undivided  profits of not
               less  than  _____ as of the date of its  latest  filed  report of
               condition  or its  audited  financial  statements  (and which may
               include the Collateral Agent);

                              (3) investments  with an original  maturity of 365
               days or less of any  Person  that is  fully  and  unconditionally
               guaranteed by a bank referred to in clause (2);

                              (4) repurchase  agreements and reverse  repurchase
               agreements  relating to marketable direct  obligations  issued or
               unconditionally  guaranteed  by the  United  States of America or
               issued by any agency  thereof and backed as to timely  payment by
               the full faith and credit of the United States of America;

                                       3
<PAGE>

                              (5)  investments in commercial  paper,  other than
               commercial paper issued by the Company or its affiliates,  of any
               corporation  incorporated  under the laws of the United States of
               America or any State thereof, which commercial paper has a rating
               at the time of  purchase  at least  equal to "A-1" by  Standard &
               Poor's  Ratings  Services  ("S&P") or at least  equal to "P-1" by
               Moody's Investors Service, Inc. ("Moody's"); and

                              (6) investments in money market funds  (including,
               but not limited to, money market funds managed by the  Collateral
               Agent or an affiliate of the Collateral  Agent)  registered under
               the  Investment  Company Act of 1940,  as  amended,  rated in the
               highest applicable rating category by S&P or Moody's.

               "PERSON" means any legal person,  including,  without limitation,
any individual,  corporation,  estate, partnership,  joint venture, association,
joint-stock   company,   limited  liability   company,   trust,   unincorporated
organization or government or any agency or political subdivision thereof.

               "PLEDGE"  means the lien and  security  interest  created by this
Agreement.

               "PLEDGED  APPLICABLE  OWNERSHIP  INTERESTS"  means the Applicable
Ownership  Interests (as specified in clause (i) of the  definition  thereof) of
the Holders  with respect to the Treasury  Portfolio  and security  entitlements
with respect  thereto from time to time credited to the  Collateral  Account and
not then released from the Pledge.

               "PLEDGED  NOTES"  means  Notes  and  security  entitlements  with
respect  thereto from time to time  credited to the  Collateral  Account and not
then released from the Pledge.

               "PLEDGED   SECURITIES"  means  the  Pledged  Notes,  the  Pledged
Applicable   Ownership   Interests   and  the   Pledged   Treasury   Securities,
collectively.

               "PLEDGED  TREASURY  SECURITIES"  means  Treasury  Securities  and
security  entitlements  with respect  thereto from time to time  credited to the
Collateral Account and not then released from the Pledge.

               "PROCEEDS"  has  the  meaning  ascribed  thereto  in the  UCC and
includes,  without  limitation,  all  interest,  dividends,  cash,  instruments,
securities,   financial  assets  and  other  property  received,  receivable  or
otherwise distributed upon the sale, exchange,  collection or disposition of any
financial assets from time to time held in the Collateral Account.

               "PURCHASE  CONTRACT  AGENT"  has  the  meaning  specified  in the
paragraph preceding the recitals of this Agreement.

               "SEPARATE   NOTES"  means  Notes  which  are  not  components  of
Corporate Units.

               "TRADES" means the  Treasury/Reserve  Automated Debt Entry System
maintained  by the  Federal  Reserve  Bank of New York  pursuant  to the  TRADES
Regulations.

                                       4
<PAGE>

               "TRADES  REGULATIONS"  means the regulations of the United States
Department  of the  Treasury,  published at 31 C.F.R.  Part 357, as amended from
time to time. Unless otherwise  defined herein,  all terms defined in the TRADES
Regulations are used herein as therein defined.

               "TRANSFER"  means (i) in the case of  certificated  securities in
registered form,  delivery as provided in Section 8-301(a) of the UCC,  endorsed
to the transferee or in blank by an effective  endorsement;  (ii) in the case of
Treasury  Securities,  registration  of the  transferee  as the  owner  of  such
Treasury  Securities on TRADES; and (iii) in the case of security  entitlements,
including,  without limitation,  security  entitlements with respect to Treasury
Securities,  a  securities  intermediary  indicating  by book  entry  that  such
security entitlement has been credited to the transferee's securities account.

               "TREASURY  SECURITIES" means __ coupon U.S.  treasury  securities
that mature on or prior to ____, 200__ (CUSIP No. ______).

               "TREASURY  UNIT" means,  following the  substitution  of Treasury
Securities  for Notes as collateral to secure a Holder's  obligations  under the
Purchase  Contract,  the  collective  rights  and  obligations  of a Holder of a
Treasury Units  Certificate in respect of such Treasury  Securities,  subject to
the Pledge thereof, and the related Purchase Contract.

               "TREASURY UNITS CERTIFICATE"  means a certificate  evidencing the
rights and  obligations  of a Holder in respect of the number of Treasury  Units
specified on such certificate.

               "UCC" means the Uniform Commercial Code as in effect in the State
of New York from time to time.

               "VALUE"  means,  with  respect to any item of  Collateral  on any
date,  as to (i) Cash,  the face amount  thereof,  (ii)  Treasury  Securities or
Notes,  the aggregate  principal amount thereof at maturity and (iii) Applicable
Ownership Interests (as specified in clause (i) of the definition of such term),
the appropriate  percentage of the aggregate principal amount at maturity of the
Treasury Portfolio.

                                   ARTICLE 2

                                     PLEDGE

               Section 2.01.  Pledge.  Each Holder,  acting through the Purchase
Contract  Agent as such  Holder's  attorney-in-fact,  and the Purchase  Contract
Agent, acting solely as such attorney-in-fact,  hereby pledges and grants to the
Collateral  Agent, as agent of and for the benefit of the Company,  a continuing
first priority security interest in and to, and a lien upon and right of set-off
against, all of such Person's right, title and interest in and to the Collateral
to secure the prompt and complete  payment and performance  when due (whether at
stated  maturity,  by  acceleration  or  otherwise)  of  the  Obligations.   The
Collateral  Agent  shall have all of the rights,  remedies  and  recourses  with
respect to the  Collateral  afforded a secured party by the UCC, in addition to,
and not in limitation of, the other rights,  remedies and recourses  afforded to
the Collateral Agent by this Agreement.

                                       5
<PAGE>

               Section 2.02. Control; Financing Statement.

               (a) The  Collateral  Agent shall have  control of the  Collateral
Account pursuant to the provisions of Article 4 of this Agreement.

               (b) Subsequent to the date of initial  issuance of the Units, the
Purchase  Contract  Agent shall  deliver to the  Collateral  Agent a copy of the
financing  statement  prepared  by the  Company  and filed in the  Office of the
Secretary of State of the State of _______ and any other jurisdictions which the
Company  deems  necessary,   authorized  by  the  Purchase  Contract  Agent,  as
attorney-in-fact  for the Holders,  as Debtors,  and describing the  Collateral,
such filing to be undertaken by the Company.

               Section 2.03. Termination.  As to each Holder, this Agreement and
the Pledge created hereby shall automatically terminate upon the satisfaction of
such Holder's  Obligations.  Upon such  termination,  the Collateral Agent shall
Transfer such Holder's portion of the Collateral to the Purchase  Contract Agent
for distribution to such Holder, free and clear of the Pledge created hereby.

                                   ARTICLE 3

                       DISTRIBUTIONS ON PLEDGED COLLATERAL

               Section 3.01.  Income and  Distributions.  The  Collateral  Agent
shall transfer all income and distributions  received by the Collateral Agent on
account of the Pledged  Notes,  the Pledged  Applicable  Ownership  Interests or
Permitted  Investments from time to time held in the Collateral Account (ABA No.
____, A/C No. ____, Re: ________, Attention:  ________) to the Purchase Contract
Agent for  distribution  to the  applicable  Holders as provided in the Purchase
Contracts or Purchase Contract Agreement.

               Section 3.02.  Principal  Payments  Following  Termination Event.
Following a Termination Event, the Collateral Agent shall transfer all principal
payments  it  receives,  if any, in respect of (a) the  Pledged  Notes,  (b) the
Pledged Applicable Ownership Interests, and (c) the Pledged Treasury Securities,
to the Purchase  Contract  Agent for the benefit of the  applicable  Holders for
distribution to such Holders in accordance with their respective interests, free
and clear of the Pledge created hereby.

               Section 3.03. Principal Payments Prior to or on Purchase Contract
Settlement Date.

               (a)  Subject to the  provisions  of Sections  5.06 and 5.08,  and
except as provided in clause 3.03(b) below,  if no Termination  Event shall have
occurred,  all principal payments received by the Collateral Agent in respect of
(1) the Pledged Notes, (2) the Pledged  Applicable  Ownership  Interests and (3)
the  Pledged  Treasury  Securities,  shall be held  and  invested  in  Permitted
Investments until the Purchase Contract  Settlement Date, and transferred to the
Company on the  Purchase  Contract  Settlement  Date as provided in Section 5.07
hereof.  Any balance remaining in the Collateral  Account shall be released from
the Pledge and transferred to the Purchase Contract Agent for the benefit of the
applicable  Holders for  distribution  to such Holders in accordance  with their
respective interests,  free and clear of the Pledge created

                                       6
<PAGE>

thereby.  The Company shall instruct the  Collateral  Agent in writing as to the
type of  Permitted  Investments  in which any  payments  made under this Section
shall be invested,  provided, however, that if the Company fails to deliver such
instructions  by 10:30 a.m.  (New York City time) on the day such  payments  are
received  by the  Collateral  Agent,  the  Collateral  Agent  shall  invest such
payments in the Permitted  Investments described in clause (6) of the definition
of Permitted  Investments.  In no event shall the Collateral Agent be liable for
the  selection  of  Permitted  Investments  or for  investment  losses  incurred
thereon.  The  Collateral  Agent  shall have no  liability  in respect of losses
incurred  as a result of the failure of the  Company to provide  timely  written
investment direction.

               (b) All principal  payments  received by the Collateral  Agent in
respect of (1) the Pledged  Notes,  (2) the Applicable  Ownership  Interests (as
specified in clause (i) of the definition thereof) in the Treasury Portfolio and
(3) the Treasury  Securities  or security  entitlements  thereto,  that, in each
case, have been released from the Pledge pursuant hereto shall be transferred to
the  Purchase  Contract  Agent for the  benefit of the  applicable  Holders  for
distribution to such Holders in accordance with their respective interests.

               Section 3.04. Payments to Purchase Contract Agent. The Collateral
Agent shall use all commercially  reasonable  efforts to deliver payments to the
Purchase  Contract  Agent  hereunder to the account  designated  by the Purchase
Contract  Agent for such purpose not later than 12:00 p.m.  (New York City time)
on the Business Day such payment is received by the Collateral Agent;  provided,
however, that if such payment is received on a day that is not a Business Day or
after 11:00 a.m.  (New York City time) on a Business  Day,  then the  Collateral
Agent shall use all commercially  reasonable  efforts to deliver such payment to
the Purchase Contract Agent no later than 10:30 a.m. (New York City time) on the
next succeeding Business Day.

               Section  3.05.  Assets Not  Properly  Released.  If the  Purchase
Contract Agent or any Holder shall receive any principal  payments on account of
financial assets credited to the Collateral  Account and not released  therefrom
in accordance  with this Agreement,  the Purchase  Contract Agent or such Holder
shall  hold the same as  trustee  of an  express  trust for the  benefit  of the
Company  and,  upon  receipt  of an  Officers'  Certificate  of the  Company  so
directing,  promptly  deliver the same to the Collateral Agent for credit to the
Collateral  Account or to the Company for  application to the Obligations of the
Holders,  and the Purchase  Contract  Agent and Holders  shall acquire no right,
title or interest in any such  payments of principal  amounts so  received.  The
Purchase  Contract Agent shall have no liability  under this Section 3.05 unless
and until it has been  notified in writing that such payment was delivered to it
erroneously  and shall have no  liability  for any  action  taken,  suffered  or
omitted to be taken prior to its receipt of such notice.

                                   ARTICLE 4

                                     CONTROL

               Section 4.01. Establishment of Collateral Account. The Securities
Intermediary hereby confirms that:

               (a) the Securities  Intermediary  has  established the Collateral
Account;

                                       7
<PAGE>

               (b) the Collateral Account is a securities account;

               (c)  subject  to the  terms  of this  Agreement,  the  Securities
Intermediary  shall  identify  in  its  records  the  Collateral  Agent  as  the
entitlement  holder  entitled to exercise the rights that comprise any financial
asset credited to the Collateral Account;

               (d)  all  property  delivered  to  the  Securities   Intermediary
pursuant to this Agreement or the Purchase  Contract  Agreement will be credited
promptly to the Collateral Account; and

               (e) all  securities or other  property  underlying  any financial
assets credited to the Collateral Account shall be (i) registered in the name of
the Purchase  Contract Agent and endorsed to the  Collateral  Agent or in blank,
(ii) registered in the name of the Collateral Agent or (iii) credited to another
securities  account  maintained  in  the  name  of  the  Collateral  Agent.  The
Collateral  Agent may, at any time or from time to time, in its sole discretion,
cause any or all  securities or other property  underlying any financial  assets
credited  to  the  Collateral  Account  not  registered  in  its  name  to be so
registered  in its name.  In no case will any  financial  asset  credited to the
Collateral  Account be registered in the name of the Purchase  Contract Agent or
any Holder or specially endorsed to the Purchase Contract Agent or any Holder.

