EXHIBIT 10.89



(MULTICURRENCY--CROSS BORDER)

                                     ISDA(R)
                  International Swap Dealers Association, Inc.

                                MASTER AGREEMENT

                             dated as of May 5, 1997

Swiss   Bank   Corporation,   London   Branch   ("Party   A")  and   Interneuron
Pharmaceuticals,  Inc. ("Party B") have entered and/or anticipate  entering into
one or more transactions (each a "Transaction")  that are or will be governed by
this Master  Agreement,  which includes the schedule (the  "Schedule"),  and the
documents  and  other  confirming  evidence  (each a  "Confirmation")  exchanged
between the parties confirming those Transactions.

Accordingly, the parties agree as follows:--

1.       INTERPRETATION

(a)  DEFINITIONS.  The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.

(b) INCONSISTENCY.  In the event of any inconsistency  between the provisions of
the Schedule and the other  provisions  of this Master  Agreement,  the Schedule
will prevail.  In the event of any  inconsistency  between the provisions of any
Confirmation   and  this  Master  Agreement   (including  the  Schedule),   such
Confirmation will prevail for the purpose of the relevant Transaction.







(c) SINGLE AGREEMENT.  All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the  parties  (collectively  referred to as this  "Agreement"),  and the parties
would not otherwise enter into any Transactions.

2.         OBLIGATIONS

(a)      GENERAL CONDITIONS.

           (i) Each party will make each  payment or delivery  specified in each
           Confirmation  to be made by it,  subject to the other  provisions  of
           this Agreement.

           (ii) Payments  under this  Agreement will be made on the due date for
           value on that  date in the  place  of the  account  specified  in the
           relevant  Confirmation or otherwise  pursuant to this  Agreement,  in
           freely transferable funds and in the manner customary for payments in
           the required  currency.  Where  settlement  is by delivery  (that is,
           other than by payment), such delivery will be made for receipt on the
           due date in the manner customary for the relevant  obligation  unless
           otherwise specified in the relevant Confirmation or elsewhere in this
           Agreement.

           (iii) Each  obligation of each party under Section 2(a)(i) is subject
           to (1) the condition  precedent that no Event of Default or Potential
           Event of Default  with respect to the other party has occurred and is
           continuing,  (2) the condition  precedent  that no Early  Termination
           Date in respect of the  relevant  Transaction  has  occurred  or been
           effectively  designated  and  (3)  each  other  applicable  condition
           precedent specified in this Agreement.

(b) CHANGE OF  ACCOUNT.  Either  party may change its  account  for  receiving a
payment  or  delivery  by giving  notice to the other  party at least five Local
Business Days prior to the  scheduled  date for the payment or delivery to which
such change  applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      NETTING.  If on any date amounts would otherwise be payable:--

           (i)   in the same currency; and

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           (ii)  in respect of the same Transaction,

by each party to the other,  then, on such date, each party's obligation to make
payment of any such amount will be  automatically  satisfied and discharged and,
if the  aggregate  amount that would  otherwise  have been  payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party,  replaced by an  obligation  upon the party by whom the larger  aggregate
amount  would  have been  payable  to pay to the other  party the  excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more  Transactions  that a net amount
will be  determined  in respect of all  amounts  payable on the same date in the
same  currency  in  respect of such  Transactions,  regardless  of whether  such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation  by specifying  that  subparagraph  (ii) above
will not apply to the Transactions  identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such  Transactions from such date). This election may
be  made  separately  for  different  groups  of  Transactions  and  will  apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      DEDUCTION OR WITHHOLDING FOR TAX.

           (i) GROSS-UP.  All payments under this Agreement will be made without
           any deduction or withholding for or on account of any Tax unless such
           deduction  or  withholding  is  required  by any  applicable  law, as
           modified  by  the  practice  of  any  relevant  governmental  revenue
           authority,  then in effect.  If a party is so  required  to deduct or
           withhold, then that party ("X") will:--

                      (1)  promptly   notify  the  other  party  ("Y")  of  such
                      requirement;

                      (2)  pay to  the  relevant  authorities  the  full  amount
                      required to be deducted  or withheld  (including  the full
                      amount  required  to be  deducted  or  withheld  from  any
                      additional  amount paid by X to Y under this Section 2(d))
                      promptly  upon  the  earlier  of  determining   that  such
                      deduction or withholding  is required or receiving  notice
                      that such amount has been assessed against Y;

