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                              AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                    MERRILL LYNCH PREFERRED FUNDING II, L.P.




                          Dated as of February 6, 1997


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<PAGE>

                                TABLE OF CONTENTS

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                                                                            ----

                                    ARTICLE I
                                  DEFINED TERMS

Section 1.1 DEFINITIONS....................................................  2

                                   ARTICLE II

                        CONTINUATION OF THE PARTNERSHIP;
             ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
                      WITHDRAWAL OF INITIAL LIMITED PARTNER

Section 2.1 CONTINUATION OF THE PARTNERSHIP................................ 11
Section 2.2 NAME........................................................... 11
Section 2.3 PURPOSES OF THE PARTNERSHIP.................................... 12
Section 2.4 TERM........................................................... 12
Section 2.5 REGISTERED AGENT AND OFFICE.................................... 12
Section 2.6 PRINCIPAL PLACE OF ACTIVITY.................................... 12
Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER............................ 13
Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES............................ 13
Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED SECURITIES; 
            WITHDRAWAL OF INITIAL LIMITED PARTNER.......................... 13

                                   ARTICLE III
                   CAPITAL CONTRIBUTIONS; REPRESENTATION OF
               PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
                                CAPITAL ACCOUNTS

Section 3.1 CAPITAL CONTRIBUTIONS.......................................... 14
Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST REPRESENTED 
            BY PARTNERSHIP PREFERRED SECURITIES............................ 15
Section 3.3 CAPITAL ACCOUNTS............................................... 15
Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS.............................. 16
Section 3.5 WITHDRAWAL AND RETURN OF
            CAPITAL CONTRIBUTIONS.......................................... 16

                                   ARTICLE IV
                                   ALLOCATIONS

Section 4.1 PROFITS AND LOSSES............................................. 16
Section 4.2 SPECIAL ALLOCATION............................................. 18
Section 4.3 WITHHOLDING.................................................... 19

                                    ARTICLE V
                                  DISTRIBUTIONS

Section 5.1 DISTRIBUTIONS.................................................. 20
Section 5.2 LIMITATIONS ON DISTRIBUTIONS................................... 20


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                                   ARTICLE VI
                 ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES

Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP
            PREFERRED SECURITIES........................................... 21
Section 6.2 PARTNERSHIP PREFERRED SECURITIES............................... 22

                                   ARTICLE VII
                             PARTNERSHIP INVESTMENTS

Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS....................... 34
Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED
            BY THE PARTNERSHIP............................................. 35

                                  ARTICLE VIII
                      BOOKS OF ACCOUNT, RECORDS AND REPORTS

Section 8.1 BOOKS AND RECORDS.............................................. 37
Section 8.2 ACCOUNTING METHOD.............................................. 38
Section 8.3 ANNUAL AUDIT................................................... 38

                                   ARTICLE IX
                               PAYMENT OF EXPENSES

Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES................ 38
Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES.......................... 38

                                    ARTICLE X
                            POWERS, RIGHTS AND DUTIES
                             OF THE LIMITED PARTNERS

Section 10.1 LIMITATIONS................................................... 39
Section 10.2 LIABILITY..................................................... 39
Section 10.3 PRIORITY...................................................... 40
                                                              
                                   ARTICLE XI
                            POWERS, RIGHTS AND DUTIES
                             OF THE GENERAL PARTNER

Section 11.1  AUTHORITY.................................................... 40
Section 11.2  POWERS AND DUTIES OF GENERAL PARTNER......................... 40
Section 11.3  OBLIGATIONS AND EXPENSES PAYABLE BY                
              GENERAL PARTNER.............................................. 43
Section 11.4  LIABILITY.................................................... 44
Section 11.5  OUTSIDE ACTIVITIES........................................... 44
Section 11.6  LIMITS ON GENERAL PARTNER'S POWERS........................... 44
Section 11.7  EXCULPATION.................................................. 45
Section 11.8  FIDUCIARY DUTY............................................... 46
Section 11.9  INDEMNIFICATION.............................................. 47
Section 11.10 TAX MATTERS ................................................. 48
Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS...................... 49
                                                                 

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                                   ARTICLE XII
                       TRANSFERS OF INTERESTS BY PARTNERS

Section 12.1   TRANSFER OF INTERESTS........................................ 50
Section 12.2   TRANSFER OF L.P. CERTIFICATES................................ 51
Section 12.3   DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED PARTNERSHIP 
               PREFERRED SECURITY HOLDERS................................... 52
Section 12.4   BOOK ENTRY PROVISIONS........................................ 53
Section 12.5   REGISTRAR, TRANSFER AGENT AND PAYING AGENT................... 55
                                                                            
                                  ARTICLE XIII
                            WITHDRAWAL, DISSOLUTION;
                     LIQUIDATION AND DISTRIBUTION OF ASSETS
                                                                            
Section 13.1   WITHDRAWAL OF PARTNERS....................................... 56
Section 13.2   DISSOLUTION OF THE PARTNERSHIP............................... 57
Section 13.3   LIQUIDATION.................................................. 58
Section 13.4   DISTRIBUTION IN LIQUIDATION.................................. 59
Section 13.5   RIGHTS OF LIMITED PARTNERS................................... 59
Section 13.6   TERMINATION.................................................. 60
                                                                            
                                   ARTICLE XIV
                             AMENDMENTS AND MEETINGS
                                                                            
Section 14.1   AMENDMENTS................................................... 60
Section 14.2   AMENDMENT OF CERTIFICATE..................................... 60
Section 14.3   MEETINGS OF PARTNERS......................................... 61
                                                                            
                                   ARTICLE XV
                                  MISCELLANEOUS
                                                                            
Section 15.1   NOTICES...................................................... 62
Section 15.2   POWER OF ATTORNEY............................................ 63
Section 15.3   ENTIRE AGREEMENT............................................. 64
Section 15.4   GOVERNING LAW................................................ 64
Section 15.5   EFFECT....................................................... 64
Section 15.6   PRONOUNS AND NUMBER.......................................... 64
Section 15.7   CAPTIONS..................................................... 64
Section 15.8   PARTIAL ENFORCEABILITY....................................... 64
Section 15.9   COUNTERPARTS................................................. 64
Section 15.10  WAIVER OF PARTITION.......................................... 65
Section 15.11  REMEDIES..................................................... 65
                                                                        

Schedule 1     LIST OF PARTNERS
Annex A        FORM OF L.P. CERTIFICATE
Exhibit A      FORM OF INDENTURE OF MERRILL LYNCH & CO., INC.
Exhibit B      FORM OF INDENTURE FOR SUBSIDIARIES


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<PAGE>

                              AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                    MERRILL LYNCH PREFERRED FUNDING II, L.P.

                                February 6, 1997

            AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Merrill
Lynch Preferred Funding II, L.P., a Delaware limited partnership (the
"Partnership"), dated as of February 6, 1997, among Merrill Lynch & Co., Inc., a
Delaware corporation (the "Company"), as the general partner, Merrill Lynch
Group, Inc., a Delaware corporation, as the initial limited partner (the
"Initial Limited Partner") and such other Persons (as defined herein) who become
Limited Partners (as defined herein) as provided herein.

            WHEREAS, the Company and the Initial Limited Partner entered into an
Agreement of Limited Partnership of Merrill Lynch Preferred Funding II, L.P.
dated as of January 16, 1997 (the "Original Partnership Agreement"), and the
Partners (as defined herein) desire to continue the Partnership under the Act
(as defined herein) and to amend and restate the Original Partnership Agreement
in its entirety;

            WHEREAS, the Certificate of Limited Partnership of the Partnership
was filed with the Office of the Secretary of State of the State of Delaware on
January 16, 1997;

            NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Partnership Agreement as follows:
<PAGE>

                                    ARTICLE I
                                  DEFINED TERMS

            Section 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Declaration.

            "Act" means the Delaware Revised Uniform Limited Partnership Act,
Del. Code Ann. tit. 6, ss. 17-101 et seq., as amended from time to time.

            "Affiliate" has the meaning set forth in Section 1.1 of the
Declaration.

            "Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of this Agreement.

            "Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.

            "Beneficiaries" has the meaning set forth in Section 11.3 of this
Agreement.

            "Book-Entry Interest" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book entries of a Clearing Agency as set forth in Section 12.4 of this
Agreement.

            "Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.

            "Capital Account" has the meaning set forth in Section 3.3 of this
Agreement.

            "Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
January 16, 1997, as it may be amended and restated from time to time.

            "Change in 1940 Act Law" has the meaning set forth in Section 1.1 of
the Declaration.


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            "Closing Date" has the meaning set forth in Section 1.1 of the
Declaration.

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

            "Company" means Merrill Lynch & Co., Inc., a Delaware corporation.

            "Compounded Distributions" has the meaning set forth in Section 6.2
of this Agreement.

            "Declaration" means the Amended and Restated Declaration of Trust by
and among the Company, as Sponsor, the Property Trustee, the Delaware Trustee,
and the Regular Trustees, dated as of February 4, 1997.

            "Definitive L.P. Certificates" has the meaning set forth in Section
12.4(a) of this Agreement.

            "Delaware Partnership Act" means the Revised Uniform Limited
Partnership Act of the State of Delaware (6 Del. C. ss. 17-101, et seq.).

            "Delaware Trustee" has the meaning set forth in Section 6.2 of the
Declaration.

            "Distribution Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.

            "Distributions" means the cumulative cash distributions payable by
the Partnership with respect to the Interests represented by the Partnership
Preferred Securities, which amounts will accumulate on the $25 liquidation
preference of each Partnership Preferred Security from the Closing Date and are
payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b) of this
Agreement.

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

            "Eligible Debt Securities" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with the
Company represented by instruments in registered form which evidence


                                        3
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any of the following: (a) any security issued or guaranteed as to principal or
interest by the United States, or by a person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or any certificate of
deposit for any of the foregoing; (b) commercial paper issued pursuant to
Section 3(a)(3) of the Securities Act of 1933 (the "Securities Act") and having,
at the time of the investment or contractual commitment to invest therein, a
rating from each of S&P and Moody's in the highest rating category granted by
such rating agency and having a maturity not in excess of nine months; (c)
demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, in no case having a maturity greater than nine months; (d)
repurchase obligations, having a maturity of no greater than nine months; with
respect to any security that is a direct obligation of, or fully guaranteed by,
the Government of the United States of America or any agency or instrumentality
thereof, the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company which is an Eligible Institution and the deposits
of which are insured by the FDIC; and (e) any other security which is identified
as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under
the 1940 Act at the time it is acquired by the Partnership.