               Section  4.02.  Treatment  as  Financial  Assets.  Each  item  of
property (whether investment property, financial asset, security,  instrument or
cash) credited to the Collateral Account shall be treated as a financial asset.

               Section  4.03.  Sole  Control  by  Collateral  Agent.  Except  as
provided in Section 6.01, at all times prior to the  termination  of the Pledge,
the Collateral Agent shall have sole control of the Collateral Account,  and the
Securities  Intermediary  shall take instructions and directions with respect to
the  Collateral  Account solely from the  Collateral  Agent.  If at any time the
Securities  Intermediary  shall  receive  an  entitlement  order  issued  by the
Collateral  Agent  and  relating  to  the  Collateral  Account,  the  Securities
Intermediary shall comply with such entitlement order without further consent by
the  Purchase  Contract  Agent or any  Holder  or any  other  Person.  Except as
otherwise  permitted under this Agreement,  until termination of the Pledge, the
Securities  Intermediary  will not comply with any entitlement  orders issued by
the Purchase Contract Agent or any Holder.

               Section 4.04. Securities  Intermediary's Location. The Collateral
Account,  and the rights and  obligations  of the Securities  Intermediary,  the
Collateral  Agent,  the  Purchase  Contract  Agent and the Holders  with respect
thereto,  shall be governed by the laws of the State of New York, without giving
effect to the conflicts of law provisions  thereof.  Regardless of any provision
in any other  agreement,  for purposes of the UCC, _______ shall be deemed to be
the Securities Intermediary's location.

               Section 4.05. No Other Claims. Except for the claims and interest
of the  Collateral  Agent and of the Purchase  Contract Agent and the Holders in
the  Collateral  Account,  the  Securities  Intermediary  (without  any  duty to
investigate)  does not know of any claim  to, or  interest  in,  the  Collateral
Account or in any financial  asset credited  thereto.  If any Person asserts any
lien, encumbrance or adverse claim (including any writ,  garnishment,  judgment,
warrant of

                                        8
<PAGE>

attachment,  execution or similar process) against the Collateral  Account or in
any financial asset carried therein,  the Securities  Intermediary will promptly
notify the Collateral Agent and the Purchase Contract Agent.

               Section 4.06.  Investment and Release.  All proceeds of financial
assets from time to time deposited in the  Collateral  Account shall be invested
and reinvested as provided in this Agreement.  At all times prior to termination
of the Pledge, no property shall be released from the Collateral  Account except
in accordance with this Agreement or upon written instructions of the Collateral
Agent.

               Section  4.07.  Statements  and  Confirmations.   The  Securities
Intermediary  will promptly  send copies of all  statements,  confirmations  and
other correspondence  concerning the Collateral Account and any financial assets
credited thereto  simultaneously  to each of the Purchase Contract Agent and the
Collateral Agent at their addresses for notices under this Agreement.

               Section 4.08. Tax Allocations.  The Purchase Contract Agent shall
report all items of income,  gain, expense and loss recognized in the Collateral
Account,  to the extent such  reporting  is  required  by law,  to the  Internal
Revenue Service or applicable  state  authorities in the manner required by law.
Neither the Securities  Intermediary nor the Collateral Agent shall have any tax
reporting duties hereunder.

               Section 4.09. No Other  Agreements.  The Securities  Intermediary
has not entered into, and prior to the  termination of the Pledge will not enter
into, any agreement with any other Person relating to the Collateral  Account or
any financial  assets  credited  thereto,  including,  without  limitation,  any
agreement  to comply  with  entitlement  orders  of any  Person  other  than the
Collateral Agent.

               Section  4.10.  Powers  Coupled with an Interest.  The rights and
powers  granted in this Article 4 to the  Collateral  Agent have been granted in
order to perfect its security  interests in the Collateral  Account,  are powers
coupled with an interest and will be affected  neither by the  bankruptcy of the
Purchase  Contract Agent or any Holder nor by the lapse of time. The obligations
of the  Securities  Intermediary  under this Article 4 shall  continue in effect
until the termination of the Pledge.

               Section 4.11. Waiver of Lien;  Waiver of Set-off.  The Securities
Intermediary  waives any security interest,  lien or right to make deductions or
setoffs  that it may now have or  hereafter  acquire  in or with  respect to the
Collateral  Account,  any  financial  asset  credited  thereto  or any  security
entitlement in respect  thereof.  Neither the financial  assets  credited to the
Collateral  Account nor the  security  entitlements  in respect  thereof will be
subject to deduction, set-off, banker's lien, or any other right in favor of any
Person other than the Company.

                                       9
<PAGE>

                                   ARTICLE 5

  INITIAL DEPOSIT; CREATION OF TREASURY UNITS AND RECREATION OF CORPORATE UNITS

               Section  5.01.   Initial  Deposit  of  Notes.  (a)  Prior  to  or
concurrently  with the  execution and delivery of this  Agreement,  the Purchase
Contract Agent, on behalf of the initial Holders of the Corporate  Units,  shall
Transfer to the  Collateral  Agent,  for credit to the Collateral  Account,  the
Notes or security  entitlements  relating thereto,  and, in the case of security
entitlements,  the Securities  Intermediary  shall indicate by book-entry that a
securities  entitlement  to such  Notes  has  been  credited  to the  Collateral
Account.

               (a)  Unless any Event of Default  (as  defined in the  Indenture)
shall have occurred and be continuing,  the Collateral  Agent agrees to hold any
Notes or security  interests  relating  thereto,  constituting  a portion of the
Collateral   registered  in  the  name  of  the  Purchase   Contract  Agent,  as
attorney-in-fact  for the  Holders,  with  appropriate  endorsement  in the form
delivered  to it and shall not  re-register  such  Notes or  security  interests
relating  thereto  unless  an  Event  of  Default  shall  have  occurred  and be
continuing.

               Section 5.02. Creation of Treasury Units.

               (a) So long as the Treasury  Portfolio has not replaced the Notes
as a component of the Corporate  Units,  a Holder of Corporate  Units shall have
the  right,  at any time  prior to 5:00 p.m.  (New York City  time) on the fifth
Business Day immediately  preceding the Purchase  Contract  Settlement  Date, to
create  Treasury  Units by  substitution  of  Treasury  Securities  or  security
entitlements  with respect  thereto for the Pledged  Notes  comprising a part of
such Holder's  Corporate Units, in integral multiples of _______ Corporate Units
by:

                              (i)  Transferring  to the  Collateral  Agent,  for
               credit to the Collateral Account, Treasury Securities or security
               entitlements  with  respect  thereto  having a Value equal to the
               aggregate  principal  amount of the Pledged Notes to be released,
               accompanied by a notice,  substantially  in the form of Exhibit C
               to  the  Purchase  Contract  Agreement,  whereupon  the  Purchase
               Contract  Agent shall deliver to the  Collateral  Agent a notice,
               substantially  in the form of Exhibit A hereto,  (A) stating that
               such Holder has notified the  Purchase  Contract  Agent that such
               Holder  has   Transferred   Treasury   Securities   or   security
               entitlements  with respect  thereto to the  Collateral  Agent for
               credit to the  Collateral  Account,  (B) stating the Value of the
               Treasury Securities or security entitlements with respect thereto
               Transferred by such Holder and (C) requesting that the Collateral
               Agent  release  from the  Pledge  the  Pledged  Notes  that are a
               component of such Corporate Units; and

                              (ii) delivering the related Corporate Units to the
               Purchase Contract Agent.

               Upon  receipt  of such  notice  and  confirmation  that  Treasury
Securities or security  entitlements  with respect thereto have been credited to
the Collateral  Account as described in

                                       10
<PAGE>

such notice, the Collateral Agent shall instruct the Securities  Intermediary by
a notice,  substantially in the form of Exhibit B, to release such Pledged Notes
from the Pledge by Transfer to the Purchase  Contract Agent for  distribution to
such Holder, free and clear of the Pledge created hereby.

               If the Treasury  Portfolio  has replaced the Notes as a component
of the Corporate  Units and subject to the  conditions of the Purchase  Contract
Agreement,  a Holder  may,  at any time on or prior to the second  Business  Day
immediately preceding the Purchase Contract Settlement Date, substitute Treasury
Securities for the  Applicable  Ownerships  Interests in the Treasury  Portfolio
with respect to such Corporate Units,  but only in multiples of  ______Corporate
Units. In such an event, the Holder shall Transfer Treasury Securities having an
aggregate  principal  amount at maturity equal to the aggregate Stated Amount of
the Purchase Contracts  underlying such Corporate Units to the Collateral Agent,
and the Purchase  Contract Agent shall instruct the Collateral  Agent to release
the Pledge of, and transfer to the Holder, the appropriate  Applicable Ownership
Interests in the Treasury Portfolio in the manner set forth above.

               (b) Upon credit to the Collateral Account of Treasury  Securities
or security entitlements with respect thereto delivered by a Holder of Corporate
Units and receipt of the related  instruction  from the  Collateral  Agent,  the
Securities Intermediary shall release such Pledged Notes or Applicable Ownership
Interest  in the  Treasury  Portfolio,  as the case may be,  and shall  promptly
Transfer  the same to the  Purchase  Contract  Agent  for  distribution  to such
Holder, free and clear of the Pledge created hereby.

               Section 5.03. Recreation of Corporate Units.

               (a) So long as the Treasury  Portfolio has not replaced the Notes
as a component of the Corporate  Units, at any time prior to 5:00 p.m. (New York
City time) on the fifth Business Day immediately preceding the Purchase Contract
Settlement  Date,  a Holder of  Treasury  Units shall have the right to recreate
Corporate Units by substitution of Notes or security  entitlements  with respect
thereto for Pledged Treasury  Securities in integral  multiples of _____Treasury
Units by:

                              (i)  Transferring  to the  Collateral  Agent,  for
               credit to the Collateral Account,  Notes or security entitlements
               with respect thereto having a principal amount equal to the Value
               of the Pledged Treasury Securities to be released, accompanied by
               a notice,  substantially in the form of Exhibit C to the Purchase
               Contract  Agreement,  whereupon the Purchase Contract Agent shall
               deliver to the Collateral  Agent a notice,  substantially  in the
               form  of  Exhibit  C  hereto,   stating   that  such  Holder  has
               Transferred  the  Notes or  security  entitlements  with  respect
               thereto to the  Collateral  Account for credit to the  Collateral
               Account and requesting that the Collateral Agent release from the
               Pledge the Pledged Treasury  Securities  related to such Treasury
               Units; and

                              (ii) delivering the related  Treasury Units to the
               Purchase Contract Agent.

                                       11
<PAGE>

               Upon  receipt  of such  notice  and  confirmation  that  Notes or
security  entitlements with respect thereto have been credited to the Collateral
Account as described in such notice,  the  Collateral  Agent shall  instruct the
Securities  Intermediary  by a notice  substantially  in the form of  Exhibit  D
hereto to release such Pledged  Treasury  Securities from the Pledge by Transfer
to the Purchase  Contract Agent for distribution to such Holder,  free and clear
of the Pledge created hereby.

               If the Treasury  Portfolio has replaced the Notes  represented by
the  Corporate  Units,  a Holder  may,  at any  time on or  prior to the  second
Business Day  immediately  preceding  the  Purchase  Contract  Settlement  Date,
substitute the Applicable  Ownership Interests in the Treasury Portfolio for the
Pledged Treasury Securities,  but only in multiples of ______ Treasury Units. In
such an event,  the Holder shall Transfer to the Collateral Agent the Applicable
Ownership  Interests  in the  Treasury  Portfolio  in an  amount  such  that the
aggregate  principal  amount  at  maturity  of the  portion  of such  Applicable
Ownership  Interests  specified in clause (i) of the  definition of such term is
equal to the aggregate Stated Amount of the Purchase  Contracts  underlying such
Treasury  Units,  and the Purchase  Contract Agent shall instruct the Collateral
Agent to release  the Pledge of, and  transfer to the  Holder,  the  appropriate
Treasury Securities in the manner set forth above.

               (b) Upon  credit to the  Collateral  Account of Notes or security
entitlements  with respect  thereto  delivered by a Holder of Treasury Units and
receipt of the related  instruction  from the Collateral  Agent,  the Securities
Intermediary  shall  release  such Pledged  Treasury  Securities  or  Applicable
Ownership  Interests in the Treasury  Portfolio and shall promptly  Transfer the
same to the Purchase  Contract Agent for  distribution to such Holder,  free and
clear of the Pledge created hereby.

               Section 5.04. Termination Event.