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                      (3)  promptly  forward  to Y an  official  receipt  (or  a
                      certified   copy),  or  other   documentation   reasonably
                      acceptable   to  Y,   evidencing   such  payment  to  such
                      authorities; and

                      (4) if  such  Tax is an  Indemnifiable  Tax,  pay to Y, in
                      addition to the payment to which Y is  otherwise  entitled
                      under  this  Agreement,   such  additional  amount  as  is
                      necessary to ensure that the net amount actually  received
                      by Y (free  and  clear  of  Indemnifiable  Taxes,  whether
                      assessed  against  X or Y) will  equal  the full  amount Y
                      would have received had no such  deduction or  withholding
                      been required.  However, X will not be required to pay any
                      additional  amount to Y to the extent that it would not be
                      required to be paid but for:--

                                 (A) the  failure by Y to comply with or perform
                                 any  agreement  contained  in Section  4(a)(i),
                                 4(a)(iii) or 4(d); or

                                 (B) the failure of a  representation  made by Y
                                 pursuant  to Section  3(f) to be  accurate  and
                                 true  unless  such   failure   would  not  have
                                 occurred  but  for (I) any  action  taken  by a
                                 taxing  authority,  or  brought  in a court  of
                                 competent jurisdiction, on or after the date on
                                 which a Transaction is entered into (regardless
                                 of whether such action is taken or brought with
                                 respect to a party to this Agreement) or (II) a
                                 Change in Tax Law.

           (ii)  LIABILITY.  If:--

                      (1) X is  required by any  applicable  law, as modified by
                      the   practice  of  any  relevant   governmental   revenue
                      authority, to make any deduction or withholding in respect
                      of  which X would  not be  required  to pay an  additional
                      amount to Y under Section 2(d)(i)(4);

                      (2) X does not so deduct or withhold; and

                      (3) a  liability  resulting  from  such  Tax  is  assessed
                      directly against X,

           then,  except to the extent Y has  satisfied  or then  satisfies  the
           liability  resulting  from such  Tax,  Y will  promptly  pay to X the
           amount  of  such  liability  (including  any  related  liability  for
           interest, but including any related liability

                                        4






           for  penalties  only if Y has failed to comply  with or  perform  any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e) DEFAULT  INTEREST;  OTHER  AMOUNTS.  Prior to the  occurrence  or  effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment  obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after  judgment) on the overdue  amount to the other party on
demand in the same  currency as such  overdue  amount,  for the period from (and
including)  the  original  due date for payment to (but  excluding)  the date of
actual  payment,  at the Default  Rate.  Such interest will be calculated on the
basis of daily  compounding and the actual number of days elapsed.  If, prior to
the occurrence or effective  designation of an Early Termination Date in respect
of  the  relevant  Transaction,  a  party  defaults  in the  performance  of any
obligation  required to be settled by  delivery,  it will  compensate  the other
party on demand if and to the extent  provided for in the relevant  Confirmation
or elsewhere in this Agreement.

3.         REPRESENTATIONS


Each party represents to the other party (which  representations  will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the  representations in Section 3(f), at all times until the
termination of this Agreement) that:--

(a)      BASIC REPRESENTATIONS.

           (i) STATUS.  It is duly organised and validly existing under the laws
           of the  jurisdiction  of its  organisation or  incorporation,  and if
           relevant under such laws, in good standing;

           (ii) POWERS. It has the power to execute this Agreement and any other
           documentation  relating to this Agreement to which it is a party,  to
           deliver this Agreement and any other  documentation  relating to this
           Agreement  that it is  required by this  Agreement  to deliver and to
           perform its  obligations  under this Agreement and any obligations it
           has under any Credit Support  Document to which it is a party and has
           taken all necessary action to authorize such execution,  delivery and
           performance;

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           (iii)  NO  VIOLATION  OR  CONFLICT.  Such  execution,   delivery  and
           performance do not violate or conflict with any law applicable to it,
           any provision of its constitutional  documents, any order or judgment
           of any court or other agency of government applicable to it or any of
           its assets or any contractual  restriction binding on or affecting it
           or any of its assets;

           (iv) CONSENTS.  All governmental and other consents that are required
           to have been  obtained by it with  respect to this  Agreement  or any
           Credit Support Document to which it is a party have been obtained and
           are in full force and effect and all  conditions of any such consents
           have been complied with; and

           (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
           Credit Support  Document to which it is a party constitute its legal,
           valid and binding  obligations,  enforceable in accordance with their
           respective terms (subject to applicable  bankruptcy,  reorganisation,
           insolvency,  moratorium or similar laws affecting  creditors'  rights
           generally and subject, as to enforceability,  to equitable principles
           of general  application  (regardless of whether enforcement is sought
           in a proceeding in equity or at law)).