            "Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (1)(i)
which has either (A) a long-term unsecured debt rating of AA or better by S&P
and Aa or better by Moody's or (B) a short-term unsecured debt rating or a
certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.

            "FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.


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<PAGE>

            "Finance Subsidiary" means any wholly-owned subsidiary of the
Company the principal purpose of which is to raise capital for the Company by
issuing securities that are guaranteed by the Company and the proceeds of which
are loaned to or invested in the Company or one or more of its affiliates.

            "Fiscal Period" means each calendar quarter.

            "Fiscal Year" means the calendar year.

            "General Partner" means Merrill Lynch & Co., Inc., in its capacity
as the general partner of the Partnership, its permitted successors, or any
successor general partner in the Partnership admitted as such pursuant to the
terms of this Agreement.

            "General Partner Capital Contribution" means the contribution by the
General Partner to the Partnership made contemporaneous with the issuance of the
Partnership Preferred Securities.

            "General Partner Interest" means the Interest of the General Partner
in the Partnership.

            "Holder" or "Partnership Preferred Security Holder" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.

            "Indentures" means the Indentures between the Company or certain of
its subsidiaries, as the case may be, and The Chase Manhattan Bank, as Indenture
Trustee, dated as of December 17, 1996, forms of which are attached hereto as
Exhibits A and B, respectively.

            "Independent Financial Adviser" shall mean a nationally recognized
accounting firm, bank or investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in the
Company or any of its subsidiaries.

            "Initial Affiliate Debentures" has the meaning set forth in Section
7.1(b) of this Agreement.


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<PAGE>

            "Initial Company Debenture" has the meaning set forth in Section
7.1(b) of this Agreement.

            "Initial Debentures" means collectively, the Initial Company
Debenture and the Initial Affiliate Debentures.

            "Initial Limited Partner" means Merrill Lynch Group, Inc., a
Delaware corporation.

            "Initial Partnership Proceeds" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.

            "Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the Partnership.

            "Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that (i) is controlled by the Company and (ii) is not
an investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.

            "Investment Event of Default" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its obligations under any Affiliate Investment
Instrument that is an equity instrument.

            "Investment Guarantee" has the meaning specified in Section 1.1 of
the Declaration.

            "Investment Offer" has the meaning specified in Section 7.2(b) of
this Agreement.

            "Limited Partner" means any Person who is admitted to the
Partnership as a limited partner pursuant to the terms of this Agreement, in
such Person's capacity as a limited partner of the Partnership.


                                        6
<PAGE>

            "Liquidator" has the meaning specified in Section 13.3 of this
Agreement.

            "L.P. Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities held
by a Limited Partner.

            "Majority in Liquidation Preference" means Holder(s) of Partnership
Preferred Securities who are the record owners of Partnership Preferred
Securities whose aggregate liquidation preferences represent more than 50% of
the aggregate liquidation preference of all Partnership Preferred Securities
then outstanding.

            "Moody's" means Moody's Investors Service, Inc. or any successor
thereto.

            "Net Income" and "Net Loss", respectively, for any Fiscal Period
mean the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.

            "1940 Act" has the meaning set forth in Section 1.1 of the
Declaration.

            "Original Partnership Agreement" has the meaning set forth in the
recitals to this Agreement.

            "Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.

            "Partnership Covered Person" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.


                                        7
<PAGE>

            "Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of this Agreement.

            "Partnership Guarantee" means the Partnership Guarantee Agreement
dated as of February 6, 1997 by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred Securities,
as amended or supplemented from time to time.

            "Partnership Indemnified Person" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.

            "Partnership Investment Company Event" means that the General
Partner shall have requested and received an opinion of nationally recognized
independent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a Change in 1940 Act
Law, the Partnership is or will be considered an "investment company" which is
required to be registered under the 1940 Act.

            "Partnership Liquidation Distribution" has the meaning set forth in
Section 6.2(g) of this Agreement.

            "Partnership Preferred Securities" represent the Interests of
Limited Partners and have the preference and designation set forth in Section
6.2(a) of this Agreement.

            "Partnership Preferred Securities Purchase Agreement" means the
partnership purchase agreement between the Trust and the Partnership providing
for the purchase of the Partnership Preferred Securities.

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


                                        8
<PAGE>

            "Partnership Special Event" means either a Partnership Tax Event or
a Partnership Investment Company Event.

            "Partnership Successor Securities" has the meaning set forth in
Section 11.11 of this Agreement.

            "Partnership Tax Event" means that the General Partner shall have
requested and received an opinion of nationally recognized independent tax
counsel experienced in such matters to the effect that there has been a Tax
Action which affects any of the events described in (i) through (iii) below and
that there is more than an insubstantial risk that (i) the Partnership is, or
will be, subject to United States federal income tax with respect to income
accrued or received on the Affiliate Investment Instruments or the Eligible Debt
Securities, (ii) the Partnership is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to the Initial
Debentures is not, or will not be, deductible by such Investment Affiliate for
United States federal income tax purposes.

            "Paying Agent" shall have the meaning set forth in Section 12.5 of
this Agreement.

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

            "Power of Attorney" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.

            "Property Trustee" has the meaning set forth in Section 1.1 of the
Declaration.

            "Purchase Agreement" means the Purchase Agreement dated February 4,
1997 among the Company, the Trust, the Partnership and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated, as representatives of the other underwriters named
in Schedule A thereto.


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<PAGE>

            "Record Date" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event, as long as the Partnership Preferred Securities remain) in
book-entry only form, one Business Day prior to the relevant payment dates and
(ii) in the event that the Trust Preferred Securities (or in the event that the
Trust is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities) shall not continue to remain in book-entry only form, the
15th day of the month of the relevant payment date.

            "Redemption Notice" has the meaning set forth in Section 6.2(e) of
this Agreement.

            "Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.

            "Registrar" has the meaning set forth in Section 12.5 of this
Agreement.

            "Regular Trustees" has the meaning set forth in Section 1.1 of the
Declaration.

            "Reinvestment Criteria" has the meaning specified in Section
7.2(c) of this Agreement.

            "S&P" means Standard & Poor's Ratings Services or any successor
thereof.

            "Special Representative" has the meaning set forth in Section
6.2(h)(i) of this Agreement.

            "Tax Action" has the meaning set forth in Section 1.1 of the
Declaration.

            "Tax Matters Partner" means the General Partner designated as such
in Section 11.10 of this Agreement.

            "10% in Liquidation Preference" means Holder(s) of the Partnership
Preferred Securities voting together as a single class representing 10% of the
aggregate liquidation amount of the Partnership Preferred Securities.

            "Treasury Regulations" has the meaning set forth in Section 1.1 of
the Declaration.


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<PAGE>

            "Trust" means the Merrill Lynch Preferred Capital Trust II, a
Delaware business trust, formed under the Declaration.

            "Trust Common Securities" has the meaning specified in Section 8.1
of the Declaration.

            "Trust Common Securities Guarantee" means the Trust Common
Securities Guarantee Agreement dated as of February 6, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.

            "Trust Preferred Securities" has the meaning specified in Section
8.1 of the Declaration.

            "Trust Preferred Securities Guarantee" means the Trust Preferred
Securities Guarantee Agreement dated as of February 6, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Preferred
Securities.

                                   ARTICLE II
                        CONTINUATION OF THE PARTNERSHIP;
             ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS;
                      WITHDRAWAL OF INITIAL LIMITED PARTNER

            Section 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct activities. The rights and duties of the Partners shall be as provided
herein and, subject to the terms hereof, under the Act.

            Section 2.2 NAME. The name of the Partnership is "Merrill Lynch
Preferred Funding II, L.P.", as such


                                       11
<PAGE>

name may be modified from time to time by the General Partner following written
notice to the Limited Partners.

            Section 2.3 PURPOSES OF THE PARTNERSHIP. The purposes of the
Partnership are (a) to issue limited partnership interests in the Partnership in
the form of Partnership Preferred Securities, (b) to receive the General Partner
Capital Contribution, (c) to use substantially all of the Initial Partnership
Proceeds to purchase, as an investment, the Initial Debentures, (d) to invest,
at all times, an amount equal to at least 1% of the Initial Partnership Proceeds
in Eligible Debt Securities, (e) to receive interest and other payments on the
Affiliate Investment Instruments and the Eligible Debt Securities held by the
Partnership from time to time, (f) to make Distributions on the Partnership
Preferred Securities and distributions on the General Partner Interest if, as
and when declared by the General Partner in its sole discretion, (g) subject to
the restrictions and conditions contained in this Agreement, to make additional
investments in Affiliate Investment Instruments and Eligible Debt Securities and
to dispose of any such investments and (h) except as otherwise limited herein,
to enter into, make and perform all contracts and other undertakings, and engage
in those activities and transactions as the General Partner may reasonably deem
necessary or advisable for the carrying out of the foregoing purposes of the
Partnership. The Partnership may not engage in any other activities or
operations except as contemplated by the preceding sentence.

            Section 2.4 TERM. The term of the Partnership shall commence upon
the filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until the Partnership is dissolved in
accordance with the provisions of this Agreement.

            Section 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be CT Corporation, Corporate Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801. At any time, the General
Partner may designate another registered agent and/or registered office.

            Section 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be


                                       12
<PAGE>

c/o Merrill Lynch & Co., Inc., World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281. Upon ten days' written notice to the Partners,
the General Partner may change the location of the Partnership's principal place
of activity, provided that such change has no material adverse effect upon any
Partner.

            Section 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:

            Merrill Lynch & Co., Inc.
            World Financial Center
            South Tower
            225 Liberty Street
            New York, New York  10080-6105
            Attention:  Treasurer

The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any such
change.

            Section 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become qualified, formed or registered under the
applicable qualification, fictitious name or similar laws of any jurisdiction in
which the Partnership conducts activities.

            Section 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED
SECURITIES; WITHDRAWAL OF INITIAL LIMITED PARTNER.

            (a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission as
a Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.

            (b) Following the first admission of a Partnership Preferred
Security Holder to the Partnership as a Limited Partner, the Initial Limited
Partner shall withdraw from the Partnership and shall receive the return of its
capital contribution without interest or deduction.


                                       13
<PAGE>

            (c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner shall be required
to update the books and records from time to time as necessary to accurately
reflect such information.