               (a) Upon receipt by the  Collateral  Agent of written notice from
the  Company  or the  Purchase  Contract  Agent  that a  Termination  Event  has
occurred,  the Collateral Agent shall release all Collateral from the Pledge and
shall promptly Transfer:

                              (i) any  Pledged  Notes or  security  entitlements
               with respect thereto or Pledged Applicable Ownership Interests,

                              (ii) any Pledged Treasury Securities, and

                              (iii) any  payments by Holders  (or the  Permitted
               Investments of such payments) pursuant to Section 5.05 hereof,

to the Purchase  Contract Agent for the benefit of the Holders for  distribution
to such Holders, in accordance with their respective  interests,  free and clear
of the Pledge created hereby; provided, however, if any Holder shall be entitled
to receive  less than $1,000  with  respect to its  interest  in the  Applicable
Ownership  Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, the Purchase Contract Agent shall have the right (but
not the  obligation)  to dispose of such  interest  for cash and deliver to such
Holder  cash  in lieu of  delivering  the  Applicable  Ownership  Interests  (as
specified  in  clause  (i) of the  definition  of  such  term)  in the  Treasury
Portfolio.

                                       12
<PAGE>

               (b) If such  Termination  Event shall  result from the  Company's
becoming a debtor under the Bankruptcy  Code, and if the Collateral  Agent shall
for any reason fail  promptly  to  effectuate  the  release and  Transfer of all
Pledged  Notes,  Pledged  Applicable   Ownership  Interests,   Pledged  Treasury
Securities  and  payments  by  Holders  (or the  Permitted  Investments  of such
payments)  pursuant to Section 5.05 hereof and Proceeds of any of the foregoing,
as the case may be, as provided by this  Section  5.04,  the  Purchase  Contract
Agent shall:

                              (i) upon direction in writing by a majority of the
               Holders,  use its reasonable best efforts to obtain an opinion of
               a nationally  recognized  law firm  reasonably  acceptable to the
               Collateral  Agent  to  the  effect  that,   notwithstanding   the
               Company's  being  the  debtor  in  such a  bankruptcy  case,  the
               Collateral  Agent  will  not  be  prohibited  from  releasing  or
               Transferring the Collateral as provided in this Section 5.04, and
               shall  deliver  or  cause to be  delivered  such  opinion  to the
               Collateral  Agent  within ten days after the  occurrence  of such
               Termination  Event, and if (A) the Purchase  Contract Agent shall
               be  unable to  obtain  such  opinion  within  ten days  after the
               occurrence of such Termination  Event or (B) the Collateral Agent
               shall  continue,  after  delivery of such  opinion,  to refuse to
               effectuate the release and Transfer of all Pledged Notes, Pledged
               Applicable Ownership  Interests,  Pledged Treasury Securities and
               the  payments by Holders (or the  Permitted  Investments  of such
               payments)  pursuant to Section 5.05 hereof and Proceeds of any of
               the  foregoing,  as the case may be, as provided in this  Section
               5.04, then the Purchase Contract Agent shall within 15 days after
               the  occurrence of such  Termination  Event commence an action or
               proceeding in the court having jurisdiction of the Company's case
               under  the  Bankruptcy   Code  seeking  an  order  requiring  the
               Collateral  Agent to  effectuate  the release and transfer of all
               Pledged Notes, Pledged Applicable  Ownership  Interests,  Pledged
               Treasury Securities and the payments by Holders (or the Permitted
               Investments of such payments) pursuant to Section 5.05 hereof and
               Proceeds  of any of the  foregoing,  or as the  case  may be,  as
               provided by this Section 5.04; and

                              (ii)  commence an action or  proceeding  like that
               described in clause  5.04(b)(i)  hereof within ten days after the
               occurrence of such Termination Event.

; provided  that the Purchase  Contract  Agent shall have the right to refuse to
act under these  Sections  5.04(b)(i) and (ii) unless it shall be indemnified to
its satisfaction as provided herein.

               Section 5.05. Cash Settlement.

               (a) Upon receipt by the Collateral Agent of (1) a notice from the
Purchase  Contract  Agent  promptly  after the receipt by the Purchase  Contract
Agent of a notice from a Holder of Corporate Units that such Holder has elected,
in  accordance  with the  procedures  specified  in  Section  5.02(c)(i)  of the
Purchase Contract  Agreement to effect a Cash Settlement and (2) payment by such
Holder by deposit in the  Collateral  Account prior to 11:00 a.m. (New York City
time) on the fourth  Business Day  immediately  preceding the Purchase  Contract
Settlement  Date of the Purchase  Price in lawful money of the United  States of
America  by

                                       13
<PAGE>

certified or cashier's  check or wire transfer of  immediately  available  funds
payable to or upon the order of the Securities Intermediary, then the Collateral
Agent shall:

                              (i) instruct the Securities  Intermediary promptly
               to invest any such Cash in Permitted Investments;

                              (ii)  instruct  the  Securities   Intermediary  to
               release from the Pledge such Holder's related Pledged Notes as to
               which such Holder has effected a Cash Settlement pursuant to this
               Section 5.05(a); and

                              (iii)  instruct  the  Securities  Intermediary  to
               Transfer all such Pledged  Notes to the Purchase  Contract  Agent
               for  distribution to such Holder,  in each case free and clear of
               the Pledge created hereby.

               The Company shall instruct the Collateral  Agent in writing as to
the type of  Permitted  Investments  in which any such Cash  shall be  invested;
provided,   however,   that  if  the  Company  fails  to  deliver  such  written
instructions by 10:30 a.m. (New York City time) on the day such Cash is received
by the Collateral Agent or to be reinvested by the Securities Intermediary,  the
Collateral Agent shall instruct the Securities  Intermediary to invest such Cash
in the  Permitted  Investments  described  in clause  (6) of the  definition  of
Permitted  Investments.  In no event shall the  Collateral  Agent or  Securities
Intermediary  be  liable  for the  selection  of  Permitted  Investments  or for
investment  losses  incurred  thereon.   The  Collateral  Agent  and  Securities
Intermediary  shall have no liability in respect of losses  incurred as a result
of the failure of the Company to provide timely written investment direction.

               Upon receipt of the proceeds  upon the maturity of the  Permitted
Investments on the Purchase Contract Settlement Date, the Collateral Agent shall
(A) instruct the Securities Intermediary to pay the portion of such proceeds and
deliver any certified or cashier's checks received, in an aggregate amount equal
to the Purchase Price, to the Company on the Purchase Contract  Settlement Date,
and (B)  release any amounts in excess of the  Purchase  Price  earned from such
Permitted  Investments to the Purchase  Contract Agent for  distribution to such
Holder.

               (b) If a Holder  of  Corporate  Units  (i)  fails to  notify  the
Purchase  Contract Agent of its intention to make a Cash  Settlement as provided
in paragraph  5.02(c)(i) of the Purchase Contract  Agreement or (ii) does notify
the Purchase  Contract Agent of its intention to pay the Purchase Price in cash,
but fails to make such  payment as  required  by  paragraph  5.02(c)(ii)  of the
Purchase  Contract  Agreement,  such Holder shall be deemed to have consented to
the  disposition  of such Holder's  Pledged Notes in accordance  with  paragraph
5.02(c)(iii) of the Purchase Contract Agreement.

               (c) As soon as practicable  after 11:00 a.m. (New York City time)
on  the  fourth  Business  Day  immediately   preceding  the  Purchase  Contract
Settlement  Date,  the Collateral  Agent shall deliver to the Purchase  Contract
Agent a notice,  substantially in the form of Exhibit E hereto,  stating (i) the
amount of Cash that it has  received  with  respect  to the Cash  Settlement  of
Corporate  Units and (ii) the amount of Pledged  Notes to be  remarketed  in the
Final  Remarketing  pursuant to Section  5.02(c)(iii)  of the Purchase  Contract
Agreement.

                                       14
<PAGE>

               Section 5.06. Early Settlement and Cash Merger Early  Settlement.
Upon  receipt by the  Collateral  Agent of a notice from the  Purchase  Contract
Agent that a Holder of Units has elected to effect  either (a) Early  Settlement
of its obligations under the Purchase  Contracts forming a part of such Units in
accordance  with the terms of the  Purchase  Contracts  and Section  5.07 of the
Purchase  Contract  Agreement  or  (b)  Cash  Merger  Early  Settlement  of  its
obligations  under  the  Purchase  Contracts  forming  a part of such  Units  in
accordance  with the terms of the Purchase  Contracts and Section  5.04(b)(2) of
the Purchase Contract Agreement (which notice shall set forth the number of such
Purchase  Contracts  as to  which  such  Holder  has  elected  to  effect  Early
Settlement  or Cash Merger Early  Settlement),  and that the  Purchase  Contract
Agent has  received  from such  Holder,  and paid to the Company as confirmed in
writing by the Company,  the related Purchase Price pursuant to the terms of the
Purchase  Contracts and the Purchase Contract  Agreement and that all conditions
to such Early  Settlement or Cash Merger Early  Settlement,  as the case may be,
have been  satisfied,  then the Collateral  Agent shall release from the Pledge,
(i) Pledged Notes or the Pledged Applicable Ownership Interests in the case of a
Holder of Corporate Units or (ii) Pledged Treasury Securities,  in the case of a
Holder of Treasury  Units, in each case with a Value equal to the product of (x)
the Stated  Amount  times (y) the number of Purchase  Contracts as to which such
Holder has elected to effect Early  Settlement or Cash Merger Early  Settlement,
and shall  instruct  the  Securities  Intermediary  to Transfer all such Pledged
Applicable  Ownership Interests or Pledged Notes or Pledged Treasury Securities,
as the case may be, to the  Purchase  Contract  Agent for  distribution  to such
Holder,  in each case free and clear of the Pledge created  hereby.  A holder of
Treasury  Units may settle early only in integral  multiples of ______  Treasury
Units, and a Holder of Corporate  Units, if the Treasury  Portfolio has replaced
the Notes as a  component  of such  Corporate  Units,  may settle  early only in
integral multiples of ______ Corporate Units.

               Section 5.07.  Application  of Proceeds in Settlement of Purchase
Contracts.

               (a) If a Holder of Corporate Units (if the Treasury Portfolio has
not replaced the Notes as a component of such  Corporate  Units) has not elected
to make an effective Cash Settlement by notifying the Purchase Contract Agent in
the manner provided for in Section 5.02(c)(i) of the Purchase Contract Agreement
or does notify the Purchase  Contract Agent as provided in paragraph  5.02(c)(i)
of the Purchase Contract Agreement of its intention to pay the Purchase Price in
cash, but fails to make such payment as required by paragraph 5.02(c)(ii) of the
Purchase Contract Agreement,  such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under such Purchase  Contracts  from
the Proceeds of the Final  Remarketing  of the related  Pledged  Notes.  In such
event,  upon written  direction from the Purchase Contract Agent, the Collateral
Agent shall instruct the Securities Intermediary to Transfer the related Pledged
Notes to the  Remarketing  Agent  for Final  Remarketing.  Upon  receiving  such
Pledged Notes, the Remarketing  Agent,  pursuant to the terms of the Remarketing
Agreement,  will use its reasonable  efforts to remarket such Pledged Notes. The
Remarketing Agent will deposit the Proceeds of such Final Remarketing  (less, to
the extent permitted by the Remarketing  Agreement,  the Remarketing Fee) in the
Collateral  Account,  and the Collateral  Agent shall invest the Proceeds of the
Final  Remarketing  in  Permitted  Investments  set forth in  clause  (6) of the
definition of Permitted  Investments.  On the Purchase Contract Settlement Date,
the Purchase  Contract Agent shall consult with the Collateral  Agent  regarding
the instruction the Collateral  Agent shall give to the Securities  Intermediary
in order to apply a portion of the Proceeds from such Final Remarketing equal to
the aggregate  principal  amount of

                                       15
<PAGE>

such Pledged Notes, less the amount of any Deferred Contract Adjustment Payments
payable to such Holder on the Purchase  Contract  Settlement Date, to satisfy in
full such Holder's  obligations to pay the Purchase Price to purchase the shares
of Ordinary Shares under the related  Purchase  Contracts and the balance of the
Proceeds from the Final  Remarketing,  if any, that shall be  transferred to the
Purchase Contract Agent for distribution to such Holder.

               If the Remarketing  Agent advises the Collateral Agent in writing
that there has been a Failed Final  Remarketing,  the Collateral  Agent, for the
benefit of the Company shall, at the written direction of the Company,  exercise
the  Company's  rights as a secured  party with respect to the Pledged  Notes in
accordance  with  applicable  law or deliver the Pledged Notes to the Company to
retain to the extent  permitted by applicable  law.  Following such action,  the
Holder's obligations to pay the Purchase Price for the shares of Ordinary Shares
will be deemed to be satisfied in full.