(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default
or, to its knowledge,  Termination  Event with respect to it has occurred and is
continuing  and no such  event or  circumstance  would  occur as a result of its
entering into or performing its  obligations  under this Agreement or any Credit
Support Document to which it is a party.

(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action,  suit or proceeding at law or in
equity or before any court,  tribunal,  governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this  Agreement  or any Credit  Support  Document to which it is a
party or its ability to perform its  obligations  under this  Agreement  or such
Credit Support Document.

(d)  ACCURACY OF  SPECIFIED  INFORMATION.  All  applicable  information  that is
furnished in writing by or on behalf of it to the other party and is  identified
for the purpose of this  Section  3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e) PAYER TAX REPRESENTATION.  Each representation  specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.

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(f) PAYEE TAX REPRESENTATIONS.  Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.

4.         AGREEMENTS


Each party  agrees with the other that,  so long as either party has or may have
any  obligation  under this  Agreement or under any Credit  Support  Document to
which it is a party:--

(a) FURNISH  SPECIFIED  INFORMATION.  It will  deliver to the other party or, in
certain  cases under  subparagraph  (iii) below,  to such  government  or taxing
authority as the other party reasonably directs:--

           (i)  any  forms,  documents  or  certificates  relating  to  taxation
           specified in the Schedule or any Confirmation;

           (ii)  any  other   documents   specified   in  the  Schedule  or  any
           Confirmation; and

           (iii)  upon  reasonable  demand  by such  other  party,  any  form or
           document that may be required or  reasonably  requested in writing in
           order to allow such other  party or its Credit  Support  Provider  to
           make a payment under this Agreement or any applicable  Credit Support
           Document  without any deduction or  withholding  for or on account of
           any Tax or with such  deduction or  withholding at a reduced rate (so
           long as the  completion,  execution  or  submission  of such  form or
           document  would not  materially  prejudice  the  legal or  commercial
           position of the party in receipt of such demand),  with any such form
           or document  to be  accurate  and  completed  in a manner  reasonably
           satisfactory  to  such  other  party  and  to be  executed  and to be
           delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such  Confirmation  or, if
none is specified, as soon as reasonably practicable.

(b) MAINTAIN  AUTHORISATIONS.  It will use all reasonable efforts to maintain in
full force and effect all consents of any  governmental  or other authority that
are required to be obtained by it with  respect to this  Agreement or any Credit
Support Document

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to which it is a party and will use all  reasonable  efforts  to obtain any that
may become necessary in the future.

(c)  COMPLY  WITH  LAWS.  It will  comply  in all  material  respects  with  all
applicable  laws and  orders to which it may be  subject if failure so to comply
would  materially  impair  its  ability to perform  its  obligations  under this
Agreement or any Credit Support Document to which it is a party.

(d) TAX AGREEMENT.  It will give notice of any failure of a representation  made
by it under  Section 3(f) to be accurate and true promptly upon learning of such
failure.

(e)  PAYMENT  OF STAMP TAX.  Subject  to  Section  11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or  performance of this
Agreement by a jurisdiction in which it is incorporated,  organised, managed and
controlled,  or  considered  to have its  seat,  or in which a branch  or office
through which it is acting for the purpose of this Agreement is located  ("Stamp
Tax  Jurisdiction")  and will  indemnify  the other party  against any Stamp Tax
levied  or  imposed  upon the other  party or in  respect  of the other  party's
execution or performance  of this  Agreement by any such Stamp Tax  Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.