                                   ARTICLE III
                    CAPITAL CONTRIBUTIONS; REPRESENTATION OF
                PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
                                CAPITAL ACCOUNTS

            Section 3.1 CAPITAL CONTRIBUTIONS.

            (a) The General Partner has, prior to the date hereof, contributed
an aggregate of $15.00 to the capital of the Partnership, which amount is equal
to at least 15% of the total capital contributions to the Partnership, after
taking into account the contribution of the Initial Limited Partner referred to
in Section 3.1(b). Contemporaneous with the issuance of the Partnership
Preferred Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such additional
capital contributions as are necessary to maintain at all times a positive
Capital Account balance equal to at least one percent (1%) of the aggregate
positive Capital Account balances of all Partners at the end of such period.

            (b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $85.00 to the capital of the Partnership, which amount
shall be returned to the Initial Limited Partner as contemplated by Section
2.9(b).

            (c) On the Closing Date, the Trust shall, in exchange for a
definitive L.P. Certificate, contribute to the capital of the Partnership on
behalf of the Trust an amount in cash equal to the gross proceeds from the sale
of the Trust Preferred Securities and the Trust Common Securities (such amount
being a capital contribution to the Partnership). On such date, immediately
following the withdrawal of the Initial Limited Partner, the Trust shall be the
sole Limited Partner.

            (d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.


                                       14
<PAGE>

            Section 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's Interest shall be represented by the Partnership Preferred
Securities held by or on behalf of such Partner. Each Partnership Preferred
Security Holder's respective ownership of Partnership Preferred Securities shall
be set forth on the books and records of the Partnership. Each Partner hereby
agrees that its Interest in the Partnership shall for all purposes be personal
property. No Partner shall have an interest in specific Partnership property.

            Section 3.3 CAPITAL ACCOUNTS.

            (a) Establishment and Maintenance of Capital Accounts. The
Partnership shall establish and maintain a separate account (the "Capital
Account") for each Partner. The initial balance of the Capital Account for each
Partner shall be the amount as set out opposite the name of each of the Partners
on Schedule 1 attached hereto. The Capital Account of each Partner shall be
increased by (i) the dollar amount of any additional contributions made by such
Partner and (ii) allocations to such Partner of income and gain (including
income exempt from tax). The Capital Account of each Partner shall be decreased
by (i) the dollar amount of any distributions made to such Partner, and (ii)
allocations to such Partner of loss and deduction (including noncapital,
nondeductible expenditures not deductible in computing the Partnership's income
or loss for United States federal income tax purposes).

            (b) Compliance with Regulations. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the Treasury Regulations promulgated under section 704 of the Code. The
General Partner, in its sole discretion, is authorized to modify such provisions
to the minimum extent necessary to comply with such Treasury Regulations.

            Section 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.


                                       15
<PAGE>

            Section 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. Subject
to Section 3.1(b) hereof, no Partner shall be entitled to withdraw any part of
such Partner's capital contribution to the Partnership. No Partner shall be
entitled to receive any distributions from the Partnership, except as provided
in this Agreement.

                                   ARTICLE IV
                                   ALLOCATIONS

            Section 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2 which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1,

            (a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:

            (i) First, to each Holder of a Partnership Preferred Security in an
      amount equal to the excess, if any, of (x) all Net Losses, if any,
      allocated to each such Holder from the date of issuance of the Partnership
      Preferred Security through and including the close of such Fiscal Period
      pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, if
      any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in
      all prior Fiscal Periods.

            (ii) Second, to the Holders of the Partnership Preferred Securities,
      an amount of Net Income equal to the excess of (x) the Distributions
      accumulated on the Partnership Preferred Securities from the date of their
      issuance through and including the last day of such Fiscal Period,
      including any Compounded Distributions payable with respect thereto, over
      (y) the amount of Net Income allocated to the Holders of the Partnership
      Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior
      Fiscal Periods. Amounts allocated to all Partnership Preferred Security
      Holders shall be allocated among such Holders in proportion to the number
      of Partnership Preferred Securities held by such Holders.


                                       16
<PAGE>

            (iii) Any remaining Net Income shall be allocated to the General
      Partner.

            (b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:

            (i) First, to the General Partner until the balance of the General
      Partner's Capital Account is reduced to zero, provided, however, that the
      aggregate amount of Net Losses allocated to the General Partner pursuant
      to this Section 4.1(b)(i) shall not exceed the sum of 14% of the total
      capital contributions of all Partners plus the aggregate Net Income
      allocated to the General Partner pursuant to this Section 4.1.

            (ii) Second, among the Holders in proportion to their respective
      aggregate Capital Account balances, until the Capital Account balances of
      such Holders are reduced to zero.

            (iii) Any remaining Net Loss shall be allocated to the General
      Partner.

            (c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General Partner
determines that another method is permissible under Section 704 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise specified,
such profits, losses or other items shall be determined for each Fiscal Period.

            Section 4.2 SPECIAL ALLOCATION.

            (a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds shall be allocated entirely to the General Partner.

            (b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's income (including
gross income) shall be specially allocated to such Partner in a manner
sufficient to eliminate


                                       17
<PAGE>

the deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "qualified income offset"
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied in all respects in accordance with such
Treasury Regulation.

            (c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.

            (d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in
this Article IV are adjusted by the Internal Revenue Service and the Tax Matters
Partner agrees to such adjustments, such allocations shall be amended to the
minimum extent necessary to conform with such adjustments.

            (e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items) under
this Article IV, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Article XIII, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain, and other tax items, for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
respective Capital Account balances so that the


                                       18
<PAGE>

final distribution will occur in the same manner as a distribution under Section
13.4.

            (f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each item
of Partnership income, gain, loss, deduction, or credit shall, at all times
during the existence of the Partnership, be equal to at least (A) at any time
that the aggregate capital contributions to the Partnership are equal to or less
than $50,000,000, one percent (1%) of each such item and (B) at any time that
the aggregate capital contributions to the Partnership are greater than
$50,000,000, at least a percentage equal to the product of (i) one percent (1%)
and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.

            Section 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under Federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Partnership is required to withhold and pay over any amounts
to any authority with respect to distributions or allocations to any Partner,
the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Partner. In the event of any claimed over-withholding,
Partners shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual distributions, the Partnership
may reduce subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as
shall reasonably be requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.


                                       19
<PAGE>

                                    ARTICLE V
                                  DISTRIBUTIONS

            Section 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the immediately
preceding sentence, to the extent that the aggregate payments of interest (or
dividends) received by the Partnership in respect of Affiliate Investment
Instruments and Eligible Debt Securities for each Fiscal Period exceed the
amount of Distributions, including any Compounded Distributions, paid on the
Partnership Preferred Securities for such Fiscal Period, the General Partner, in
its sole discretion may declare and distribute such excess funds to the General
Partner in respect of its General Partner Interest.

            Section 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if such
Distribution would violate Section 17-607 of the Act or other applicable law.


                                       20
<PAGE>

                                   ARTICLE VI
                  ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES

            Section 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.

            (a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$309,278,400 and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.

            (b) The payment of Distributions (including payments of
distributions by the Partnership in liquidation or on redemption in respect of
Partnership Preferred Securities) shall be guaranteed by the Company pursuant to
and to the extent set forth in the Partnership Guarantee. The Partnership
Preferred Security Holders hereby authorize the General Partner to hold the
Guarantee on behalf of the Partnership Preferred Security Holders. In the event
of an appointment of a Special Representative pursuant to Section 6.2(i), among
other things, to enforce the Partnership Guarantee, the Special Representative
may take possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the subordination provisions in, and other terms of, the Partnership
Guarantee.

            (c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Part-


                                       21
<PAGE>

nership Preferred Securities will be issued in registered form only.

            (d) No Holder shall be entitled as a matter of right to subscribe
for or purchase, or have any preemptive right with respect to, any part of any
new or additional limited partnership interests, or of securities convertible
into any Partnership Preferred Securities or other limited partnership
interests, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of a distribution.

            (e) Any of the Partnership Preferred Securities that are owned by
the Company or by any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Company, shall not be entitled to
vote or consent with respect to any Partnership Preferred Security owned by it,
and shall, for purposes of such vote or consent, be treated as if they were not
outstanding except for Partnership Preferred Securities purchased or acquired by
the Company or its affiliates in connection with transactions effected by or for
the account of customers of the Company or any of its subsidiaries or in
connection with the distribution or trading of such Partnership Preferred
Securities; provided, however, that persons (other than affiliates of the
Company) to whom the Company or any of its subsidiaries have pledged Partnership
Preferred Securities may vote or consent with respect to such pledged
Partnership Preferred Securities under any of the circumstances described in
Section 6.2.

            Section 6.2 PARTNERSHIP PREFERRED SECURITIES.

            (a) DESIGNATION. A total of 12,371,136 Partnership Preferred
Securities, liquidation preference $25 per Partnership Preferred Security, are
hereby designated as "8% Partnership Preferred Securities".

            (b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall
be entitled to receive cumulative Distributions and Compounded Distributions (as
defined below) (if any), if, as and when declared by the General Partner, in its
sole discretion, out of the assets of the Partnership legally available
therefor, at a rate per annum of 8% of the stated liquidation preference of $25
per Partnership Preferred Security, calculated on the


                                       22
<PAGE>

basis of a 360-day year consisting of twelve 30-day months. For any period
shorter than a full 90-day quarter, Distributions will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. Such Distributions
shall, from the date of original issue, accumulate and be cumulative and shall
be payable quarterly, when, if, and as declared by the General Partner on the
dates specified in Section 6.2(b)(ii) below. Distributions and Compounded
Distributions (as defined below) (if any) on the Partnership Preferred
Securities shall be cumulative from the Closing Date. Distributions not paid on
the scheduled Distribution Payment Date will accumulate and compound quarterly
at the rate of 8% per annum ("Compounded Distributions"). In the event that any
date on which Distributions are payable on the Partnership Preferred Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.

            (ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 30, June 30, September 30 and December 30 of each year, commencing on
March 30, 1997 (each a "Distribution Payment Date").

            Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date. If the Trust
or the Property Trustee is the Holder of the Partnership Preferred Securities,
all Distributions of cash shall be made by wire transfer of same day funds to
such Holder by 10:00 a.m., New York City time, on the applicable Distribution
Payment Date. Distributions payable on any Partnership Preferred Securities that
are not punctually paid on any Distribution Payment Date will cease to be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the relevant record date, and such Distribution will instead be
payable to the Person in whose name such Partnership Preferred Securities are
registered on the special record date or other specified


                                       23
<PAGE>

date for payment of such defaulted or accumulated Distribution.