               (b) In the case of a Treasury  Unit or a  Corporate  Unit (if the
Treasury  Portfolio  has  replaced  the Notes as a component  of such  Corporate
Unit),  promptly,  after  11:00 a.m.  (New York City time) on the  Business  Day
immediately prior to the Purchase Contract Settlement Date, the Collateral Agent
shall invest the Cash Proceeds of the maturing  Pledged  Treasury  Securities or
Pledged  Applicable  Ownership  Interests,  as the  case  may be,  in  Permitted
Investments set forth in clause (6) of the definition of Permitted  Investments,
unless prior to 10:30 a.m. (New York City time) on such date,  the Company shall
otherwise  instruct the Collateral  Agent in writing as to the type of Permitted
Investments in which any such Cash Proceeds shall be invested. In no event shall
the Collateral Agent be liable for the selection of Permitted Investments or for
investment losses incurred thereon. The Collateral Agent shall have no liability
in  respect of losses  incurred  as a result of the  failure  of the  Company to
provide timely written investment  direction.  Without receiving any instruction
from any such  Holder,  the  Collateral  Agent shall  apply the  Proceeds of the
related Pledged Treasury Securities or Pledged Applicable  Ownership  Interests,
as the case may be, to the settlement of such Purchase Contracts on the Purchase
Contract  Settlement Date. In the event the sum of the Proceeds from the related
Pledged Treasury Securities or Pledged Applicable  Ownership  Interests,  as the
case may be,  and the  investment  earnings  from the  investment  in  Permitted
Investments exceeds the aggregate Purchase Price of the Purchase Contracts being
settled thereby,  less the amount of any Deferred Contract  Adjustment  Payments
payable to such Holder on the Purchase Contract  Settlement Date, the Collateral
Agent shall instruct the Securities  Intermediary to transfer such excess,  when
received, to the Purchase Contract Agent for distribution to such Holder.

               (c) Prior to 5:00 p.m. (New York City time) on the fifth Business
Day immediately  preceding the applicable  Remarketing Date, but no earlier than
the Payment Date immediately  preceding such date, Holders of Separate Notes may
elect to have their Separate Notes remarketed  under the Remarketing  Agreement,
by  delivering  their  Separate  Notes  along  with a notice  of such  election,
substantially  in the form of Exhibit F hereto,  to the Custodial  Agent.  After
such time,  such  election  shall  become an  irrevocable  election to have such
Separate Notes remarketed in such Remarketing and, if such Remarketing fails, in
any subsequent Remarketing.  The Custodial Agent shall hold Separate Notes in an
account  separate from the  Collateral  Account in which the Pledged  Securities
shall be held.  Holders of Separate  Notes electing to have their Separate Notes
remarketed  will also have the right to withdraw that election by written notice
to the Custodial Agent,  substantially in the form of Exhibit G hereto,

                                       16
<PAGE>

prior to 5:00 p.m.  (New York City time) on the fifth  Business Day  immediately
preceding the applicable Remarketing Date, upon which notice the Custodial Agent
shall return such Separate Notes to such Holder.

               By  11:00  a.m.   (New  York  City  time)  on  the  Business  Day
immediately preceding the applicable Remarketing Date, the Custodial Agent shall
notify the Remarketing  Agent of the aggregate  principal amount of the Separate
Notes to be remarketed and deliver to the Remarketing  Agent for remarketing all
Separate Notes delivered to the Custodial Agent pursuant to this Section 5.07(c)
and not  validly  withdrawn  prior to such  date.  In the event of a  Successful
Remarketing,  after deducting the Remarketing Fee (to the extent permitted under
the terms of the Remarketing Agreement), the Remarketing Agent will remit to the
Custodial  Agent the remaining  portion of the proceeds of such  Remarketing for
payment to the Holders of the  remarketed  Separate  Notes,  in accordance  with
their  respective  interests.  In  the  event  of  a  Failed  Remarketing,   the
Remarketing  Agent will  promptly  return such  Separate  Notes to the Custodial
Agent,  and, in the event of a Failed Final  Remarketing,  the  Custodial  Agent
shall deliver such Separate Notes to the appropriate Holders.

               Section 5.08.  Special Event Redemption.  If the Collateral Agent
receives written notice that a Special Event Redemption has occurred while Notes
are still credited to the Collateral  Account,  the Collateral Agent shall apply
the  Redemption  Amount to purchase the Treasury  Portfolio,  and the Collateral
Agent shall credit the  Applicable  Ownership  Interests (as specified in clause
(i) of the definition of such term) in the Treasury  Portfolio to the Collateral
Account and shall transfer the Applicable  Ownership  Interests (as specified in
clause (ii)(y) of the definition of such term) in the Treasury  Portfolio to the
Purchase  Contract Agent for distribution to the Holders of the Corporate Units.
Upon credit to the Collateral Account of the Applicable  Ownership Interests (as
specified  in  clause  (i) of the  definition  of  such  term)  in the  Treasury
Portfolio having a Value equal to the aggregate  principal amount of the Pledged
Notes, the Collateral  Agent shall cause the Securities  Intermediary to release
the Pledged Notes from the Collateral  Account and shall  promptly  transfer the
Pledged Notes to the Company.

                                   ARTICLE 6

                          VOTING RIGHTS - PLEDGED NOTES

               Section 6.01. Voting Rights. Subject to the terms of Section 4.02
of the Purchase Contract Agreement, the Purchase Contract Agent may exercise, or
refrain  from  exercising,  any and  all  voting  and  other  consensual  rights
pertaining  to the  Pledged  Notes  or any  part  thereof  for any  purpose  not
inconsistent  with the terms of this Agreement and in accordance  with the terms
of the Purchase Contract Agreement;  provided,  that the Purchase Contract Agent
shall not exercise or shall not refrain from  exercising such right, as the case
may be, if, in the judgment of the Purchase  Contract  Agent,  such action would
impair or otherwise have a material adverse effect on the value of all or any of
the Pledged Notes; and provided, further, that the Purchase Contract Agent shall
give the Company and the  Collateral  Agent at least five  Business  Days' prior
written notice of the manner in which it intends to exercise, or its reasons for
refraining  from  exercising,  any such right.  Upon  receipt of any notices and
other  communications  in respect of any Pledged Notes,  including notice of any
meeting at which  holders of the Notes are entitled to vote or  solicitation  of
consents, waivers or proxies of holders

                                       17
<PAGE>

of the Notes, the Collateral Agent shall use reasonable efforts to send promptly
to the  Purchase  Contract  Agent such notice or  communication,  and as soon as
reasonably  practicable  after  receipt of a written  request  therefor from the
Purchase Contract Agent, execute and deliver to the Purchase Contract Agent such
proxies  and other  instruments  in respect of such  Pledged  Notes (in form and
substance  satisfactory to the Collateral  Agent) as are prepared by the Company
and delivered to the Purchase Contract Agent with respect to the Pledged Notes.

                                    ARTICLE 7

                               RIGHTS AND REMEDIES

               Section 7.01. Rights and Remedies of the Collateral Agent.

               (a) In addition to the rights and  remedies  specified in Section
5.07  hereof  or  otherwise  available  at law or in  equity,  after an event of
default (as specified in Section 7.01(b) below) hereunder,  the Collateral Agent
shall have all of the rights and remedies  with respect to the  Collateral  of a
secured  party  under  the  UCC  (whether  or not the  UCC is in  effect  in the
jurisdiction  where  the  rights  and  remedies  are  asserted)  and the  TRADES
Regulations and such additional  rights and remedies to which a secured party is
entitled  under the laws in  effect in any  jurisdiction  where any  rights  and
remedies  hereunder  may be asserted.  Without  limiting the  generality  of the
foregoing, such remedies may include, to the extent permitted by applicable law,
(1)  retention  of  the  Pledged  Notes,  Pledged  Treasury  Securities  or  the
applicable  Pledged  Applicable  Ownership  Interests or (2) sale of the Pledged
Notes,   Pledged  Treasury  Securities  or  the  applicable  Pledged  Applicable
Ownership  Interests  in one or  more  public  or  private  sales,  and in  each
instance, the Holders' obligations under the Purchase Contracts and the Purchase
Contract Agreement shall be deemed to have been satisfied in full.

               (b) Without  limiting any rights or powers  otherwise  granted by
this Agreement to the  Collateral  Agent,  in the event the Collateral  Agent is
unable to make  payments  to the  Company on account of the  applicable  Pledged
Applicable  Ownership  Interests,  or on account of  principal  payments  of any
Pledged Treasury  Securities as provided in Article 3 hereof, in satisfaction of
the  Obligations  of the  Holder of the Units of which such  applicable  Pledged
Applicable  Ownership  Interests  or  such  Pledged  Treasury   Securities,   as
applicable,  are a part under the related Purchase  Contracts,  the inability to
make such  payments  shall  constitute  an event of  default  hereunder  and the
Collateral  Agent shall have and may  exercise,  with  reference to such Pledged
Treasury Securities or Pledged Applicable  Ownership  Interests,  as applicable,
any and all of the rights and remedies  available  to a secured  party under the
UCC and the  TRADES  Regulations  after  default by a debtor,  and as  otherwise
granted herein or under any other law.

               (c) Without  limiting any rights or powers  otherwise  granted by
this  Agreement  to  the  Collateral  Agent,  the  Collateral  Agent  is  hereby
irrevocably  authorized to receive and collect all payments of (i) the principal
amount of the Pledged Notes,  (ii) the principal  amount of the Pledged Treasury
Securities and (iii) the principal  amount of the Pledged  Applicable  Ownership
Interests,  subject, in each case, to the provisions of Article 3 hereof, and as
otherwise granted herein.

                                       18
<PAGE>

               (d) The Purchase  Contract  Agent and each Holder of Units agrees
that, from time to time, upon the written request of the Collateral Agent or the
Purchase  Contract  Agent,  such Holder  shall  execute and deliver such further
documents  and do such  other  acts  and  things  as the  Collateral  Agent  may
reasonably  request in order to maintain  the  Pledge,  and the  perfection  and
priority  thereof,  and to confirm the rights of the Collateral Agent hereunder.
The Purchase  Contract Agent shall have no liability to any Holder for executing
any  documents  or  taking  any such  acts  requested  by the  Collateral  Agent
hereunder,  except for liability  for its own grossly  negligent  acts,  its own
grossly negligent failure to act or its own willful misconduct.

               Section 7.02. Special Event Redemption.  Upon the occurrence of a
Special  Event  Redemption  while  Notes are still  credited  to the  Collateral
Account, the Redemption Price shall be credited to the Collateral Account by the
Collateral Agent upon receipt thereof from the Indenture Trustee, on or prior to
12:30 p.m., New York City time on such Special Event Redemption Date, by federal
funds check or wire transfer of  immediately  available  funds.  The  Collateral
Agent is hereby  authorized  to present the Pledged  Notes for payment as may be
required by their  respective  terms.  Upon  receipt of such funds,  the Pledged
Notes shall be released from the Collateral Account. In the event such funds are
credited  to the  Collateral  Account,  the  Collateral  Agent,  at the  written
direction of the Company,  shall  instruct the  Securities  Intermediary  to (a)
apply an amount  equal to the  Redemption  Amount of such funds to purchase  the
Treasury Portfolio from the Quotation Agent for credit to the Collateral Account
and (b)  promptly  remit the  remaining  portion of such  funds,  if any, to the
Purchase  Contract  Agent for  payment to the  Holders of  Corporate  Units,  in
accordance with their respective interests.

               Section  7.03.  Initial  Remarketing.   Unless  a  Special  Event
Redemption  has occurred prior to the Initial  Remarketing  Date, the Collateral
Agent shall,  by 11:00 a.m., New York City time, on the Business Day immediately
preceding the Initial  Remarketing Date, without any instruction from any Holder
of Corporate Units,  present the related Pledged Notes to the Remarketing  Agent
for Initial Remarketing. In the event of a Failed Initial Remarketing, the Notes
presented to the Remarketing Agent pursuant to this Section 7.03 for Remarketing
shall be redeposited into the Collateral Account.

               Section  7.04.  Second   Remarketing.   Unless  a  Special  Event
Redemption  has  occurred  prior to the  Second  Remarketing  Date,  if a Failed
Initial Remarketing has occurred, the Collateral Agent shall, by 11:00 a.m., New
York City time, on the Business Day immediately preceding the Second Remarketing
Date,  without any instruction from any Holder of Corporate  Units,  present the
related Pledged Notes to the Remarketing  Agent for Second  Remarketing.  In the
event of a Failed Second  Remarketing,  the Notes  presented to the  Remarketing
Agent pursuant to this Section 7.04 for  Remarketing  shall be redeposited  into
the Collateral Account.

               Section  7.05.   Third   Remarketing.   Unless  a  Special  Event
Redemption has occurred prior to the Third  Remarketing Date, if a Failed Second
Remarketing  has occurred,  the Collateral  Agent shall, by 11:00 a.m., New York
City time, on the Business Day immediately preceding the Third Remarketing Date,
without any instruction from any Holder of Corporate Units,  present the related
Pledged Notes to the Remarketing Agent for Third Remarketing.  In the event of a
Failed Third Remarketing,  the Notes presented to the Remarketing Agent pursuant
to this Section 7.05 for  Remarketing  shall be redeposited  into the Collateral
Account.