5.         EVENTS OF DEFAULT AND TERMINATION EVENTS

(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following  events  constitutes  an event of default (an
"Event of Default") with respect to such party:--

           (i)  FAILURE TO PAY OR  DELIVER.  Failure by the party to make,  when
           due,  any payment  under this  Agreement  or delivery  under  Section
           2(a)(i)  or 2(e)  required  to be made by it if such  failure  is not
           remedied on or before the third Local  Business  Day after  notice of
           such failure is given to the party;

           (ii)  BREACH OF  AGREEMENT.  Failure  by the party to comply  with or
           perform any agreement or obligation (other than an obligation to make
           any payment under this Agreement or delivery under Section 2(a)(i) or
           2(e) or to give notice of a  Termination  Event or any  agreement  or
           obligation  under Section  4(a)(i),  4(a)(iii) or 4(d) to be complied
           with or performed by the party in accordance

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           with this  Agreement if such failure is not remedied on or before the
           thirtieth day after notice of such failure is given to the party;

           (iii)  CREDIT SUPPORT DEFAULT.

                      (1) Failure by the party or any Credit Support Provider of
                      such party to comply  with or  perform  any  agreement  or
                      obligation  to be  complied  with  or  performed  by it in
                      accordance  with  any  Credit  Support  Document  if  such
                      failure is continuing  after any  applicable  grace period
                      has elapsed;

                      (2) the  expiration or  termination of such Credit Support
                      Document or the failing or ceasing of such Credit  Support
                      Document to be in full force and effect for the purpose of
                      this  Agreement  (in either case other than in  accordance
                      with  its  terms)  prior  to  the   satisfaction   of  all
                      obligations of such party under each  Transaction to which
                      such Credit Support  Document  relates without the written
                      consent of the other party; or

                      (3) the party or such Credit Support Provider  disaffirms,
                      disclaims,  repudiates or rejects, in whole or in part, or
                      challenges the validity of, such Credit Support Document;

           (iv) MISREPRESENTATION. A representation (other than a representation
           under  Section  3(e) or (f)) made or  repeated or deemed to have been
           made or repeated by the party or any Credit Support  Provider of such
           party in this Agreement or any Credit Support Document proves to have
           been  incorrect or  misleading  in any material  respect when made or
           repeated or deemed to have been made or repeated;

           (v)  DEFAULT  UNDER  SPECIFIED  TRANSACTION.  The  party,  any Credit
           Support Provider of such party or any applicable  Specified Entity of
           such party (1)  defaults  under a Specified  Transaction  and,  after
           giving effect to any applicable  notice  requirement or grace period,
           there occurs a liquidation of, an acceleration of obligations  under,
           or  any  early  termination  of,  that  Specified  Transaction,   (2)
           defaults, after giving effect to any applicable notice requirement or
           grace  period,  in making  any  payment or  delivery  due on the last
           payment,  delivery  or  exchange  date of,  or any  payment  on early
           termination of, a Specified  Transaction  (or such default  continues
           for at least

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           three  Local   Business  Days  if  there  is  no  applicable   notice
           requirement or grace period) or (3) disaffirms, disclaims, repudiates
           or rejects,  in whole or in part,  a Specified  Transaction  (or such
           action is taken by any person or entity  appointed  or  empowered  to
           operate it or act on its behalf);

           (vi) CROSS DEFAULT.  If "Cross  Default" is specified in the Schedule
           as  applying  to the party,  the  occurrence  or  existence  of (1) a
           default,  event  of  default  or  other  similar  condition  or event
           (however  described)  in respect of such  party,  any Credit  Support
           Provider  of such party or any  applicable  Specified  Entity of such
           party  under  one or  more  agreements  or  instruments  relating  to
           Specified  Indebtedness of any of them (individually or collectively)
           in an  aggregate  amount  of not less than the  applicable  Threshold
           Amount (as  specified  in the  Schedule)  which has  resulted in such
           Specified  Indebtedness becoming, or becoming capable at such time of
           being declared, due and payable under such agreements or instruments,
           before it would  otherwise have been due and payable or (2) a default
           by such party,  such Credit Support Provider or such Specified Entity
           (individually  or collectively) in making one or more payments on the
           due  date  thereof  in an  aggregate  amount  of not  less  than  the
           applicable  Threshold  Amount under such  agreements  or  instruments
           (after giving effect to any  applicable  notice  requirement or grace
           period);

           (vii)  BANKRUPTCY.  The party,  any Credit  Support  Provider of such
           party or any applicable Specified Entity of such party:- -