            (c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after March 30, 2007, upon not less than 30 nor more than 60 days
notice, at an amount per Partnership Preferred Securities equal to $25 plus
accumulated and unpaid Distributions thereon, including any Compounded
Distributions (the "Redemption Price"). The Partnership may not redeem the
Partnership Preferred Securities in part unless all accumulated and unpaid
Distributions, including any Compounded Distributions, have been paid in full on
all Partnership Preferred Securities for all Fiscal Periods terminating on or
prior to the date of redemption. If a partial redemption of the Partnership
Preferred Securities would result in the delisting of the Trust Preferred
Securities (or, if the Trust is liquidated in connection with a Trust Special
Event, or if a partial redemption would result in the delisting of the
Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.

            (d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, the Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all costs and expenses incurred by or
payable by the Partnership which are attributable to the Partnership Special
Event.


                                       24
<PAGE>

            (e) REDEMPTION PROCEDURES. (i) Notice of any redemption of
Partnership Preferred Securities (a "Redemption Notice") will be given by the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.

            (ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata provided, that, in the event Partnership
Preferred Securities are held in book-entry only form by DTC or its nominee (or
any successor Clearing Agency or its nominee), DTC will reduce, in accordance
with DTC's customary procedures, the amount of the interest of each Clearing
Agency Participant in the Partnership Preferred Securities to be redeemed;
provided, that if, as a result of such pro rata redemption, Holders would hold
fractional interests in the Partnership Preferred Securities, the General
Partner may adjust the amount of the interest of each Holder to be redeemed to
avoid such fractional interests.

            (iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the redemption
date, the Partnership (A) if the Partnership Preferred Securities are in
book-entry only form with DTC, will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price in respect of the
Partnership Preferred Securities held through DTC in global form or (B) if the
Partnership Preferred Securities are held in certificated form, will deposit
with the Paying Agent, funds sufficient to pay


                                       25
<PAGE>

the applicable Redemption Price of the amount of any such Partnership Preferred
Securities and will give to the Paying Agent irrevocable instructions and
authority to pay such amounts to the Holders of Partnership Preferred
Securities, upon surrender of their certificates, by check, mailed to the
address of the relevant Holder appearing on the books and records of the
Partnership on the redemption date; provided, however, that for so long as the
Trust or the Property Trustee of the Trust shall hold the Partnership Preferred
Securities, payment of cash shall be made by wire in same day funds to the
Holder by 12:00 Noon, New York City time, on the redemption date. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. Upon
satisfaction of the foregoing conditions, then immediately prior to the close of
business on the date of such deposit or payment, all rights of Holders of such
Partnership Preferred Securities so called for redemption will cease, except the
right of the Holders to receive the Redemption Price, but without interest on
such Redemption Price, and from and after the date fixed for redemption, such
Partnership Preferred Securities will not accumulate Distributions or bear
interest.

            In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day in each case, with the same force and effect
as if made on such date fixed for redemption. In the event that payment of the
Redemption Price is improperly withheld or refused and not paid by either the
Partnership or the Company pursuant to the Partnership Guarantee, Distributions
on the Partnership Preferred Securities called for Redemption will continue to
accumulate, to the extent that payment of such interest is legally available,
from the original redemption date until the Redemption Price is actually paid.

            The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.


                                       26
<PAGE>

            (f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Declaration) of Trust Preferred Securities, the Company or any of
its subsidiaries may at any time and from time to time purchase outstanding
Partnership Preferred Securities by tender, in the open market, or by private
agreement.

            (g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "Partnership
Liquidation Distribution") payable in cash.

            (h)  VOTING RIGHTS.

            (i) SPECIAL REPRESENTATIVE. (1) If one or more of the following
events shall occur and be continuing (each a "Partnership Enforcement Event"):
(i) arrearages on distributions on the Partnership Preferred Securities shall
exist for six consecutive quarterly distribution periods, (ii) the Company is in
default on any of its obligations under the Partnership Guarantee or (iii) an
Investment Event of Default on any Affiliate Investment Instrument or a default
under any Investment Guarantee, as the case may be, occurs and is continuing
then the Property Trustee, for so long as the Partnership Preferred Securities
are held by the Property Trustee, will have the right, or the Holders of the
Partnership Preferred Securities, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Partnership Preferred Securities,
shall have the right, to the exclusion of the General Partner, (a) to appoint
and authorize a special representative of the Partnership and the Limited
Partners (a "Special Representative") to enforce (1) to the maximum extent
permitted by applicable law, the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, (2) the rights of the Holders of the Partnership Preferred
Securities under the Partnership Guarantee, and (3) the rights of the Holders of
the Partnership Preferred Securities to receive Distri-


                                       27
<PAGE>

butions (only if, and to the extent, declared by the General Partner, in its
sole discretion, out of funds legally available therefor) on the Partnership
Preferred Securities, and (b) under the Partnership Guarantee to enforce the
terms of the Partnership Guarantee, including the right to enforce the covenant
restricting certain payments of the Company and Finance Subsidiaries. Under no
circumstances, however, shall the Special Representative have authority to cause
the General Partner to declare Distributions on the Partnership Preferred
Securities nor to have any authority concerning the selection of Partnership
Investments. When the Special Representative acts to enforce the Partnership's
creditors' rights and other rights with respect to the Affiliate Investment
Instruments and the Investment Guarantees, the Special Representative acts as an
agent of the Partnership. When the Special Representative acts to enforce the
rights of the Holders of the Partnership Preferred Securities under the
Partnership Guarantee or their rights to receive Distributions on the
Partnership Preferred Securities, the Special Representative acts as an agent of
the Holders of the Partnership Preferred Securities. In addition, the Special
Representative shall not, by virtue of acting in such capacity, be admitted as a
general or limited partner in the Partnership or otherwise be deemed to be a
general or limited partner in the Partnership and shall have no liability for
the debts, obligations, or liabilities of the Partnership.

            (2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so appointed and to avoid any doubt concerning the
powers of the Special Representative, any Special Representative, in its own
name, in the name of the Partnership, in the name of the Limited Partners, or
otherwise, may institute, or cause to be instituted, a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce on behalf of the Partnership the
Partnership's rights directly against the Company or any other obligor in
connection with its obligations to the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the Company
or any other obligor in connection with such obligations and collect, out of the
property, wherever situated, of the Company or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the


                                       28
<PAGE>

manner provided by law. The General Partner agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the Partnership.

            (3) If the Special Representative fails to enforce its rights under
the Affiliate Investment Instruments after a holder of Partnership Preferred
Securities has made a written request, such holder of record of Partnership
Preferred Securities may to the fullest extent permitted by law directly
institute a legal proceeding against the Company to enforce the rights of the
Special Representative and the Partnership under the Affiliate Investment
Instruments without first instituting any legal proceeding against the Special
Representative, the Partnership or any other person or entity. In any event, if
a Partnership Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a holder of
Partnership Preferred Securities may to the fullest extent permitted by law on
behalf of the Partnership directly institute a proceeding against such
Investment Affiliate with respect to such Affiliate Investment Instrument for
enforcement of payment. In addition, the Partnership acknowledges that, for so
long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of Trust Securities has made
a written request, a holder of record of Trust Securities may to the fullest
extent permitted by law on behalf of the Partnership directly institute a legal
proceeding against the Investment Affiliates under the Affiliate Investment
Instruments, without first instituting any legal proceeding against the Property
Trustee, the Trust, the Special Representative or the Partnership. In any event,
for so long as the Trust is the holder of any Partnership Preferred Securities,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument or the failure of the
Company to make any required payment when due on any Investment Guarantee, then
the Partnership acknowledges that a holder of Trust Securities may to the full-


                                       29
<PAGE>

est extent permitted by law on behalf of the Partnership directly institute a
proceeding against such Investment Affiliate with respect to such Affiliate
Investment Instrument or against the Company with respect to any such Investment
Guarantee, in each case for enforcement of payment. Under no circumstances shall
the Special Representative, any holder of Partnership Preferred Securities or
any holder of Trust Preferred Securities have authority to cause the General
Partner to declare distributions on the Partnership Preferred Securities.

            (4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six (6) consecutive quarters, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than a
Majority in Liquidation Preference of Partnership Preferred Securities entitled
to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or the Company
pursuant to the Partnership Guarantee) shall have paid in full all accumulated
and unpaid Distributions on the Partnership Preferred Securities, (y) the
relevant Investment Event of Default shall have been cured, and (z) the Company
is in compliance with all its obligations under the Partnership Guarantee, and
the Company, in its capacity as the General Partner, shall continue the
activities of the Partnership without dissolution. Notwithstanding the
appointment of any such Special Representative, the Company


                                       30
<PAGE>

shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred
Securities.

            (ii) CERTAIN AMENDMENTS; WAIVER. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partnership interests
in the Partnership ranking, as to participation in profits or distributions, or
in the assets of the Partnership, senior to the Partnership Preferred
Securities); or (y) the dissolution, winding-up or termination of the
Partnership, other than (1) in connection with the occurrence of a Partnership
Special Event or (2) as described under Sections 11.11 and 13.2 of this
Agreement, then the Holders of outstanding Partnership Preferred Securities will
be entitled to vote on such amendment or proposal of the General Partner (but
not on any other amendment or proposal) as a class and such amendment or
proposal shall not be effective except with the approval of Holders of a
Majority in Liquidation Preference of such outstanding Partnership Preferred
Securities having a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Partnership
Preferred Securities, any such amendment or proposal not excepted by (1) or (2)
above shall not be effective without the prior or concurrent approval of the
Holders of a majority in liquidation preference of the outstanding Trust
Preferred Securities having a right to vote on such matters; provided, further,
that no such approval shall be required if the dissolution, winding-up or
termination of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of the Company.