                                       19
<PAGE>

               Section 7.06. Successful Remarketing. In the event the Collateral
Agent  receives  Proceeds of the Pledged Notes from any  Successful  Remarketing
prior to the Final  Remarketing Date (after deducting any Remarketing Fee to the
extent permitted under the terms of the Remarketing  Agreement),  the Collateral
Agent will,  at the written  direction of the Company,  apply an amount equal to
the Treasury  Portfolio  Purchase Price to purchase from the Quotation Agent the
Treasury  Portfolio and promptly remit the remaining portion of such Proceeds to
the Purchase  Contract Agent for payment to the Holders of Corporate  Units,  in
accordance with their respective interests.  With respect to Separate Notes, any
Proceeds of such Remarketing  (after deducting any Remarketing Fee to the extent
permitted  under the terms of the  Remarketing  Agreement)  attributable  to the
Separate  Notes  will be  remitted  to the  Custodial  Agent for  payment to the
holders of Separate  Notes.  The  Collateral  Agent shall  Transfer the Treasury
Portfolio  to the  Collateral  Account  and  the  Pledged  Applicable  Ownership
Interests  will  secure the  obligation  of all  Holders of  Corporate  Units to
purchase Common Stock of the Company under the Purchase Contracts constituting a
part of such Corporate Units, in substitution for the Pledged Notes, which shall
be released from the Collateral Account.

               Section 7.07.  Substitutions.  Whenever a Holder has the right to
substitute Treasury Securities,  Notes or security  entitlements for any of them
or the appropriate  Applicable  Ownership Interests (as defined in clause (i) of
the definition of such term) in the Treasury Portfolio,  as the case may be, for
financial assets held in the Collateral  Account,  such  substitution  shall not
constitute a novation of the security interest created hereby.

                                   ARTICLE 8

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

               Section 8.01.  Representations  and Warranties.  Each Holder from
time to time, acting through the Purchase Contract Agent as attorney-in-fact (it
being  understood  that the Purchase  Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder),  hereby represents
and warrants to the Collateral Agent (with respect to such Holder's  interest in
the Collateral),  which  representations and warranties shall be deemed repeated
on each day a Holder Transfers Collateral, that:

               (a) such Holder has the power to grant a security interest in and
lien on the Collateral;

               (b) such Holder is the sole  beneficial  owner of the  Collateral
and, in the case of Collateral delivered in physical form, is the sole holder of
such  Collateral  and is the  sole  beneficial  owner  of,  or has the  right to
Transfer,  the Collateral it Transfers to the Collateral Agent for credit to the
Collateral Account, free and clear of any security interest,  lien, encumbrance,
call,  liability  to pay  money or other  restriction  other  than the  security
interest and lien granted under Article 2 hereof;

               (c) upon the Transfer of the Collateral to the  Collateral  Agent
for credit to the Collateral  Account,  the Collateral Agent, for the benefit of
the Company,  will have a valid and perfected first priority  security  interest
therein  (assuming  that  any  central  clearing  operation  or  any  securities
intermediary  or other  entity not within the control of the Holder  involved in
the

                                       20
<PAGE>

Transfer of the  Collateral,  including the Collateral  Agent and the Securities
Intermediary,  gives the notices and takes the action  required of it  hereunder
and under  applicable  law for  perfection  of that  interest  and  assuming the
establishment and exercise of control pursuant to Article 4 hereof); and

               (d)  the  execution  and   performance   by  the  Holder  of  its
obligations under this Agreement will not result in the creation of any security
interest,  lien or other  encumbrance on the Collateral  other than the security
interest and lien granted under Article 2 hereof or violate any provision of any
existing law or regulation applicable to it or of any mortgage,  charge, pledge,
indenture, contract or undertaking to which it is a party or which is binding on
it or any of its assets.

               Section 8.02.  Covenants.  The Holders from time to time,  acting
through  the  Purchase  Contract  Agent  as  their  attorney-in-fact  (it  being
understood that the Purchase Contract Agent shall not be liable for any covenant
made by or on behalf of a Holder),  hereby covenant to the Collateral Agent that
for so long as the Collateral remains subject to the Pledge:

               (a) neither the  Purchase  Contract  Agent nor such  Holders will
create or purport  to create or allow to subsist  any  mortgage,  charge,  lien,
pledge or any other security interest whatsoever over the Collateral or any part
of it other than pursuant to this Agreement; and

               (b) neither the  Purchase  Contract  Agent nor such  Holders will
sell or otherwise  dispose (or attempt to dispose) of the Collateral or any part
of it  except  for  the  beneficial  interest  therein,  subject  to the  Pledge
hereunder, transferred in connection with the Transfer of the Units.

                                   ARTICLE 9

          THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES

                                  INTERMEDIARY

               It is hereby agreed as follows:

               Section 9.01. Appointment,  Powers and Immunities. The Collateral
Agent, the Custodial Agent or Securities Intermediary shall act as agent for the
Company hereunder with such powers as are specifically  vested in the Collateral
Agent,  the Custodial Agent or Securities  Intermediary,  as the case may be, by
the terms of this  Agreement.  The  Collateral  Agent,  the Custodial  Agent and
Securities Intermediary shall:

               (a) have no duties or responsibilities except those expressly set
forth  in this  Agreement  and no  implied  covenants  or  obligations  shall be
inferred from this Agreement  against the Collateral  Agent, the Custodial Agent
and Securities Intermediary, nor shall the Collateral Agent, the Custodial Agent
and Securities  Intermediary  be bound by the provisions of any agreement by any
party hereto beyond the specific terms hereof;

                                       21
<PAGE>

               (b)  not be  responsible  for  any  recitals  contained  in  this
Agreement,  or in any certificate or other document  referred to or provided for
in, or received by it under, this Agreement,  the Units or the Purchase Contract
Agreement,   or   for   the   value,   validity,   effectiveness,   genuineness,
enforceability  or  sufficiency  of this  Agreement  (other  than as against the
Collateral  Agent, the Custodial Agent or Securities  Intermediary,  as the case
may be), the Units,  any  Collateral or the Purchase  Contract  Agreement or any
other document  referred to or provided for herein or therein or for any failure
by the Company or any other Person (except the Collateral  Agent,  the Custodial
Agent or  Securities  Intermediary,  as the case may be) to  perform  any of its
obligations  hereunder or thereunder or for the perfection,  priority or, except
as expressly  required  hereby,  maintenance  of any security  interest  created
hereunder;

               (c) not be required to  initiate  or conduct  any  litigation  or
collection  proceedings hereunder (except pursuant to directions furnished under
Section 9.02 hereof, subject to Section 9.08 hereof);

               (d) not be  responsible  for any  action  taken or  omitted to be
taken by it hereunder or under any other  document or instrument  referred to or
provided for herein or in connection  herewith or therewith,  except for its own
gross negligence, bad faith or willful misconduct; and

               (e)  not be  required  to  advise  any  party  as to  selling  or
retaining,  or taking or refraining  from taking any action with respect to, any
securities or other property deposited hereunder.

               Subject to the foregoing,  during the term of this Agreement, the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall take
all  reasonable  action in connection  with the  safekeeping  of the  Collateral
hereunder.

               No  provision  of this  Agreement  shall  require the  Collateral
Agent,  Custodial  Agent or  Securities  Intermediary  to expend or risk its own
funds or otherwise  incur any financial  liability in the  performance of any of
its duties hereunder. In no event shall the Collateral Agent, Custodial Agent or
Securities  Intermediary  be liable for any amount in excess of the Value of the
Collateral.

               Section 9.02. Instructions of the Company. The Company shall have
the right,  by one or more written  instruments  executed  and  delivered to the
Collateral  Agent,  to direct  the time,  method  and  place of  conducting  any
proceeding  for  the  realization  of  any  right  or  remedy  available  to the
Collateral  Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or  refraining  from taking of any action  authorized by
this Agreement;  provided,  however,  that (a) such direction shall not conflict
with the  provisions of any law or of this  Agreement or involve the  Collateral
Agent in personal liability and (b) the Collateral Agent shall be indemnified to
its  satisfaction  as provided  herein.  Nothing  contained in this Section 9.02
shall impair the right of the  Collateral  Agent in its  discretion  to take any
action  or omit to take  any  action  which  it deems  proper  and  which is not
inconsistent with such direction.

               Section  9.03.   Reliance  by  Collateral  Agent  and  Securities
Intermediary.  Each of the Securities Intermediary,  the Custodial Agent and the
Collateral Agent shall be entitled to rely

                                       22
<PAGE>

conclusively upon any certification,  order, judgment,  opinion, notice or other
written communication (including,  without limitation,  any thereof by e-mail or
similar electronic means,  telecopy,  telex or facsimile) reasonably believed by
it to be genuine  and correct and to have been signed or sent by or on behalf of
the  proper  Person  or  Persons   (without  being  required  to  determine  the
correctness of any fact stated therein) and consult with and  conclusively  rely
upon advice, opinions and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities Intermediary,  as
the case may be. As to any matters not expressly provided for by this Agreement,
the Collateral Agent, the Custodial Agent and the Securities  Intermediary shall
in all  cases be fully  protected  in  acting,  or in  refraining  from  acting,
hereunder in  accordance  with  instructions  given by the Company in accordance
with this Agreement.

               Section 9.04.  Certain Rights. (a) Whenever in the administration
of the provisions of this Agreement the Collateral Agent, the Custodial Agent or
the Securities  Intermediary  shall deem it necessary or desirable that a matter
be proved or  established  prior to taking or  suffering  any action to be taken
hereunder,  such matter  (unless  other  evidence  in respect  thereof be herein
specifically  prescribed) may, in the absence of gross negligence,  bad faith or
willful  misconduct on the part of the Collateral  Agent, the Custodial Agent or
the Securities Intermediary, be deemed to be conclusively proved and established
by a certificate signed by one of the Company's  officers,  and delivered to the
Collateral  Agent,  the Custodial Agent or the Securities  Intermediary and such
certificate, in the absence of gross negligence, bad faith or willful misconduct
on the part of the  Collateral  Agent,  the  Custodial  Agent or the  Securities
Intermediary, shall be full warrant to the Collateral Agent, the Custodial Agent
or the Securities  Intermediary for any action taken,  suffered or omitted by it
under the provisions of this Agreement upon the faith thereof.

               (a) The Collateral  Agent,  the Custodial Agent or the Securities
Intermediary  shall  not be bound to make any  investigation  into the  facts or
matters stated in any resolution,  certificate,  statement, instrument, opinion,
report, notice, request, consent,  entitlement order, approval or other paper or
document.

               Section 9.05. Merger, Conversion,  Consolidation or Succession to
Business.  Any corporation into which the Collateral  Agent, the Custodial Agent
or the Securities  Intermediary  may be merged or converted or with which it may
be  consolidated,  or any corporation  resulting from any merger,  conversion or
consolidation  to  which  the  Collateral  Agent,  the  Custodial  Agent  or the
Securities  Intermediary shall be a party, or any corporation  succeeding to the
business  of the  Collateral  Agent,  the  Custodial  Agent  or  the  Securities
Intermediary shall be the successor of the Collateral Agent, the Custodial Agent
or the Securities  Intermediary hereunder without the execution or filing of any
paper with any party hereto or any further act on the part of any of the parties
hereto  except where an  instrument of transfer or assignment is required by law
to effect such succession, anything herein to the contrary notwithstanding.

               Section 9.06. Rights in Other  Capacities.  The Collateral Agent,
the Custodial  Agent and the Securities  Intermediary  and their  affiliates may
(without  having to account  therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Company, the Purchase

                                       23
<PAGE>

Contract Agent, any other Person  interested herein and any Holder of Units (and
any of their  respective  subsidiaries or affiliates) as if they were not acting
as the Collateral Agent, the Custodial Agent or the Securities Intermediary,  as
the case may be, and the Collateral  Agent,  the Custodial Agent, the Securities
Intermediary and their affiliates may accept fees and other  consideration  from
the Company,  the Purchase Contract Agent and any Holder of Units without having
to account for the same to the  Company;  provided  that each of the  Securities
Intermediary,  the Custodial Agent and the Collateral Agent covenants and agrees
with the Company that it shall not accept, receive or permit there to be created
in favor of itself and shall take no  affirmative  action to permit  there to be
created  in favor of any other  Person,  any  security  interest,  lien or other
encumbrance of any kind in or upon the Collateral other than the lien created by
the Pledge.