                      (1) is dissolved  (other than pursuant to a consolidation,
                      amalgamation  or  merger);  (2)  becomes  insolvent  or is
                      unable to pay its debts or fails or admits in writing  its
                      inability  generally  to pay its debts as they become due;
                      (3) makes a general assignment, arrangement or composition
                      with or for the benefit of its  creditors;  (4) institutes
                      or  has  instituted  against  it a  proceeding  seeking  a
                      judgment of  insolvency  or bankruptcy or any other relief
                      under any  bankruptcy or  insolvency  law or other similar
                      law  affecting   creditors'   rights,  or  a  petition  is
                      presented for its winding-up or  liquidation,  and, in the
                      case of any such  proceeding  or  petition  instituted  or
                      presented  against it,  such  proceeding  or petition  (A)
                      results in a judgment of  insolvency  or bankruptcy or the
                      entry of an order for relief or the making of an order for
                      its  winding-up or  liquidation  or (B) is not  dismissed,
                      discharged,  stayed or  restrained  in each case within 30
                      days of the institution or presentation thereof; (5) has a
                      resolution passed for its winding-up, official

                                       10




                      management  or  liquidation  (other  than  pursuant  to  a
                      consolidation,  amalgamation  or  merger);  (6)  seeks  or
                      becomes  subject to the  appointment of an  administrator,
                      provisional liquidator,  conservator,  receiver,  trustee,
                      custodian or other  similar  official for it or for all or
                      substantially all its assets; (7) has a secured party take
                      possession of all or substantially all its assets or has a
                      distress,  execution,  attachment,  sequestration or other
                      legal process  levied,  enforced or sued on or against all
                      or  substantially  all its assets and such  secured  party
                      maintains   possession,   or  any  such   process  is  not
                      dismissed,  discharged, stayed or restrained, in each case
                      within 30 days thereafter; (8) causes or is subject to any
                      event with respect to it which,  under the applicable laws
                      of any jurisdiction, has an analogous effect to any of the
                      events specified in clauses (1) to (7) (inclusive); or (9)
                      takes any  action in  furtherance  of, or  indicating  its
                      consent to,  approval of, or  acquiescence  in, any of the
                      foregoing acts; or

           (viii) MERGER  WITHOUT  ASSUMPTION.  The party or any Credit  Support
           Provider of such party  consolidates  or amalgamates  with, or merges
           with or into,  or transfers all or  substantially  all its assets to,
           another entity and, at the time of such consolidation,  amalgamation,
           merger or transfer:--

                      (1) the resulting, surviving or transferee entity fails to
                      assume all the  obligations  of such party or such  Credit
                      Support  Provider  under  this  Agreement  or  any  Credit
                      Support  Document  to  which it or its  predecessor  was a
                      party by  operation  of law or  pursuant  to an  agreement
                      reasonably   satisfactory  to  the  other  party  to  this
                      Agreement; or

                      (2) the benefits of any Credit  Support  Document  fail to
                      extend  (without  the  consent of the other  party) to the
                      performance  by such  resulting,  surviving or  transferee
                      entity of its obligations under this Agreement.

(b) TERMINATION  EVENTS.  The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event  specified  below  constitutes  an  Illegality if the
event is specified  in (i) below,  a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below,  and,
if  specified  to be  applicable,  a Credit  Event  Upon  Merger if the event is
specified pursuant to (iv)

                                       11




below or an Additional Termination Event if the event is specified pursuant to 
(v) below:--

           (i)  ILLEGALITY.  Due to the  adoption  of,  or any  change  in,  any
           applicable law after the date on which a Transaction is entered into,
           or due to the promulgation  of, or any change in, the  interpretation
           by  any  court,  tribunal  or  regulatory  authority  with  competent
           jurisdiction  of any  applicable  law after  such  date,  it  becomes
           unlawful  (other than as a result of a breach by the party of Section
           4(b)) for such party (which will be the Affected Party):--

                      (1) to perform any absolute or  contingent  obligation  to
                      make a payment  or  delivery  or to  receive a payment  or
                      delivery in respect of such  Transaction or to comply with
                      any other material provision of this Agreement relating to
                      such Transaction; or

                      (2) to perform, or for any Credit Support Provider of such
                      party to perform, any contingent or other obligation which
                      the party (or such Credit Support  Provider) has under any
                      Credit Support Document relating to such Transaction;