            (2) The Holders of a Majority in Liquidation Preference of
Partnership Preferred Securities may, by vote, on behalf of the Holders of all
of the Partnership Preferred Securities, waive any past Partnership Enforcement
Event with respect to the Partnership Preferred


                                       31
<PAGE>

Securities and its consequences; provided, that if the underlying Investment
Event of Default:

      (A)   is not waivable under the related Affiliate Investment Instrument,
            such Partnership Enforcement Event shall also not be waivable; or

      (B)   requires the consent or vote of the Holders of greater than a
            majority in principal amount or liquidation preference of the
            Affiliate Investment Instruments (a "Super Majority") to be waived
            under the related Affiliate Investment Instrument, the Partnership
            Enforcement Event may only be waived by the vote of the Holders of
            the relevant Super Majority in liquidation preference of the
            Partnership Preferred Securities.

Upon such waiver, any such Partnership Enforcement Event shall cease to exist,
and shall be deemed to have been cured, for every purpose of this Agreement, but
no such waiver shall extend to any subsequent or other Partnership Enforcement
Event or impair any right consequent thereon.

            (3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.

            (iii) GENERAL VOTING. (1) The General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy
available, (ii) waive any Investment Event of Default that is waivable under the
Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a
declaration that the principal of any Affiliate Investment Instruments that are
debt instruments shall be due and payable, (iv) waive the breach of the covenant
by the Company in the Partnership Guarantee to restrict certain payments by the
Company, or (v) consent to any amendment, modification or termination of any
Affiliate Investment Instrument, where such consent shall be required from the
investor, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Preference of the Partnership Preferred
Securities; provided, howev-


                                       32
<PAGE>

er, that if the Property Trustee on behalf of the Trust is the Holder of the
Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall not
revoke any action previously authorized or approved by a vote of the Holders of
the Partnership Preferred Securities without the approval of a Majority in
Liquidation Preference of the Partnership Preferred Securities. The General
Partner shall notify all Holders of the Partnership Preferred Securities of any
notice of an Investment Event of Default received with respect to any Affiliate
Investment Instrument.

            (2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose or pursuant to written consent. The General Partner will cause a notice
of any meeting at which Holders of Partnership Preferred Securities are entitled
to vote, or of any matter upon which the action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Partnership
Preferred Securities. Each such notice will include a statement setting forth
(x) the date of such meeting or the date by which such action is to be taken,
(y) a description of any matter proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matters upon which written consent
is sought and (z) instructions for the delivery of proxies or consents. No vote
or consent of the Holders of Partnership Preferred Securities will be required
for the Partnership to redeem and cancel Partnership Preferred Securities in
accordance with this Agreement.

            (3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are beneficially
owned by the Company or by any entity directly or indirectly controlled by, or
under direct or indirect common control with, the Company, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding, except for Partnership Preferred Securities
purchased or acquired by the Company or its affiliates in


                                       33
<PAGE>

connection with transactions effected by or for the account of customers of the
Company or any of its subsidiaries or in connection with the distribution or
trading of such Partnership Preferred Securities; provided, however, that
persons (other than affiliates of the Company) to whom the Company or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities pursuant to the
terms of such pledge.

            (4) Holders of the Partnership Preferred Securities shall have no
rights to remove or replace the General Partner.

            (5) Holders of Partnership Preferred Securities shall have no
preemptive rights.

                                   ARTICLE VII
                             PARTNERSHIP INVESTMENTS

            Section 7.1 INITIAL AFFILIATE INVESTMENT INSTRUMENTS.

            (a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "Affiliate Investment Instruments") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used by
the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.

            (b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) a debt instrument of the Company (the
"Initial Company Debenture") and (2) debt instruments of one or more eligible
controlled affiliates of the Company (such debt instruments collectively
referred to as the "Initial Affiliate Debentures"). The Initial Company
Debenture and the Initial Affiliate Debentures are collectively referred to as
the "Initial Debentures". The Initial Affiliate Debentures may each contain a
provision that allows an affiliate of the issuer of such Debenture to assume the
obligations of such issuer subject to certain conditions. The Partnership may
purchase the Initial


                                       34
<PAGE>

Debentures only upon receipt of an opinion of the Independent Financial Advisor
to the effect that (i) if such Initial Debentures were to be rated, at least one
Rating Agency would rate all the Initial Debentures investment grade at the time
such Initial Debentures are purchased by the Partnership, (ii) the Company and
each Investment Affiliate which is a subsidiary of the Company would have been
capable of issuing and selling debt instruments with the same terms and
conditions as the applicable Initial Debentures to unrelated third party
investors, (iii) the terms and conditions of the Initial Debentures are
consistent with the terms and conditions of a public offering or a private
placement pursuant to Rule 144A under the Securities Act of 1933 of such Initial
Debentures and are no more favorable to the relevant Investment Affiliate than
could have been obtained by such Investment Affiliate from unrelated third party
investors pursuant to such a public offering or private placement of such
Initial Debentures. On the Closing Date, the Partnership shall invest at least
1% of such Initial Partnership Proceeds in Eligible Debt Securities. The terms
of the Initial Debentures will be as set forth in the Indentures attached hereto
as Exhibits A and B.

            Section 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.

            (a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.

            (b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "Investment Offer") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).

            (c) If the Independent Financial Advisor determines that the terms
of an Affiliate Investment Instrument (as set forth in the Investment Offer) do
not


                                       35
<PAGE>

satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.

            (d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "Reinvestment Criteria"): (i) the economic terms of each Affiliate
Investment Instrument shall be no less favorable to the Partnership than terms
that would otherwise be obtainable through a public offering or private
placement under Rule 144A of the Securities Act of 1933 of securities by the
requesting Investment Affiliate and the other terms and conditions of each
Affiliate Reinvestment Instrument are substantially similar to the terms and
conditions of similar securities and guarantees, if any, included therein, that
are offered to the public in a public offering or private placement under Rule
144A of the Securities Act of 1933 of such securities; (ii) the Partnership
shall not have held any Affiliate Investment Instruments of the Investment
Affiliate submitting the Investment Offer within the three-year period ending on
the date of the Investment Offer; (iii) there shall not have been a default on
any debt obligation of the Investment Affiliate submitting the Investment Offer
that was owned by the Partnership; (iv) no dividend arrearages shall have
existed on any preferred stock of the Investment Affiliate submitting the
Investment Offer that was owned by the Partnership; and (v) the Investment
Affiliate submitting the Investment Offer shall not be deemed to be an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act or is
otherwise an eligible recipient of funds directly or indirectly from the Trust
pursuant to an order issued by the Securities and Exchange Commission.

            (e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).


                                       36
<PAGE>

                                  ARTICLE VIII
                      BOOKS OF ACCOUNT, RECORDS AND REPORTS

            Section 8.1 BOOKS AND RECORDS.

            (a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.

            (b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.

            (c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the close
of each Fiscal Year, the General Partner shall transmit to each Partner a
statement indicating such Partner's share of each item of Partnership income,
gain, loss, deduction or credit, for United States federal income tax purposes,
for such Fiscal Year.

            (ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.

            Section 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and


                                       37
<PAGE>

records of the Partnership shall be kept on the accrual method of accounting
applied on a consistent basis and shall reflect all Partnership transactions.

            Section 8.3 ANNUAL AUDIT. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Partnership shall be audited by a firm of independent certified public
accountants selected by the General Partner in accordance with applicable law.
The cost of such audits will be an expense of the Partnership and shall be paid
by the General Partner.

                                   ARTICLE IX
                               PAYMENT OF EXPENSES

            Section 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the Partnership hereby agrees, at any time
while the Property Trustee is the Holder of any Partnership Preferred
Securities, to pay all the expenses of the Trust, including, but not limited to,
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
domestic taxing authority, so that the net amounts received and retained by the
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Trust and the Property Trustee would have received had no such costs
or expenses been incurred by or imposed on the Trust. The General Partner shall
be liable for, and shall pay all such expenses solely out of its own funds. In
addition, if the Partnership is required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other domestic taxing authority, then, in
any case, the General Partner will pay such taxes, duties, assessments or other
governmental charges out of its own funds.

            Section 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:


                                       38
<PAGE>

            (a) pay all costs and expenses of the Partnership (including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of the Partnership Preferred
Securities (including commissions to the underwriters in connection therewith)
the fees and expenses of the Special Representatives (if any), and the costs and
expenses relating to the operation of the Partnership, including, without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses; and

            (b) be primarily and fully liable for any indemnification
obligations arising with respect to this Agreement.

                                    ARTICLE X
                            POWERS, RIGHTS AND DUTIES
                             OF THE LIMITED PARTNERS

            Section 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for the
Partnership, nor shall the Limited Partners have the power to act for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner (and, upon appointment, and to the extent set forth herein, the Special
Representative). The Limited Partners shall have such rights as are set forth
herein and in the Partnership Guarantee. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity
therein, or in any proceeds of any sales thereof (which sales shall not be
restricted in any respect), by virtue of acquiring or owning an Interest in the
Partnership.

            Section 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.


                                       39
<PAGE>

            Section 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.

                                   ARTICLE XI
                            POWERS, RIGHTS AND DUTIES
                             OF THE GENERAL PARTNER

            Section 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.

            Section 11.2 POWERS AND DUTIES OF GENERAL PARTNER. (a) Subject to
the provisions of Section 6.2(h)(i) with respect to the Special Representative,
the General Partner shall have all rights and powers of a general partner under
the Act, and shall have all authority, rights and powers in the management of
the Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:

            (i) to secure the necessary goods and services required in
      performing the General Partner's duties for the Partnership;

            (ii) to exercise all powers of the Partnership, on behalf of the
      Partnership, in connection with enforcing the Partnership's rights under
      the Affiliate Investment Instruments and the Partnership Guarantee;


                                       40
<PAGE>

            (iii) to issue Partnership Preferred Securities and to admit Limited
      Partners in connection therewith in accordance with this Agreement;

            (iv) to act as registrar and transfer agent for the Partnership
      Preferred Securities or designate an entity to act as registrar and
      transfer agent;

            (v) to establish a record date with respect to all actions to be
      taken hereunder that require a record date be established, including with
      respect to Distributions and voting rights and to make determinations as
      to the payment of Distributions, and make or cause to be made all other
      required payments to Holders of the Partnership Preferred Securities and
      to the General Partner;

            (vi) to open, maintain and close bank accounts and to draw checks
      and other orders for the payment of money;

            (vii) to bring or defend, pay, collect, compromise, arbitrate,
      resort to legal action, or otherwise adjust claims or demands of or
      against the Partnership;

            (viii) to deposit, withdraw, invest, pay, retain and distribute the
      Partnership's funds in a manner consistent with the provisions of this
      Agreement;

            (ix) to take all action that may be necessary or appropriate for the
      preservation and the continuation of the Partnership's valid existence,
      rights, franchises and privileges as a limited partnership under the laws
      of the State of Delaware and of each other jurisdiction in which such
      existence is necessary to protect the limited liability of the Limited
      Partners or to enable the Partnership to invest in the Affiliate
      Investment Instruments and Eligible Debt Securities;

            (x) to take all action not inconsistent with applicable law, the
      Certificate or this Agreement, that the General Partner or, upon
      appointment pursuant to Section 6.2(h)(i), the Special Representative


                                       41
<PAGE>

      determines in its sole discretion to be necessary or desirable to ensure,
      as long as such action does not adversely affect the interests of the
      Partnership Preferred Security Holders, or cause (i) the Partnership to be
      deemed to be an "investment company" required to be registered under the
      1940 Act, (ii) any Initial Debenture (or any subsequent Affiliate
      Investment Instrument that is intended to be classified as debt) to not be
      treated as indebtedness for United States federal income tax purposes, or
      (iii) the Partnership to be treated as an association, or as a publicly
      traded partnership, taxable as a corporation;

            (xi) to cause the Partnership to enter into and perform the Purchase
      Agreement and the Partnership Preferred Securities Purchase Agreement and
      to purchase Eligible Debt Securities and Affiliate Investment Instruments,
      as the case may be, without any further act, vote or approval of any
      Partner; and

            (xii) to execute and deliver any and all documents or instruments,
      perform all duties and powers and do all things for and on behalf of the
      Partnership in all matters necessary or desirable or incidental to the
      foregoing.