               Section 9.07. Non-Reliance on the Collateral Agent, the Custodial
Agent and the Securities Intermediary.  None of the Securities Intermediary, the
Custodial  Agent or the  Collateral  Agent  shall  be  required  to keep  itself
informed as to the  performance or observance by the Purchase  Contract Agent or
any Holder of Units of this  Agreement,  the Purchase  Contract  Agreement,  the
Units or any other document  referred to or provided for herein or therein or to
inspect the properties or books of the Purchase  Contract Agent or any Holder of
Units.  None of the  Collateral  Agent,  the Custodial  Agent or the  Securities
Intermediary  shall have any duty or  responsibility to provide the Company with
any credit or other information  concerning the affairs,  financial condition or
business of the Purchase  Contract Agent or any Holder of Units (or any of their
respective  affiliates)  that may come  into the  possession  of the  Collateral
Agent,  the  Custodial  Agent  or the  Securities  Intermediary  or any of their
respective affiliates.

               Section 9.08. Compensation and Indemnity. The Company agrees to:

               (a)  pay  the  Collateral  Agent,  the  Custodial  Agent  and the
Securities  Intermediary  from time to time such compensation as shall be agreed
in writing between the Company and the Collateral  Agent, the Custodial Agent or
the Securities  Intermediary,  as the case may be, for all services  rendered by
them hereunder;

               (b) indemnify, defend and hold harmless the Collateral Agent, the
Custodial  Agent,  the  Securities  Intermediary  and each of  their  respective
directors,  officers,  agents and employees  (collectively,  the "INDEMNITEES"),
harmless  from and  against any and all claims,  liabilities,  losses,  damages,
fines,  penalties  and  expenses  (including  reasonable  fees and  expenses  of
counsel) (collectively, "Losses" and individually, a "LOSS") that may be imposed
on, reasonably incurred by, or asserted against,  the Indemnitees or any of them
for  following  any  instructions  or other  directions  upon  which  any of the
Indemnitees  is  entitled  to rely  pursuant  to the  terms  of this  Agreement,
provided that such  Indemnitee has not acted with gross  negligence or bad faith
or engaged in willful misconduct with respect to the specific Loss against which
indemnification is sought; and

               (c)  in  addition  to and  not in  limitation  of  paragraph  (b)
immediately above,  indemnify and hold the Indemnitees and each of them harmless
from and  against  any and all Losses  that may be imposed  on,  incurred  by or
asserted  against,  the Indemnitees or any of them in connection with or arising
out  of  the  Collateral  Agent's,  the  Custodial  Agent's  or  the  Securities
Intermediary's  acceptance,  performance  or exercise of its rights,  powers and
duties under this

                                       24
<PAGE>

Agreement,  provided the Collateral Agent, the Custodial Agent or the Securities
Intermediary  has not acted  with  gross  negligence  or bad faith or engaged in
willful   misconduct   with   respect  to  the  specific   Loss  against   which
indemnification is sought.

               The  provisions  of this Section and Section  11.07 shall survive
the  resignation  or  removal  of  the  Collateral  Agent,  Custodial  Agent  or
Securities Intermediary and the termination of this Agreement.

               Section  9.09.  Failure to Act. In the event of any  ambiguity in
the provisions of this Agreement or any dispute between or conflicting claims by
or among the parties  hereto or any other  Person  with  respect to any funds or
property deposited  hereunder,  then at its sole option,  each of the Collateral
Agent,  the Custodial Agent and the Securities  Intermediary  shall be entitled,
after prompt notice to the Company and the Purchase Contract Agent, to refuse to
comply with any and all claims,  demands or  instructions  with  respect to such
property or funds so long as such dispute or conflict  shall  continue,  and the
Collateral Agent, the Custodial Agent and the Securities  Intermediary shall not
be or become  liable in any way to any of the parties  hereto for its failure or
refusal to comply with such conflicting  claims,  demands or  instructions.  The
Collateral Agent, the Custodial Agent and the Securities  Intermediary  shall be
entitled to refuse to act until either:

               (a) such conflicting or adverse claims or demands shall have been
finally determined by a court of competent  jurisdiction or settled by agreement
between the  conflicting  parties as evidenced in a writing  satisfactory to the
Collateral Agent, the Custodial Agent or the Securities Intermediary; or (b) the
Collateral Agent, the Custodial Agent or the Securities  Intermediary shall have
received  security or an  indemnity  satisfactory  to it  sufficient  to save it
harmless   from  and  against  any  and  all  loss,   liability  or   reasonable
out-of-pocket  expense which it may incur by reason of its acting at the expense
of the Company.

               The  Collateral  Agent,  the Custodial  Agent and the  Securities
Intermediary  may in addition elect to commence an  interpleader  action or seek
other judicial relief or orders as the Collateral  Agent, the Custodial Agent or
the  Securities  Intermediary  may  deem  necessary.   Notwithstanding  anything
contained  herein to the contrary,  none of the Collateral  Agent, the Custodial
Agent or the Securities  Intermediary  shall be required to take any action that
is in its opinion  contrary to law or to the terms of this  Agreement,  or which
would in its opinion  subject it or any of its officers,  employees or directors
to liability.

               Section 9.10.  Resignation of the Collateral Agent, the Custodial
Agent and the Securities Intermediary.

               (a)  Subject to the  appointment  and  acceptance  of a successor
Collateral Agent, Custodial Agent or Securities Intermediary as provided below:

                              (i) the Collateral  Agent, the Custodial Agent and
               the  Securities  Intermediary  may  resign  at any time by giving
               notice thereof to the Company and the Purchase  Contract Agent as
               attorney-in-fact for the Holders of Units;

                                       25
<PAGE>

                              (ii) the Collateral Agent, the Custodial Agent and
               the  Securities  Intermediary  may be  removed at any time by the
               Company; and

                              (iii) if the Collateral Agent, the Custodial Agent
               or  the  Securities  Intermediary  fails  to  perform  any of its
               material  obligations  hereunder  in any  material  respect for a
               period of not less than 20 days after receiving written notice of
               such  failure by the  Purchase  Contract  Agent and such  failure
               shall be continuing,  the Collateral  Agent,  the Custodial Agent
               and the  Securities  Intermediary  may be removed by the Purchase
               Contract  Agent,  acting at the  direction  of the  Holders  of a
               majority of the Units.

The Purchase  Contract Agent shall promptly notify the Company of any removal of
the  Collateral  Agent,  the  Custodial  Agent  or the  Securities  Intermediary
pursuant to clause (iii) of this Section  9.10(a).  Upon any such resignation or
removal,  the  Company  shall have the right to appoint a  successor  Collateral
Agent,  Custodial  Agent or Securities  Intermediary,  as the case may be, which
shall not be an  Affiliate  of the  Purchase  Contract  Agent.  If no  successor
Collateral Agent, Custodial Agent or Securities  Intermediary shall have been so
appointed  and shall have  accepted  such  appointment  within 30 days after the
retiring  Collateral  Agent's,  Custodial  Agent's or Securities  Intermediary's
giving  of notice of  resignation  or the  Company's  or the  Purchase  Contract
Agent's giving notice of such removal,  then the retiring or removed  Collateral
Agent,  Custodial  Agent or  Securities  Intermediary  may petition any court of
competent jurisdiction,  at the expense of the Company, for the appointment of a
successor  Collateral  Agent,  Custodial Agent or Securities  Intermediary.  The
Collateral Agent, the Custodial Agent and the Securities Intermediary shall each
be a bank or a national  banking  association  which has an office (or an agency
office)  in New York  City  with a  combined  capital  and  surplus  of at least
$50,000,000.  Upon  the  acceptance  of any  appointment  as  Collateral  Agent,
Custodial Agent or Securities  Intermediary  hereunder by a successor Collateral
Agent,  Custodial  Agent or  Securities  Intermediary,  as the case may be, such
successor Collateral Agent, Custodial Agent or Securities  Intermediary,  as the
case may be, shall  thereupon  succeed to and become vested with all the rights,
powers,  privileges and duties of the retiring Collateral Agent, Custodial Agent
or  Securities  Intermediary,  as the case may be, and the  retiring  Collateral
Agent,  Custodial  Agent or Securities  Intermediary,  as the case may be, shall
take all  appropriate  action,  subject to payment of any  amounts  then due and
payable to it hereunder, to transfer any money and property held by it hereunder
(including the Collateral) to such  successor.  The retiring  Collateral  Agent,
Custodial  Agent or Securities  Intermediary  shall,  upon such  succession,  be
discharged from its duties and obligations as Collateral Agent,  Custodial Agent
or Securities  Intermediary  hereunder.  After any retiring  Collateral Agent's,
Custodial  Agent's  or  Securities   Intermediary's   resignation  hereunder  as
Collateral Agent, Custodial Agent or Securities Intermediary,  the provisions of
this  Article 9 shall  continue  in effect  for its  benefit  in  respect of any
actions taken or omitted to be taken by it while it was acting as the Collateral
Agent, Custodial Agent or Securities Intermediary. Any resignation or removal of
the Collateral Agent, Custodial Agent or Securities Intermediary hereunder, at a
time when such  Person is acting as the  Collateral  Agent,  Custodial  Agent or
Securities  Intermediary,  shall be deemed for all purposes of this Agreement as
the  simultaneous  resignation  or removal of the Collateral  Agent,  Securities
Intermediary or Custodial Agent, as the case may be.

                                       26
<PAGE>

               (b) Since _______ is serving as the  Collateral  Agent  hereunder
and the Purchase  Contract Agent under the Purchase  Contract  Agreement,  if an
event of  default  (other  than an event of default  occurring  as a result of a
Failed  Final  Remarketing)  occurs  hereunder  or under the  Purchase  Contract
Agreement,  _______ will resign as the Collateral  Agent, but continue to act as
the Purchase  Contract Agent. A successor  Collateral Agent will be appointed in
accordance with the terms hereof.

               Section 9.11.  Right to Appoint Agent or Advisor.  The Collateral
Agent shall have the right to appoint agents or advisors in connection  with any
of its duties  hereunder,  and the Collateral  Agent shall not be liable for any
action  taken or omitted by, or in  reliance  upon the advice of, such agents or
advisors  selected in good faith.  The  appointment  of agents  pursuant to this
Section 9.11 shall be subject to prior  written  consent of the  Company,  which
consent shall not be unreasonably withheld.

               Section 9.12.  Survival.  The  provisions of this Article 9 shall
survive  termination  of this  Agreement and the  resignation  or removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary.

               Section 9.13.  Exculpation.  Anything contained in this Agreement
to the contrary  notwithstanding,  in no event shall the Collateral  Agent,  the
Custodial Agent or the Securities  Intermediary  or their  officers,  directors,
employees or agents be liable  under this  Agreement to the Company or any third
party for indirect,  special,  punitive,  or consequential loss or damage of any
kind whatsoever, including, but not limited to, lost profits, whether or not the
likelihood  of such  loss or  damage  was  known to the  Collateral  Agent,  the
Custodial Agent or the Securities Intermediary, or any of them and regardless of
the form of action.

                                   ARTICLE 10

                                    AMENDMENT

               Section 10.01. Amendment Without Consent of Holders.  Without the
consent of any Holders, the Company, when authorized by a Board Resolution,  the
Collateral  Agent,  the Custodial  Agent,  the Securities  Intermediary  and the
Purchase  Contract  Agent,  at any time and from time to time,  may  amend  this
Agreement,  in form  satisfactory  to the Company,  the  Collateral  Agent,  the
Custodial  Agent, the Securities  Intermediary and the Purchase  Contract Agent,
to:

               (a) evidence the  succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company;

               (b)  evidence  and  provide  for the  acceptance  of  appointment
hereunder  by  a  successor  Collateral  Agent,   Custodial  Agent,   Securities
Intermediary or Purchase Contract Agent;

               (c) add to the  covenants  of the  Company for the benefit of the
Holders,  or  surrender  any right or power herein  conferred  upon the Company,
provided  that such  covenants  or such  surrender do not  adversely  affect the
validity, perfection or priority of the Pledge created hereunder; or

                                       27
<PAGE>

               (d) cure any ambiguity (or formal defect),  correct or supplement
any provisions  herein which may be inconsistent  with any other such provisions
herein,  or make any other  provisions with respect to such matters or questions
arising  under this  Agreement,  provided  that such action shall not  adversely
affect the interests of the Holders in any material respect.