           (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
           brought in a court of competent jurisdiction, on or after the date on
           which a  Transaction  is entered  into  (regardless  of whether  such
           action is taken or brought with respect to a party to this Agreement)
           or (y) a Change in Tax Law,  the party  (which  will be the  Affected
           Party) will,  or there is a substantial  likelihood  that it will, on
           the next succeeding  Scheduled Payment Date (1) be required to pay to
           the other party an additional  amount in respect of an  Indemnifiable
           Tax under  Section  2(d)(i)(4)  (except in respect of interest  under
           Section  2(e),  6(d)(ii) or 6(e)) or (2) receive a payment from which
           an amount is required to be deducted or withheld for or on account of
           a Tax (except in respect of interest under Section 2(e),  6(d)(ii) or
           6(e)) and no  additional  amount is required to be paid in respect of
           such Tax under  Section  2(d)(i)(4)  (other than by reason of Section
           2(d)(i)(4)(A) or
(B));

           (iii) TAX EVENT UPON MERGER.  The party (the "Burdened Party") on the
           next succeeding Scheduled Payment Date will either (1) be required to
           pay an  additional  amount in respect of an  Indemnifiable  Tax under
           Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
           6(d)(ii) or 6(e)) or (2)  receive a payment  from which an amount has
           been deducted or withheld for or on account of any  Indemnifiable Tax
           in respect of which the other party is not

                                       12




           required to pay an additional amount (other than by reason of Section
           2(d)(i)(4)(A)  or  (B)),  in  either  case  as a  result  of a  party
           consolidating  or  amalgamating  with,  or merging  with or into,  or
           transferring all or  substantially  all its assets to, another entity
           (which  will be the  Affected  Party)  where  such  action  does  not
           constitute an event described in Section 5(a)(viii);

           (iv)  CREDIT  EVENT UPON  MERGER.  If "Credit  Event Upon  Merger" is
           specified in the Schedule as applying to the party, such party ("X"),
           any Credit Support  Provider of X or any applicable  Specified Entity
           of X  consolidates  or  amalgamates  with, or merges with or into, or
           transfers all or substantially  all its assets to, another entity and
           such  action  does not  constitute  an  event  described  in  Section
           5(a)(viii) but the  creditworthiness  of the resulting,  surviving or
           transferee  entity is  materially  weaker than that of X, such Credit
           Support  Provider  or such  Specified  Entity,  as the  case  may be,
           immediately  prior  to such  action  (and,  in such  event,  X or its
           successor or transferee, as appropriate, will be the Affected Party);
           or

           (v) ADDITIONAL  TERMINATION  EVENT.  If any  "Additional  Termination
           Event" is specified in the Schedule or any  Confirmation as applying,
           the occurrence of such event (and, in such event,  the Affected Party
           or  Affected  Parties  shall  be as  specified  for  such  Additional
           Termination Event in the Schedule or such Confirmation).

(c) EVENT OF DEFAULT AND  ILLEGALITY.  If an event or  circumstance  which would
otherwise  constitute  or give rise to an Event of Default also  constitutes  an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.

6.         EARLY TERMINATION

(a) RIGHT TO TERMINATE  FOLLOWING  EVENT OF DEFAULT.  If at any time an Event of
Default  with  respect to a party (the  "Defaulting  Party") has occurred and is
then continuing,  the other party (the "Non-defaulting  Party") may, by not more
than 20 days notice to the  Defaulting  Party  specifying  the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions.  If, however,
"Automatic  Early  Termination"  is  specified  in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur  immediately  upon the  occurrence  with  respect to such party of an
Event of Default  specified in Section  5(a)(vii)(1),  (3),  (5), (6) or, to the
extent analogous thereto, (8), and as of the

                                       13





time  immediately  preceding the  institution of the relevant  proceeding or the
presentation  of the relevant  petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).

(b)      RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.

           (i) NOTICE.  If a Termination  Event occurs,  an Affected Party will,
           promptly  upon  becoming   aware  of  it,  notify  the  other  party,
           specifying  the nature of that  Termination  Event and each  Affected
           Transaction  and will also give such  other  information  about  that
           Termination Event as the other party may reasonably require.