            (b) For so long as any Partnership Preferred Securities remain
outstanding, the General Partner covenants and agrees (i) subject to Section
12.1(b) hereof, to remain the sole general partner of the Partnership and to
maintain directly 100% ownership of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the Partnership to remain a limited
partnership and not to voluntarily dissolve, liquidate, wind-up or be
terminated, except as permitted by the Limited Partnership Agreement and (iii)
to use its commercially reasonable efforts to ensure that the Partnership will
not be (A) an "investment company" for purposes of the 1940 Act or (B) an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes.

            Section 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY GENERAL PARTNER.
(a) The General Partner hereby as-


                                       42
<PAGE>

sumes and shall be liable for the debts, obligations and liabilities of the
Partnership, including, but not limited to, any liabilities arising under the
Securities Act or the Exchange Act and all costs and expenses relating to the
investment by the Partnership in any Affiliate Investment Instruments (but not
any losses related to any non-payment with respect to such investments), and
agrees to pay to each Person to whom the Partnership is now or hereafter becomes
indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations
or liabilities arise in contract, tort or otherwise (excluding payment
obligations of the Company to Holders of the Partnership Preferred Securities in
such Holders' capacities as Holders of such Partnership Preferred Securities,
such obligations being separately guaranteed under the Partnership Guarantee),
the full payment of such indebtedness and any and all liabilities, when and as
due. This Agreement is intended to be for the benefit of and to be enforceable
by all such Beneficiaries whether or not such Beneficiaries have received notice
hereof.

            (b) The General Partner agrees to pay and be responsible for:

                  (i) all costs and expenses of the Partnership including, but
not limited to, costs and expenses relating to the organization of the
Partnership, the offering, sale and issuance of Partnership Preferred
Securities, the costs and expenses relating to the operation of the Partnership
(including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agents, duplicating, travel and telephone and other telecommunications expenses)
and costs and expenses incurred in connection with the acquisition, financing,
and disposition of the Partnership's assets; and

                  (ii) any and all taxes (other than Federal, state and local
withholding taxes) and all liabilities, costs and expenses with respect to such
taxes of the Partnership.

            Section 11.4 LIABILITY. Except as expressly set forth in this
Agreement or in the Guarantee Agreements, (a) the General Partner shall not be
personally


                                       43
<PAGE>

liable for the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital contributions
(or any return thereon) shall be made solely from assets of the Partnership; and
(c) the General Partner shall not be required to pay to the Partnership or to
any Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.

            Section 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.

            Section 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:

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

                  (ii) do any act which would make it impractical or impossible
      to carry on the ordinary activity of the Partnership as set forth in
      Section 2.3;


                                 44
<PAGE>

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

                  (iv) admit a Person as a Partner, except as expressly provided
      in this Agreement;

                  (v) make any advances of funds to the General Partner or its
      Affiliates, other than such as represented by the Affiliate Investment
      Instruments;

                  (vi) perform any act that would subject any Limited Partner to
      liability as a general partner in any jurisdiction;

                  (vii) engage in any activity that is not consistent with the
      purposes of the Partnership, as set forth in Section 2.3;

                  (viii) without the written consent of the Holders of 66-2/3%
      in liquidation preference of the Partnership Preferred Securities, have an
      order for relief entered with respect to the Partnership or commence a
      voluntary case under any applicable bankruptcy, insolvency or other
      similar law now or hereafter in effect, or consent to the entry of an
      order for relief in an involuntary case under any such law, or consent to
      the appointment of or taking possession by a receiver, trustee or other
      custodian for all or a substantial part of the Partnership's property, or
      make any assignment for the benefit of creditors of the Partnership; or

                  (ix) borrow money or become liable for the borrowings of any
      third party or to engage in any financial or other trade or business.

            Section 11.7 EXCULPATION. (a) No Partnership Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any Partnership Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Partnership Indemnified Person in good faith on behalf of the Partnership and in
a manner such Partnership Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Partnership Indemnified Person by
this Agreement or by law,


                                       45
<PAGE>

except that a Partnership Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Partnership Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.

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

            Section 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, a Partnership Indemnified Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Partnership
Covered Person, a Partnership Indemnified Person acting under this Agreement
shall not be liable to the Partnership or to any other Partnership Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a Partnership Indemnified Person otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partnership Indemnified Person.

            (b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons, or
(ii) whether this Agreement or any other agreement contemplated herein or
therein provides that a Partnership Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Partnership or
any Partner, the Partnership Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the


                                       46
<PAGE>

benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Partnership Indemnified
Person, the resolution, action or term so made, taken or provided by the
Partnership Indemnified Person shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Partnership Indemnified Person at law or in equity or otherwise.

            (c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.

            Section 11.9 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Partnership shall indemnify and hold harmless each
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.9 shall be provided
out of and to the extent of Partnership assets only, and no Partnership Covered
Person shall have any personal liability on account thereof.


                                       47
<PAGE>

            (b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).

            Section 11.10 TAX MATTERS

            (a) For purposes of section 6231(a)(7) of the Code, the "Tax Matters
Partner" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.

            (b) Neither the Partnership, nor the Tax Matters Partner on behalf
of the Partnership, shall make an election under section 754 of the Code.

            (c) The General Partner and the Partnership Preferred Security
Holders acknowledge that they intend, for United States federal income tax
purposes, that the Partnership shall be treated as a "partnership" (other than a
publicly traded partnership taxable as a corporation) and that the General
Partner and the Partnership Preferred Security Holders shall be treated as
"partners" of the Partnership.

            (d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.

            Section 11.11 CONSOLIDATION, MERGER OR SALE OF ASSETS. The
Partnership may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as


                                       48
<PAGE>

permitted pursuant to this Section 11.11. The Partnership may, without the
consent of the Holders of the Partnership Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by a limited partnership, limited
liability company or trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor entity either (x)
expressly assumes all of the obligations of the Partnership under the
Partnership Preferred Securities or (y) substitutes for the Partnership
Preferred Securities other securities having substantially the same terms as the
Partnership Preferred Securities (the "Partnership Successor Securities") so
long as the Partnership Successor Securities are not junior to any other equity
securities of the successor entity, with respect to participation in the profits
and distributions, and in the assets, of the successor entity, (ii) the
Investment Affiliates expressly acknowledge such successor entity as the holder
of the Affiliate Investment Instruments, (iii) the Partnership Preferred
Securities continue to be or any Partnership Successor Securities are or will be
listed, upon notification of issuance, on any national securities exchange or
other organization on which the Partnership Preferred Securities, if so listed,
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (or, in the event that the Trust
is liquidated in connection with a Trust Special Event, the Partnership
Preferred Securities (including any Partnership Successor Securities)) to be
downgraded by any nationally recognized statistical securities rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the powers, preferences and other special rights of the
holders of the Trust Preferred Securities or the Holders of the Partnership
Preferred Securities (including any Partnership Successor Securities)) in any
material respect (other than, in the case of the Partnership Preferred
Securities, with respect to any dilution of the Holders' interest in the new
resulting entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger, consolidation,
amalgamation or replacement, the Company has received an opinion of nationally
recognized independent counsel to the Partnership experienced in such matters to
the effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and


                                       49
<PAGE>

not as an association or a publicly traded partnership taxable as a corporation,
(B) such merger, consolidation, amalgamation or replacement will not cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes, (C)
following such merger, consolidation, amalgamation or replacement, the Company
and such successor entity will be in compliance with the 1940 Act without
registering thereunder as an investment company, and (D) such merger,
consolidation, amalgamation or replacement will not adversely affect the limited
liability of the Holders of the Partnership Preferred Securities and (viii) the
Company guarantees the obligations of such successor entity under the
Partnership Successor Securities at least to the extent provided by the
Partnership Guarantee.

                                   ARTICLE XII
                       TRANSFERS OF INTERESTS BY PARTNERS

            Section 12.1 TRANSFER OF INTERESTS.

            (a) Partnership Preferred Securities shall be freely transferable by
a Holder.

            (b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66 2/3% in Liquidation Preference
of the Partnership Preferred Securities. The General Partner may assign or
transfer its Interest in the Partnership without such consent to an entity that
is the survivor of a merger or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced in such
matters to the effect that after such assignment or transfer the Partnership
will continue to be treated as a partnership for United States federal income
tax purposes and will not be treated as an association or a publicly traded
partnership taxable as a corporation. The General Partner may transfer its
Interest to a wholly-owned direct or indirect subsidiary of the Company provided


                                       50
<PAGE>

that (i) such entity expressly accepts such transfer of the obligations as
General Partner and (ii) prior to such transfer, the Company has received an
opinion of nationally recognized independent counsel to the Partnership
experienced in such matters to the effect that (A) the Partnership will be
treated as a partnership for United States federal income tax purposes, (B) such
transfer would not cause the Trust to be classified as an association taxable as
a corporation for United States federal income tax purposes, (C) following such
transfer, the Company and such successor entity will be in compliance with the
1940 Act without registering thereunder as an investment company, and (D) such
transfer will not adversely affect the limited liability of the holders of the
Partnership Preferred Securities. "Permitted Successor" shall mean an entity
that is an assignee or transferee of the Interest of the General Partner as
permitted by this Section 12.1(b). The admission of a Permitted Successor as a
general partner of the Partnership shall be effective upon the filing of an
amendment to the Certificate with the Secretary of State of the State of
Delaware which indicates that the Permitted Successor has been admitted as a
general partner of the Partnership. If the General Partner assigns its entire
Interest, the General Partner shall cease to be a general partner of the
Partnership simultaneously with the admission of the Permitted Successor as a
general partner of the Partnership. Any such Permitted Successor is hereby
authorized to and shall continue the business of the Partnership without
dissolution.