               Section  10.02.  Amendment  with  Consent  of  Holders.  With the
consent of the Holders of not less than a majority of the Purchase  Contracts at
the time outstanding,  including  without  limitation the consent of the Holders
obtained  in  connection  with a tender  or an  exchange  offer,  by Act of such
Holders  delivered to the Company,  the Purchase  Contract Agent,  the Custodial
Agent, the Securities Intermediary and the Collateral Agent, as the case may be,
the Company,  when duly authorized by a Board Resolution,  the Purchase Contract
Agent,  the Collateral  Agent,  the Securities  Intermediary  and the Collateral
Agent may amend this  Agreement  for the purpose of  modifying in any manner the
provisions  of this  Agreement  or the  rights of the  Holders in respect of the
Units; provided, however, that no such supplemental agreement shall, without the
unanimous  consent of the Holders of each  Outstanding  Unit adversely  affected
thereby in any material respect:

               (a)  change the amount or type of  Collateral  underlying  a Unit
(except for the rights of holders of Corporate  Units to substitute the Treasury
Securities for the Pledged Notes or the Pledged Applicable  Ownership Interests,
as the case may be, or the  rights of Holders of  Treasury  Units to  substitute
Notes or the Applicable  Ownership  Interests (as specified in clause (i) of the
definition  of such term) in the  Treasury  Portfolio,  as  applicable,  for the
Pledged Treasury Securities),  unless such change is not adverse to the Holders,
impair  the right of the  Holder  of any Unit to  receive  distributions  on the
underlying Collateral or otherwise adversely affect the Holder's rights in or to
such Collateral; or

               (b) otherwise effect any action that would require the consent of
the Holder of each  Outstanding  Unit affected  thereby pursuant to the Purchase
Contract  Agreement if such action were effected by a modification  or amendment
of the provisions of the Purchase Contract Agreement; or

               (c) reduce the  percentage  of Purchase  Contracts the consent of
whose Holders is required for the modification or amendment of the provisions of
this Agreement;

provided  that if any  amendment or proposal  referred to above would  adversely
affect  only the  Corporate  Units or only the  Treasury  Units,  then  only the
affected class of Holders as of the record date for the Holders entitled to vote
thereon  will be  entitled  to vote on such  amendment  or  proposal,  and  such
amendment or proposal shall not be effective  except with the consent of Holders
of not less than a majority of such class; provided, further, that the unanimous
consent  of the  Holders of each  outstanding  Purchase  Contract  of such class
affected  thereby  shall be  required  to  approve  any  amendment  or  proposal
specified in clauses (a) through (c) above.

               It shall  not be  necessary  for any Act of  Holders  under  this
Section to approve the particular form of any proposed  amendment,  but it shall
be sufficient if such Act shall approve the substance thereof.

                                       28
<PAGE>

               Section  10.03.   Execution  of  Amendments.   In  executing  any
amendment permitted by this Article,  the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Purchase Contract Agent shall be entitled to
receive and  (subject to Section 7.01 of the Purchase  Contract  Agreement  with
respect to the Purchase  Contract Agent) shall be fully authorized and protected
in  relying  upon,  an Opinion of Counsel  stating  that the  execution  of such
amendment is authorized or permitted by this  Agreement and that all  conditions
precedent,  if any, to the  execution and delivery of such  amendment  have been
satisfied.  The Collateral Agent, Custodial Agent,  Securities  Intermediary and
Purchase  Contract Agent may, but shall not be obligated to, enter into any such
amendment which affects their own respective rights,  duties or immunities under
this Agreement or otherwise.

               Section 10.04.  Effect of  Amendments.  Upon the execution of any
amendment  under this Article,  this  Agreement  shall be modified in accordance
therewith,  and  such  amendment  shall  form a part of this  Agreement  for all
purposes;   and  every  Holder  of   Certificates   theretofore   or  thereafter
authenticated,  executed  on  behalf  of the  Holders  and  delivered  under the
Purchase Contract Agreement shall be bound thereby.

               Section   10.05.    Reference   of    Amendments.    Certificates
authenticated,  executed  on  behalf  of the  Holders  and  delivered  after the
execution of any  amendment  pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase  Contract Agent, bear a notation in form
approved  by the  Purchase  Contract  Agent and the  Collateral  Agent as to any
matter  provided for in such amendment.  If the Company shall so determine,  new
Certificates so modified as to conform,  in the opinion of the Collateral Agent,
the  Purchase  Contract  Agent and the  Company,  to any such  amendment  may be
prepared  and executed by the Company and  authenticated,  executed on behalf of
the Holders and delivered by the Purchase  Contract Agent in accordance with the
Purchase   Contract   Agreement  in  exchange  for   Certificates   representing
Outstanding Units.

                                   ARTICLE 11

                                  MISCELLANEOUS

               Section 11.01. No Waiver.  No failure on the part of the Company,
the Collateral Agent, the Custodial Agent, the Securities Intermediary or any of
their respective  agents to exercise,  and no course of dealing with respect to,
and no delay in exercising,  any right,  power or remedy hereunder shall operate
as a waiver  thereof;  nor shall any single or partial  exercise by the Company,
the Collateral Agent, the Custodial Agent, the Securities Intermediary or any of
their respective  agents of any right,  power or remedy  hereunder  preclude any
other or further exercise  thereof or the exercise of any other right,  power or
remedy. The remedies herein are cumulative and are not exclusive of any remedies
provided by law.

               Section 11.02.  Governing Law;  Submission to Jurisdiction.  THIS
AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,  THE LAWS OF
THE STATE OF NEW YORK,  WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS
THEREOF.  The Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Holders from time to time of the Units,  acting through the
Purchase  Contract  Agent  as  their  attorney-in-fact,  hereby  submit  to  the
nonexclusive  jurisdiction

                                       29
<PAGE>

of the United States District Court for the Southern District of New York and of
any New York state court  sitting in New York City for the purposes of all legal
proceedings  arising out of or relating to this  Agreement  or the  transactions
contemplated hereby. The Company, the Collateral Agent, the Custodial Agent, the
Securities  Intermediary and the Holders from time to time of the Units,  acting
through  the  Purchase  Contract  Agent as their  attorney-in-fact,  irrevocably
waive,  to the fullest extent  permitted by applicable  law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.

               Section 11.03. Notices. All notices, requests, consents and other
communications   provided  for  herein  (including,   without  limitation,   any
modifications  of, or waivers or consents under,  this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended  recipient at the "Address For Notices" specified below its name on the
signature  pages hereof or, as to any party,  at such other  address as shall be
designated by such party in a notice to the other  parties.  Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when  transmitted  by telecopier  or personally  delivered or, in the
case of a mailed  notice,  upon  receipt,  in each case  given or  addressed  as
aforesaid.

               Section 11.04.  Successors and Assigns.  This Agreement  shall be
binding upon and inure to the benefit of the  respective  successors and assigns
of the Company,  the  Collateral  Agent,  the Custodial  Agent,  the  Securities
Intermediary and the Purchase  Contract Agent, and the Holders from time to time
of the Units, by their acceptance of the same, shall be deemed to have agreed to
be bound by the  provisions  hereof and to have ratified the  agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.

               Section  11.05.  Counterparts.  This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.

               Section 11.06.  Severability.  If any provision hereof is invalid
and unenforceable in any jurisdiction,  then, to the fullest extent permitted by
law,  (i) the other  provisions  hereof shall remain in full force and effect in
such  jurisdiction  and shall be  liberally  construed in order to carry out the
intentions  of the  parties  hereto as nearly  as may be  possible  and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not  affect  the  validity  or  enforceability  of such  provision  in any other
jurisdiction.

               Section 11.07. Expenses, Etc. The Company agrees to reimburse the
Collateral Agent, the Custodial Agent and the Securities Intermediary for:

               (a) all reasonable  costs and expenses of the  Collateral  Agent,
the  Custodial  Agent  and  the  Securities  Intermediary  (including,   without
limitation, the reasonable fees and expenses of counsel to the Collateral Agent,
the Custodial  Agent and the Securities  Intermediary),  reasonably  incurred in
connection  with (i) the  negotiation,  preparation,  execution  and delivery or
performance of this Agreement and (ii) any modification, supplement or waiver of
any of the terms of this Agreement;

                                       30
<PAGE>

               (b) all reasonable  costs and expenses of the  Collateral  Agent,
the  Custodial  Agent  and  the  Securities  Intermediary  (including,   without
limitation,  reasonable  fees and  expenses of counsel)  reasonably  incurred in
connection  with (i) any  enforcement  or  proceedings  resulting or incurred in
connection with causing any Holder of Units to satisfy its obligations under the
Purchase  Contracts forming a part of the Units and (ii) the enforcement of this
Section 11.07;

               (c) all transfer,  stamp,  documentary  or other  similar  taxes,
assessments  or  charges  levied by any  governmental  or revenue  authority  in
respect  of this  Agreement  or any other  document  referred  to herein and all
costs,  expenses,  taxes,  assessments and other charges reasonably  incurred in
connection  with  any  filing,  registration,  recording  or  perfection  of any
security interest contemplated hereby;

               (d) all  reasonable  fees and  expenses  of any agent or  advisor
appointed by the Collateral  Agent and consented to by the Company under Section
9.11 of this Agreement;

               (e) any out-of-pocket  costs and expenses  reasonably incurred by
the Collateral  Agent, the Custodial  Agent, and the Securities  Intermediary in
connection with the exercise of their rights or performance of their obligations
and duties under Section 9.10 hereof; and

               (f)  any  other  reasonable   out-of-pocket  costs  and  expenses
reasonably  incurred  by the  Collateral  Agent,  the  Custodial  Agent  and the
Securities  Intermediary  in  connection  with the  performance  of their duties
hereunder.

               Section  11.08.  Security  Interest  Absolute.  All rights of the
Collateral Agent and security  interests  hereunder,  and all obligations of the
Holders  from  time to time  hereunder,  shall  be  absolute  and  unconditional
irrespective of:

               (a) any lack of validity or  enforceability  of any  provision of
the  Purchase  Contracts  or the  Units or any  other  agreement  or  instrument
relating thereto;

               (b) any change in the time, manner or place of payment of, or any
other term of, or any  increase in the amount of, all or any of the  obligations
of Holders  of the Units  under the  related  Purchase  Contracts,  or any other
amendment  or waiver of any term of, or any  consent to any  departure  from any
requirement of, the Purchase Contract  Agreement or any Purchase Contract or any
other agreement or instrument relating thereto; or

               (c) any other  circumstance  which might  otherwise  constitute a
defense available to, or discharge of, a borrower, a guarantor or a pledgor.

               Section 11.09. Notice of Special Event,  Special Event Redemption
and Termination  Event.  Upon the occurrence of a Special Event, a Special Event
Redemption or a Termination  Event,  the Company shall deliver written notice to
the  Purchase   Contract  Agent,   the  Collateral   Agent  and  the  Securities
Intermediary. Upon the written request of the Collateral Agent or the Securities
Intermediary,  the  Company  shall  inform  such party  whether or not a Special
Event, a Special Event Redemption or a Termination Event has occurred.

                                       31
<PAGE>

               Section 11.10.  Regarding the Purchase Contract Agent. All of the
rights,  privileges,  protections,   indemnities  and  immunities  afforded  the
Purchase Contract Agent pursuant to the Purchase  Contract  Agreement are hereby
incorporated herein as if set forth herein in full.

                                       32
<PAGE>

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


                               Scottish Annuity & Life Holdings, Ltd., _______as
                                   Purchase Contract Agent and
                                   as attorney-in-fact of the Holders
                                   from time to time of the Units

By:                                          By:

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

Address for Notices:                         Address for Notices:

Scottish Annuity & Life Holding, Ltd.
P.O. Box 2939
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton HM MX, Bermuda
Telephone:  (441) 295-4451
Attention:  General Counsel


----------------------------,
as Collateral Agent, Custodial Agent and
Securities Intermediary
By:

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

Address for Notices:


                                       33
<PAGE>

                                                                       EXHIBIT A

                                   INSTRUCTION
                          FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT
                          (Creation of Treasury Units)


The Collateral Agent
[Address]
Attention:

               Re:

                      _____ Corporate Units of Scottish Annuity & Life Holdings,
                      Ltd. (the "Company")

                      The  securities  account  of ____,  as  Collateral  Agent,
                      maintained by the Securities  Intermediary  and designated
                      "_____,  as  Collateral  Agent of Scottish  Annuity & Life
                      Holdings, Ltd., as pledgee of __, as the Purchase Contract
                      Agent  on  behalf  of  and  as  attorney-in-fact  for  the
                      Holders" (the "Collateral Account")

               Please  refer to the Pledge  Agreement,  dated as of ____,  200__
(the  "Pledge  Agreement"),  among the Company,  you, as  Collateral  Agent,  as
Securities Intermediary and as Custodial Agent and the undersigned,  as Purchase
Contract Agent and as  attorney-in-fact  for the holders of Corporate Units from
time to time.  Capitalized  terms  used  herein but not  defined  shall have the
meaning set forth in the Pledge Agreement.

               We hereby  notify  you in  accordance  with  Section  5.02 of the
Pledge  Agreement  that the holder of securities  named below (the "Holder") has
elected  to  substitute   $_____  Value  of  Treasury   Securities  or  security
entitlements  with  respect  thereto in  exchange  for an equal Value of Pledged
Notes relating to _____  Corporate  Units and has delivered to the undersigned a
notice  stating that the Holder has  Transferred  such  Treasury  Securities  or
security entitlements with respect thereto to the Securities  Intermediary,  for
credit to the Collateral Account.

                                       34
<PAGE>

               We hereby request that you instruct the Securities  Intermediary,
upon confirmation that such Treasury Securities or security entitlements thereto
have been credited to the Collateral  Account,  to release to the undersigned an
equal  Value of Pledged  Notes in  accordance  with  Section  5.02 of the Pledge
Agreement.