           (ii)  TRANSFER TO AVOID  TERMINATION  EVENT.  If either an Illegality
           under Section  5(b)(i)(1) or a Tax Event occurs and there is only one
           Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
           Party is the Affected Party,  the Affected Party will, as a condition
           to its right to designate  an Early  Termination  Date under  Section
           6(b)(iv),  use all  reasonable  efforts  (which will not require such
           party to incur a loss, excluding immaterial,  incidental expenses) to
           transfer  within 20 days after it gives notice under Section  6(b)(i)
           all its rights and obligations under this Agreement in respect of the
           Affected Transactions to another of its Offices or Affiliates so that
           such Termination Event ceases to exist.

           If the  Affected  Party is not able to make such a  transfer  it will
           give  notice to the other  party to that  effect  within  such 20 day
           period,  whereupon the other party may effect such a transfer  within
           30 days after the notice is given under Section 6(b)(i).

           Any such  transfer by a party  under this  Section  6(b)(ii)  will be
           subject  to and  conditional  upon the prior  written  consent of the
           other party, which consent will not be withheld if such other party's
           policies  in  effect  at such  time  would  permit  it to enter  into
           transactions with the transferee on the terms proposed.

           (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
           or a Tax Event occurs and there are two Affected Parties,  each party
           will use all  reasonable  efforts to reach  agreement  within 30 days
           after  notice  thereof is given  under  Section  6(b)(i) on action to
           avoid that Termination Event.

                                       14




           (iv)  RIGHT TO TERMINATE.  If:--

                      (1) a transfer  under  Section  6(b)(ii)  or an  agreement
                      under Section 6(b)(iii),  as the case may be, has not been
                      effected with respect to all Affected  Transactions within
                      30 days after an Affected Party gives notice under Section
                      6(b)(i); or

                      (2) an Illegality under Section 5(b)(i)(2), a Credit Event
                      Upon Merger or an Additional  Termination Event occurs, or
                      a Tax Event Upon Merger  occurs and the Burdened  Party is
                      not the Affected Party,

           either party in the case of an Illegality,  the Burdened Party in the
           case of a Tax Event Upon Merger,  any Affected Party in the case of a
           Tax Event or an  Additional  Termination  Event if there is more than
           one Affected  Party,  or the party which is not the Affected Party in
           the case of a Credit Event Upon Merger or an  Additional  Termination
           Event if there is only one  Affected  Party may,  by not more than 20
           days  notice  to the  other  party  and  provided  that the  relevant
           Termination  Event is then  continuing,  designate  a day not earlier
           than the day such notice is effective as an Early Termination Date in
           respect of all Affected Transactions.

(c)      EFFECT OF DESIGNATION.

           (i) If notice  designating an Early  Termination  Date is given under
           Section  6(a) or (b),  the Early  Termination  Date will occur on the
           date so  designated,  whether or nor the relevant Event of Default or
           Termination Event is then continuing.

           (ii)  Upon  the  occurrence  or  effective  designation  of an  Early
           Termination  Date, no further  payments or  deliveries  under Section
           2(a)(i)  or 2(e) in respect of the  Terminated  Transactions  will be
           required to be made, but without prejudice to the other provisions of
           this Agreement.  The amount,  if any,  payable in respect of an Early
           Termination Date shall be determined pursuant to Section 6(e).

                                       15





(d)      CALCULATIONS.

           (i) STATEMENT.  On or as soon as reasonably practicable following the
           occurrence  of an Early  Termination  Date,  each party will make the
           calculations  on its part, if any,  contemplated  by Section 6(e) and
           will  provide  to  the  other  party  a  statement  (1)  showing,  in
           reasonable   detail,   such  calculations   (including  all  relevant
           quotations  and specifying any amount payable under Section 6(e)) and
           (2)  giving  details  of the  relevant  account  to which any  amount
           payable to it is to be paid.  In the absence of written  confirmation
           from the  source of a  quotation  obtained  in  determining  a Market
           Quotation,  the records of the party obtaining such quotation will be
           conclusive evidence of the existence and accuracy of such quotation.