            (c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.

            Section 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every L.P.
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form


                                       51
<PAGE>

satisfactory to the General Partner duly executed by the Partnership Preferred
Security Holder or his or her attorney duly authorized in writing. Each L.P.
Certificate surrendered for registration of transfer shall be cancelled by the
General Partner. A transferee of an L.P. Certificate shall be admitted to the
Partnership as a Limited Partner, shall become bound by this Agreement and shall
be entitled to the rights and subject to the obligations of a Partnership
Preferred Security Holder hereunder upon the receipt by the transferee of an
L.P. Certificate, which receipt shall be deemed to constitute a request by such
transferee that the books and records of the Partnership reflect such
transferee's admission as a limited partner. The transferor of an L.P.
Certificate, in whole, shall cease to be a Limited Partner at the time that the
transferee of such L.P. Certificate is admitted to the Partnership as a Limited
Partner in accordance with this Section 12.2.

            Section 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED
PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) DEFINITIVE L.P. CERTIFICATES. Unless
and until the Partnership issues a global L.P. Certificate pursuant to Section
12.4(a), the Partnership shall only issue definitive L.P. Certificates to the
Partnership Preferred Security Holders. (b) The Partnership may treat the Person
in whose name any L.P. Certificate shall be registered on the books and records
of the Partnership as the sole holder of such L.P. Certificate and of the
Partnership Preferred Securities represented by such L.P. Certificate for
purposes of receiving Distributions and for all other purposes whatsoever
(including without limitation, tax returns and information reports) and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such L.P. Certificate or in the Partnership Preferred Securities
represented by such L.P. Certificate on the part of any other Person, whether or
not the Partnership shall have actual or other notice thereof.

            Section 12.4 BOOK ENTRY PROVISIONS.

            (a) General. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding up or liquidation of the


                                       52
<PAGE>

Trust as a result of the occurrence of a Trust Special Event. Upon the
occurrence of such event, a global L.P. Certificate representing the Book-Entry
Interests shall be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Partnership and any previously issued and still outstanding
definitive L.P. Certificates shall be of no further force and effect. The global
L.P. Certificate shall initially be registered on the books and records of the
Partnership in the name of Cede & Co., the nominee of DTC, and no Holder of a
Partnership Preferred Security will receive a new definitive L.P. Certificate
representing such Holder's interests in such L.P. Certificate, except as
provided in Section 12.4(c). In connection with the involuntary or voluntary
dissolution, winding up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, shall
automatically be admitted to the Partnership as a Limited Partner. Receipt of
the global L.P. Certificate shall be deemed to constitute a request by Cede &
Co., the nominee of DTC, that the books and records of the Partnership reflect
its admission as a Limited Partner. Unless and until new definitive, fully
registered L.P. Certificates (the "Definitive L.P. Certificates") have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c):

            (i) The provisions of this Section shall be in full force and
      effect;

            (ii) The Partnership, the General Partner and any Special
      Representative shall be entitled to deal with the Clearing Agency for all
      purposes of this Agreement (including the payment of Distributions,
      Redemption Price and liquidation proceeds on the L.P. Certificates and
      receiving approvals, votes or consents hereunder) as the Partnership
      Preferred Security Holder and the sole holder of the L.P. Certificates and
      shall have no obligation to the Partnership Preferred Security Owners;

            (iii) None of the Partnership, the Trust, the General Partner, any
      Special Representative or any agents of any of the foregoing shall have
      any liability or responsibility for any aspect of the records relating to
      or payments made on account of beneficial ownership interests in a global
      L.P. Certificate for such beneficial ownership interests


                                       53
<PAGE>

      or for maintaining, supervising or reviewing any records relating to such
      beneficial ownership interests; and

            (iv) Except as provided in Section 12.4(c) below, the Partnership
      Preferred Security Owners will not be entitled to receive physical
      delivery of the Partnership Preferred Securities in definitive form and
      will not be considered Holders thereof for any purpose under this
      Agreement, and no global L.P. Certificate representing Partnership
      Preferred Securities shall be exchangeable, except for another global L.P.
      Certificate of like denomination and tenor to be registered in the name of
      DTC or Cede & Co., or to a successor Depositary or its nominee.
      Accordingly, each Partnership Preferred Security Owner must rely on the
      procedures of DTC or if such person is not a Participant, on the
      procedures of the Participant through which such person owns its interest
      to exercise any rights of a Holder under the Agreement.

            (b) NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Partnership Preferred Security Holders is required under
this Agreement, unless and until Definitive L.P. Certificates shall have been
issued to the Partnership Preferred Security Owners pursuant to Section 12.4(c),
the General Partner and any Special Representative shall give all such notices
and communications specified herein to be given to the Partnership Preferred
Security Holders to the Clearing Agency, and shall have no obligations to the
Partnership Preferred Security Owners.

            (c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue its services as a securities depositary
and no successor depositary shall have been appointed, (ii) the Depositary, at
any time, ceases to be a clearing agency registered under the Exchange Act at
such time as the Depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, or (iii) the
Company, in its sole discretion, determines that such global L.P. Certificate
shall be so


                                       54
<PAGE>

exchangeable. Upon surrender of the global L.P. Certificate or L.P. Certificates
representing the Book-Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause Definitive L.P.
Certificates to be delivered to Partnership Preferred Security Owners in
accordance with the instructions of the Clearing Agency. Neither the General
Partner nor the Partnership shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive L.P. Certificate in
accordance with this Section 12.4 shall be admitted to the Partnership as a
Limited Partner upon receipt of such Definitive L.P. Certificate and shall be
registered on the books and records of the Partnership as a Partnership
Preferred Security Holder. The Clearing Agency or the nominee of the Clearing
Agency, as the case may be, shall cease to be a Limited Partner under this
Section 12.4(c) at the time that at least one additional Person is admitted to
the Partnership as a Limited Partner in accordance herewith. The Definitive L.P.
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as may be required by any national securities exchange on which
Partnership Preferred Securities may be listed and is reasonably acceptable to
the General Partner, as evidenced by its execution thereof.

            Section 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.

            (a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.

            (b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
agency where Partnership Preferred Securities may be


                                       55
<PAGE>

presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Partnership Preferred Securities and of their transfer and exchange. The
Partnership may appoint the Registrar and the Paying Agent and may appoint one
or more co-registrars and one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Partnership may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. If the Partnership fails to
appoint or maintain another entity as Registrar or Paying Agent, the General
Partner shall act as such.

            (c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on behalf of the Partnership, but upon
payment (with the giving of such indemnity as the Partnership or the General
Partner may require) in respect of any tax or other governmental charges that
may be imposed.

            (d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.

                                  ARTICLE XIII
                            WITHDRAWAL, DISSOLUTION;
                     LIQUIDATION AND DISTRIBUTION OF ASSETS

            Section 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.

            Section 13.2 DISSOLUTION OF THE PARTNERSHIP.

            (a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of


                                       56
<PAGE>

any other event which terminates the Interest of a Limited Partner in the
Partnership, shall not, in and of itself, cause the Partnership to be dissolved
and its affairs wound up. To the fullest extent permitted by applicable law,
upon the occurrence of any such event, the General Partner may, without any
further act, vote on approval of any Partner, admit any Person to the
Partnership as an additional or substitute limited partner in the Partnership,
which admission shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued without
dissolution.

            (b) The Partnership shall be dissolved and its affairs shall be
wound up upon the earliest to occur of any of the following events:

            (i) upon the bankruptcy or insolvency of the General Partner;

            (ii) upon the assignment by the General Partner of its entire
      interest in the Partnership when the assignee is not admitted to the
      Partnership as a general partner of the Partnership in accordance with
      this Agreement, or the filing of a certificate of dissolution or its
      equivalent with respect to the General Partner, or the revocation of the
      General Partner's charter and the expiration of 90 days after the date of
      notice to the General Partner of revocation without a reinstatement of its
      charter, or if any other event occurs that causes the General Partner to
      cease to be a general partner of the Partnership under the Delaware
      Partnership Act, unless the business of the Partnership is continued in
      accordance with the Delaware Partnership Act;

            (iii) the Partnership has redeemed or otherwise purchased all of
      the Partnership Preferred Securities;

            (iv) upon the entry of a decree of judicial dissolution under
      Section 17-802 of the Act; or

            (v) the written consent of all Partners.


                                       57
<PAGE>

            (c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.

            Section 13.3 LIQUIDATION.

            (a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant to
Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not
less than 66 2/3% in Liquidation Preference of the Partnership Preferred
Securities (the General Partner or such Person so appointed is hereinafter
referred to as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the Partnership and the satisfaction of liabilities to creditors so as to enable
the Partners to minimize the normal losses attendant upon liquidation. The
Partners shall continue to share all income, losses and distributions during the
period of liquidation in accordance with Articles IV and V. Subject to the
provisions of this Article XIII, the Liquidator shall have full right and
unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property pursuant to such liquidation, giving due regard to
the activity and condition of the relevant market and general financial and
economic conditions.

            (b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.

            (c) Notwithstanding the foregoing, a Liquidator that is not a
General Partner shall not, by virtue of acting in such capacity, be deemed a
Partner in this Partnership and shall not have any of the economic interests in
the Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at


                                       58
<PAGE>

normal customary and competitive rates for its services to the Partnership as
reasonably determined by all the Limited Partners.