Date:                                   __________________________,

                                        as Purchase Contract Agent and as
                                        attorney-in-fact of the Holders from
                                        time to time of the Units


                                        By: ____________________________________
                                            Name:
                                            Title:

                                       35
<PAGE>

Please  print  name and  address  of  Holder  electing  to  substitute  Treasury
Securities or security entitlements with respect thereto for the Pledged Notes:

----------------------------------            ----------------------------------
                                              Name:
                                              Social Security
                                              or other  Taxpayer  Identification
                                              Number, if any


----------------------------------
              Address

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

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

                                       36
<PAGE>
                                                                       EXHIBIT B

                                   INSTRUCTION
                              FROM COLLATERAL AGENT
                           TO SECURITIES INTERMEDIARY
                          (Creation of Treasury Units)


The Securities Intermediary
[Address]
Fax:
Attention:

               Re:

                      _____ Corporate Units of Scottish Annuity & Life Holdings,
                      Ltd. (the "Company")

                      The  securities  account of ______,  as Collateral  Agent,
                      maintained by the Securities  Intermediary  and designated
                      "______,  as Collateral  Agent of Scottish  Annuity & Life
                      Holdings,  Ltd.,  as  pledgee  of _____,  as the  Purchase
                      Contract  Agent on behalf of and as  attorney-in-fact  for
                      the Holders" (the "Collateral Account")

                  Please refer to the Pledge Agreement,  dated as of ____, 200__
(the "Pledge Agreement"),  among the Company,  you, as Securities  Intermediary,
_______, as Purchase Contract Agent and as  attorney-in-fact  for the holders of
Corporate  Units from time to time, and the  undersigned,  as Collateral  Agent.
Capitalized  terms used herein but not defined shall have the meanings set forth
in the Pledge Agreement.

                  When  you  have   confirmed   that  $____  Value  of  Treasury
Securities or security  entitlements thereto has been credited to the Collateral
Account  by or for the  benefit  of _____,  as Holder of  Corporate  Units  (the
"Holder"),  you are hereby instructed to release from the Collateral  Account an
equal  Value of Pledged  Notes or security  entitlements  with  respect  thereto
relating to _____  Corporate  Units of the Holder by  Transfer  to the  Purchase
Contract Agent.


                                           -------------------
                                           as Collateral Agent


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

                                       37
<PAGE>

Please print name and address of Holder:


----------------------------------            ----------------------------------
               Name                           Social Security
                                              or other  Taxpayer  Identification
                                              Number, if any


----------------------------------
              Address

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

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

                                       38
<PAGE>

                                                                       EXHIBIT C

                                   INSTRUCTION
                          FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT
                         (Recreation of Corporate Units)


The Collateral Agent
[Address]
Fax:
Attention:

               Re:    _____ Treasury Units of Scottish  Annuity & Life Holdings,
                      Ltd. (the "Company")

               Please refer to the Pledge Agreement dated as of ____, 200__ (the
"Pledge Agreement"),  among the Company, you, as Collateral Agent, as Securities
Intermediary, as Custodial Agent and the undersigned, as Purchase Contract Agent
and as  attorney-in-fact  for the holders of  Treasury  Units from time to time.
Capitalized  terms used herein but not defined  shall have the meaning set forth
in the Pledge Agreement.

               We hereby  notify you in accordance  with Section  5.03(a) of the
Pledge  Agreement  that the holder of securities  named below (the "Holder") has
elected to substitute $____ Value of Notes or security entitlements with respect
thereto in exchange  for $_____  Value of Pledged  Treasury  Securities  and has
delivered to the  undersigned a notice  stating that the holder has  Transferred
such Notes or  security  entitlements  with  respect  thereto to the  Securities
Intermediary, for credit to the Collateral Account.

               We hereby request that you instruct the Securities  Intermediary,
upon confirmation that such Notes or security  entitlements with respect thereto
have been  credited to the  Collateral  Account,  to release to the  undersigned
$_____  Value of Treasury  Securities  or  security  entitlements  with  respect
thereto  related  to _____  Treasury  Units of such  Holder in  accordance  with
Section 5.03(a) of the Pledge Agreement.


                                           --------------------------
                                           as Purchase Contract Agent


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

                                       39
<PAGE>

Please print name and address of Holder electing to substitute Notes or security
entitlements with respect thereto for Pledged Treasury Securities:

----------------------------------            ----------------------------------
               Name                           Social Security
                                              or other  Taxpayer  Identification
                                              Number, if any


----------------------------------
              Address

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

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


                                       40
<PAGE>

                                                                       EXHIBIT D

                                   INSTRUCTION
                              FROM COLLATERAL AGENT
                           TO SECURITIES INTERMEDIARY
                         (Recreation of Corporate Units)


The Securities Intermediary
[Address]
Fax:
Attention:

               Re:    _____ Treasury Units of Scottish  Annuity & Life Holdings,
                      Ltd. (the "Company")

                      The  securities  account of _____,  as  Collateral  Agent,
                      maintained by the Securities  Intermediary  and designated
                      "__,  as  Collateral  Agent  of  Scottish  Annuity  & Life
                      Holdings,  Ltd.,  as pledgee of  ______,  as the  Purchase
                      Contract  Agent on behalf of and as  attorney-in-fact  for
                      the Holders" (the "Collateral Account")

               Please  refer to the Pledge  Agreement  dated as of _____,  200__
(the "Pledge Agreement"),  among the Company,  you, as Securities  Intermediary,
Custodial Agent and Collateral  Agent and _____, as Purchase  Contract Agent and
as  attorney-in-fact  for the holders of Corporate  Units from time to time, and
the  undersigned,  as  Collateral  Agent.  Capitalized  terms used herein but no
defined shall have the meaning set forth in the Pledge Agreement.

               When you have  confirmed  that $ _____ Value of Notes or security
entitlements with respect thereto has been credited to the Collateral Account by
or for the benefit of _____, as Holder of Treasury Units (the "Holder"), you are
hereby  instructed  to  release  from the  Collateral  Account  $_____  Value of
Treasury Securities or security entitlements thereto by Transfer to the Purchase
Contract Agent.


                                           -------------------
                                           as Collateral Agent


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

                                       41
<PAGE>


----------------------------------            ----------------------------------
               Name                           Social Security
                                              or other  Taxpayer  Identification
                                              Number, if any


----------------------------------
              Address

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

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

                                       42
<PAGE>

                                                                       EXHIBIT E

                    NOTICE OF CASH SETTLEMENT FROM COLLATERAL
                        AGENT TO PURCHASE CONTRACT AGENT
                            (Cash Settlement Amounts)


The Purchase Contract Agent
[Address]
Fax:
Attention:

               Re:    ______   Corporate  Units  of  Scottish   Annuity  &  Life
                      Holdings,  Ltd. (the  "Company")  ______ Treasury Units of
                      the Company

               Please refer to the Pledge Agreement dated as of ____, 200__ (the
"Pledge  Agreement"),  by and among you, the Company, and _______, as Collateral
Agent,  Custodial Agent and Securities  Intermediary.  Unless otherwise  defined
herein,  terms  defined  in the  Pledge  Agreement  are used  herein as  defined
therein.

               In accordance  with Section 5.05(c) of the Pledge  Agreement,  we
hereby  notify  you that as of 11:00  a.m.  (New York City  time) on the  fourth
Business Day  immediately  preceding  _____ (the "Purchase  Contract  Settlement
Date"),  we have received (i) $_____ in immediately  available  funds paid in an
aggregate  amount equal to the Purchase Price due to the Company on the Purchase
Contract  Settlement Date with respect to ____ Corporate Units and (ii) based on
the funds received set forth in clause (i) above, an aggregate  principal amount
of  $_____  of  Pledged  Notes  are to be  tendered  for  purchase  in the Final
Remarketing.



                                           as Collateral Agent


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

                                       43
<PAGE>

                                                                       EXHIBIT F

              INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING


The Custodial Agent
[Address]
Fax:
Attention:

               Re:    Notes Due ____ of Scottish  Annuity & Life Holdings,  Ltd.
                      (the "Company")

               The  undersigned  hereby  notifies you in accordance with Section
5.07(c)  of  the  Pledge  Agreement,  dated  as  of  ____,  200__  (the  "Pledge
Agreement"),  among the Company,  you, as Collateral Agent,  Custodial Agent and
Securities  Intermediary  and  ______,  as the  Purchase  Contract  Agent and as
attorney-in-fact  for the holders of Corporate Units from time to time, that the
undersigned elects to deliver $____ aggregate principal amount of Separate Notes
for delivery to the Remarketing Agent prior to 5:00 p.m. (New York City time) on
the fifth  Business Day  immediately  preceding  the ____  Remarketing  Date for
remarketing pursuant to Section 5.07(c) of the Pledge Agreement. The undersigned
will, upon request of the Remarketing Agent,  execute and deliver any additional
documents  deemed by the Remarketing  Agent or by the Company to be necessary or
desirable to complete the sale,  assignment  and transfer of the Separate  Notes
tendered  hereby.  Capitalized  terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.

               The  undersigned  hereby  instructs  you,  upon  receipt  of  the
Proceeds  of such  remarketing  from the  Remarketing  Agent,  to  deliver  such
Proceeds to the undersigned in accordance with the instructions indicated herein
under "A. Payment  Instructions."  The undersigned  hereby instructs you, in the
event of a Failed Final Remarketing, upon receipt of the Separate Notes tendered
herewith  from the  Remarketing  Agent,  to deliver such  Separate  Notes to the
person(s) and the address(es) indicated herein under "B. Delivery Instructions."

               With this  notice,  the  undersigned  hereby (i)  represents  and
warrants  that the  undersigned  has full power and  authority to tender,  sell,
assign and transfer the Separate Notes tendered  hereby and that the undersigned
is the  record  owner of any  Notes  tendered  herewith  in  physical  form or a
participant in The Depositary  Trust Company ("DTC") and the beneficial owner of
any Notes tendered herewith by book-entry  transfer to your account at DTC, (ii)
agrees to be bound by the terms and conditions of Section  5.07(c) of the Pledge
Agreement and (iii)  acknowledges and agrees that after 5:00 p.m. (New York City
time) on the fifth Business Day immediately preceding the ____ Remarketing Date,
such election shall become an  irrevocable  election to have such Separate Notes
remarketed in the Remarketing and, in the case of a Failed  Remarketing,  in any
subsequent Remarketing,  and that the Separate Notes tendered herewith will only
be returned in the event of a Failed Final Remarketing.

                                       44
<PAGE>

Dated:
        -----------------------------
                                        ----------------------------------------


                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                             Signature Guarantee:
                                                                   -------------



----------------------------------
               Name                           Social Security or other  Taxpayer
                                              Identification Number, if any


----------------------------------
              Address

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

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

                                       45
<PAGE>

A.   PAYMENT INSTRUCTIONS

Proceeds of the remarketing should be paid by check in the name of the person(s)
set forth below and mailed to the address set forth below.

Name(s)

(Please Print)
Address

(Please Print)



(Zip Code)

(Tax Identification or Social Security Number)

B. DELIVERY INSTRUCTIONS

In the event of a failed  final  remarketing,  Notes which are in physical  form
should be delivered to the  person(s)  set forth below and mailed to the address
set forth below.
Name(s)

(Please Print) Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

In the event of a failed final  remarketing,  Notes which are in book-entry form
should be  credited  to the account at The  Depository  Trust  Company set forth
below.


----------------------------------------------
DTC Account Number

Name of Account Party:
                      ------------------------

                                       46
<PAGE>

                                                                       EXHIBIT G


                    INSTRUCTION TO CUSTODIAL AGENT REGARDING
                           WITHDRAWAL FROM REMARKETING


The Custodial Agent
[Address]
Fax:
Attention:

               Re:    Notes due ____ of Scottish  Annuity & Life Holdings,  Ltd.
                      (the "Company")

               The  undersigned  hereby  notifies you in accordance with Section
5.07(c) of the Pledge Agreement,  dated as of _______ (the "Pledge  Agreement"),
among the Company and you, as Collateral  Agent,  Custodial Agent and Securities
Intermediary,  and _______,  as Purchase Contract Agent and as  attorney-in-fact
for the  holders  of  Corporate  Units from time to time,  that the  undersigned
elects to  withdraw  the $____  aggregate  principal  amount of  Separate  Notes
delivered to the  Collateral  Agent on ___,  200__ for  remarketing  pursuant to
Section 5.07(c) of the Pledge Agreement. The undersigned hereby instructs you to
return  such  Notes to the  undersigned  in  accordance  with the  undersigned's
instructions. With this notice, the Undersigned hereby agrees to be bound by the
terms and  conditions of Section  5.07(c) of the Pledge  Agreement.  Capitalized
terms used herein but not defined shall have the meaning set forth in the Pledge
Agreement.


Dated:
        -----------------------------
                                        ----------------------------------------


                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                             Signature Guarantee:
                                                                   -------------



----------------------------------            ----------------------------------
               Name                           Social Security or other  Taxpayer
                                              Identification Number, if any


----------------------------------
              Address

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

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