            Section 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):

            (i) first, to creditors of the Partnership, including Partners who
      are creditors, to the extent otherwise permitted by law, in satisfaction
      of the liabilities of the Partnership (whether by payment or the making of
      reasonable provisions for payment thereof), other than liabilities for
      distributions (including Distributions) to Partners;

            (ii) second, following any allocations required under Section 4.2(e)
      of the Agreement, to the Limited Partners, an amount equal to the
      aggregate liquidation preference of their Partnership Preferred
      Securities, plus the amount of Distributions (including any Compounded
      Distributions) that are accumulated and unpaid as of the date of such
      liquidating distribution; and

            (iii) thereafter, to the General Partner.

            Section 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner, except under the Partnership Guarantee. No Partner shall have any right
to demand or receive property other than cash upon dissolution and termination
of the Partnership.

            Section 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.


                                       59
<PAGE>

                                   ARTICLE XIV
                             AMENDMENTS AND MEETINGS

            Section 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(i), this Agreement may be amended by, and only by, a written
instrument executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any such
purported amendment shall be void and ineffective, to the extent the result
thereof would be to (A) cause the Partnership to be treated for United States
federal income tax purposes as an association or a publicly traded partnership
taxable as a corporation, (B) require the Partnership to register under the 1940
Act or (C) materially adversely affect the rights, privileges or preferences of
the Partnership Preferred Securities. Notwithstanding any provision to the
contrary, in the event of (i) a liquidation of the Trust for any reason or (ii)
any other distribution which effectively causes Partnership Preferred Securities
to be distributed to Holders of Trust Preferred Securities, the General Partner
may amend this Agreement without the consent of the Limited Partners to provide
for (A) orderly dissemination, purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters to the extent required
by or desirable under then applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no such amendment may
materially adversely affect the rights, privileges, or preferences of the
Partnership Preferred Securities without the consent of a majority in interest
of the Partners so effected.

            Section 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement
shall be amended pursuant to Section 14.1, the General Partner shall amend the
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.

            Section 14.3 MEETINGS OF PARTNERS.

            (a) Meetings of the Limited Partners who are Holders may be called
at any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so by
Holders of no less


                                       60
<PAGE>

than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the General Partner a request in
writing stating that the signing Limited Partners desire to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Limited Partners calling a meeting shall specify in writing the L.P.
Certificates held by the Limited Partners exercising the right to call a meeting
and only those specified Interests shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met. Except to the extent otherwise provided in this
Agreement, the following provisions shall apply to meetings of Partners.

            (b) Notice of any such meeting shall be given to all Limited
Partners having a right to vote thereat not less than seven Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall set
forth the date, time and place of the meeting, a description of any matter on
which Holders are entitled to vote and instructions for the delivery of proxies
or written consents.

            (c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Interests that would be necessary to authorize or take such action at a
meeting in which all Limited Partners having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners entitled to vote who have not consented
in writing. The General Partner may provide that any written ballot submitted to
the Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.

            (d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at


                                       61
<PAGE>

the pleasure of the Partner executing it. Except as otherwise provided herein,
or pursuant to Section 14.3(f), all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Partnership were a Delaware corporation and the Limited Partners were
stockholders of a Delaware corporation.

            (e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.

            (f) The General Partner may establish all other reasonable
procedures relating to meetings of Limited Partners or the giving of written
consents, in addition to those expressly provided, including notice of time,
place or purpose of any meeting at which any matter is to be voted on by any
Partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.

                                   ARTICLE XV
                                  MISCELLANEOUS

            Section 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:

            (a) if given to the Partnership, in care of the General Partner at
      the Partnership's mailing address set forth below:

                  Merrill Lynch & Co., Inc.
                  World Financial Center
                  South Tower
                  225 Liberty Street
                  New York, New York  10080-6105
                  Attention:  Treasurer


                                       62
<PAGE>

            (b) if given to the General Partner, at its mailing address set
      forth below:

                  Merrill Lynch & Co., Inc.
                  World Financial Center
                  South Tower
                  225 Liberty Street
                  New York, New York  10080-6105
                  Attention:  Treasurer

            (c) if given to any other Partner at the address set forth on the
      books and records of the Partnership.

            Section 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
of this Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Partnership or
to dissolve the Partnership for any other purpose consistent with this Agreement
and the transactions contemplated hereby.

            The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.

            Section 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or understandings
among them, and it may not be modified or amended in any manner other than as
set forth herein.


                                       63
<PAGE>

            Section 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

            Section 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.

            Section 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.

            Section 15.7 CAPTIONS. Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.

            Section 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.

            Section 15.9 COUNTERPARTS. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.

            Section 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.


                                       64
<PAGE>

            Section 15.11 REMEDIES. The failure of any party to seek redress for
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.


                                       65
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.

                               GENERAL PARTNER:

                               MERRILL LYNCH & CO., INC.
                                  a Delaware corporation



                               By: 
                                   -----------------------------------
                                    Name:    Theresa Lang
                                    Title:   Senior Vice President
                                               and Treasurer


                               INITIAL LIMITED PARTNER:

                               MERRILL LYNCH GROUP, INC.
                                    a Delaware corporation



                               By:
                                   -----------------------------------
                                    Name:   Theresa Lang
                                    Title:  President


                                       66
<PAGE>

SCHEDULE 1


                                  S-1
<PAGE>

ANNEX A

                            FORM OF L.P. CERTIFICATE

            [IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security is a Global Certificate within the
meaning of the Partnership Agreement hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Partnership Preferred Security is exchangeable for
Partnership Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in the
Partnership Agreement and no transfer of this Partnership Preferred Security
(other than a transfer of this Partnership Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.

            Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York), a New York corporation, to the Partnership or its agent for
registration of transfer, exchange or payment, and any Partnership Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and any payment
hereon is made to Cede & Co. or such other entity as is requested by an
authorized representative of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]


                                       A-1
<PAGE>

PS-1                   [                                 ]

             Certificate Evidencing Partnership Preferred Securities
                                       of
                    MERRILL LYNCH PREFERRED FUNDING II, L.P.

                       8% Partnership Preferred Securities
         (liquidation preference $25 per Partnership Preferred Security)

            MERRILL LYNCH PREFERRED FUNDING II, L.P., a limited partnership
formed under the laws of the State of Delaware (the "Partnership"), hereby
certifies that The Chase Manhattan Bank, a property trustee pursuant to the
Amended and Restated Declaration of Trust of Merrill Lynch Preferred Capital
Trust II, dated as of February 4, 1997 (the "Holder") is the registered owner of
___________ preferred securities of the Partnership representing limited partner
interests in the Partnership designated the 8% Partnership Preferred Securities
(liquidation preference $25 per Partnership Preferred Security) (the
"Partnership Preferred Securities"). The Partnership Preferred Securities are
freely transferable on the books and records of the Partnership, in person or by
a duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Partnership
Preferred Securities represented hereby are set forth in, issued under and shall
in all respects be subject to the provisions of the Amended and Restated
Agreement of Limited Partnership dated as of February 6, 1997, as the same may
be amended from time to time (the "Partnership Agreement"). Capitalized terms
used herein but not defined shall have the meaning given them in the Partnership
Agreement. The Holder is entitled to the benefits of the Partnership Guarantee
to the extent provided therein. The Partnership will provide a copy of the
Partnership Agreement and the Partnership Guarantee to a Holder without charge
upon written request to the Partnership at its principal place of business.

            Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder. Each Holder of a Partnership Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Debentures, and any other Affiliate Investment Instruments that are treated as
debt instruments by the relevant Investment Affiliate and by the Partnership, as
indebtedness for United States federal income tax purposes.


                                    A1-1
<PAGE>

            IN WITNESS WHEREOF, the Partnership has executed this certificate
this 6th day of February, 1997.


                        MERRILL LYNCH PREFERRED FUNDING II, L.P.

                              By: MERRILL LYNCH & CO., INC.,
                              as General Partner



                              By:
                                 -----------------------------------
                                 Name:    Theresa Lang
                                 Title:   Senior Vice President
                                          and Treasurer

                       (See reverse for additional terms)


                                      A1-2
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

            Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of 8% of the stated liquidation preference of $25 per
Partnership Preferred Security. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of 8% per annum. The term "Distributions" as used
herein shall mean ordinary cumulative distributions in respect of each Fiscal
Period together with any such Compounded Distributions. Distributions on the
Partnership Preferred Securities will only be made to the extent that the
Partnership has funds legally available for the payment of such distributions.
Amounts available to the Partnership for Distribution to the holders of the
Partnership Preferred Securities will be limited to payments received by the
Partnership from the Company and certain wholly owned subsidiaries on the
Initial Debentures and Affiliate Investment Instruments or from the Company on
the Partnership Guarantee or on the Eligible Debt Securities. Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in a
90-day quarter.

            Except as otherwise described herein, Distributions on the
Partnership Preferred Securities will be cumulative, will accumulate from the
date of initial issuance and will be payable quarterly in arrears, on March 30,
June 30, September 30 and December 30 of each year, commencing on March 30,
1997, if, as and when declared by the General Partner in its sole discretion. If
the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership
Preferred Securities) are in book-entry-only form, Distributions will be payable
to the Holders of record of Partnership Preferred Securities as they appear on
the books and records of the Partnership on the relevant record dates, which
will be one Business Day prior to the relevant payment dates. If the Trust or
the Property Trustee is the Holder of the Partnership Preferred Securities, all
Distributions of cash shall be made by wire transfer of same day funds to such
Holder by 10:00 a.m., New York City time, on the applicable Distribution Payment
Date. Distributions payable on any Partnership Preferred Securities that are not
punctually paid on any Distribution Payment Date will cease to be payable to the
Person in whose name such Partnership Preferred Securities are registered on the
relevant record date, and


                                      A1-3
<PAGE>

such Distribution will instead be payable to the Person in whose name such
Partnership Preferred Securities are registered on the special record date or
other specified date for payment of such defaulted or accumulated Distribution.
If the Trust Preferred Securities (or, if the Trust is liquidated, the
Partnership Preferred Securities) are not in book-entry-only form, the relevant
record dates shall be the 15th day of the month of the relevant payment dates.
In the event that any date on which Distributions are payable is not a Business
Day, payment of such Distribution shall be made on the next succeeding day which
is a Business Day (without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.

            The Partnership Preferred Securities shall be redeemable as provided
in the Partnership Agreement.


                                      A1-4
<PAGE>

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


                                   ASSIGNMENT

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

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

and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________ agent to transfer this
Partnership Preferred Security Certificate on the books of the Partnership. The
agent may substitute another to act for him or her.

Date: _______________________

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


                                      A1-5