           (ii) PAYMENT  DATE.  An amount  calculated as being due in respect of
           any Early  Termination Date under Section 6(e) will be payable on the
           date that notice of the amount  payable is effective  (in the case of
           an Early  Termination  Date which is designated or occurs as a result
           of an Event of  Default)  and on the day which is two Local  Business
           Days after the day on which notice of the amount payable is effective
           (in the case of an Early  Termination  Date which is  designated as a
           result of a  Termination  Event).  Such amount will be paid  together
           with (to the extent  permitted under applicable law) interest thereon
           (before as well as after judgment) in the Termination Currency,  from
           (and  including)  the  relevant  Early   Termination   Date  to  (but
           excluding) the date such amount is paid, at the Applicable Rate. Such
           interest will be calculated on the basis of daily compounding and the
           actual number of days elapsed.

(e) PAYMENTS ON EARLY  TERMINATION.  If an Early  Termination  Date occurs,  the
following  provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the  "First  Method"  or the  "Second  Method".  If the  parties  fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The  amount,  if any,  payable  in  respect  of an  Early  Termination  Date and
determined pursuant to this Section will be subject to any Set-off.

           (i) EVENTS OF DEFAULT.  If the Early Termination Date results from an
           Event of Default:--

                                       16





                      (1) First Method and Market Quotation. If the First Method
                      and Market  Quotation apply, the Defaulting Party will pay
                      to the  Non-defaulting  Party the  excess,  if a  positive
                      number,   of  (A)  the  sum  of  the   Settlement   Amount
                      (determined by the Non-defaulting Party) in respect of the
                      Terminated   Transactions  and  the  Termination  Currency
                      Equivalent   of   the   Unpaid   Amounts   owing   to  the
                      Non-defaulting  Party  over (B) the  Termination  Currency
                      Equivalent of the Unpaid  Amounts owing to the  Defaulting
                      Party.

                      (2) First  Method and Loss.  If the First  Method and Loss
                      apply,   the  Defaulting   Party  will  pay  to  the  Non-
                      defaulting Party, if a positive number, the Non-defaulting
                      Party's Loss in respect of this Agreement.

                      (3)  Second  Method and  Market  Quotation.  If the Second
                      Method  and  Market  Quotation  apply,  an amount  will be
                      payable  equal  to (A)  the sum of the  Settlement  Amount
                      (determined by the Non-defaulting Party) in respect of the
                      Terminated   Transactions  and  the  Termination  Currency
                      Equivalent   of   the   Unpaid   Amounts   owing   to  the
                      Non-defaulting  Party  less (B) the  Termination  Currency
                      Equivalent of the Unpaid  Amounts owing to the  Defaulting
                      Party. If that amount is a positive number, the Defaulting
                      Party will pay it to the Non-defaulting  Party; if it is a
                      negative  number,  the  Non-defaulting  Party will pay the
                      absolute value of that amount to the Defaulting Party.

                      (4) Second  Method and Loss. If the Second Method and Loss
                      apply,   an   amount   will  be   payable   equal  to  the
                      Non-defaulting  Party's Loss in respect of this Agreement.
                      If that amount is a positive number,  the Defaulting Party
                      will  pay  it  to  the  Non-defaulting  Party;  if it is a
                      negative  number,  the  Non-defaulting  Party will pay the
                      absolute value of that amount to the Defaulting Party.

           (ii) TERMINATION EVENTS. If the Early Termination Date results from a
           Termination Event: --

                      (1) One Affected  Party.  If there is one Affected  Party,
                      the amount  payable will be determined in accordance  with
                      Section  6(e)(i)(3),   if  Market  Quotation  applies,  or
                      Section  6(e)(i)(4),  if Loss  applies,  except  that,  in
                      either case, references to the Defaulting Party and to the
                      Non-

                                       17





             defaulting Party will be deemed to be references to the
          Affected Party and the party which is not the Affected Party,
            respectively, and, if Loss applies and fewer than all the
         Transactions are being terminated, Loss shall be calculated in
                     respect of all Terminated Transactions.

                  (2) Two Affected Parties. If there are two Affected Parties:--

                                 (A) if Market  Quotation  applies,  each  party
                                 will  determine a Settlement  Amount in respect
                                 of the Terminated  Transactions,  and an amount
                                 will  be  payable  equal  to (I) the sum of (a)
                                 one-half   of  the   difference   between   the
                                 Settlement  Amount of the party with the higher
                                 Settlement  Amount  ("X")  and  the  Settlement
                                 Amount of the party  with the lower  Settlement
                                 Amount ("Y") and (b) the  Termination  Currency
                                 Equivalent  of the  Unpaid  Amounts  owing to X
                                 less (II) the Termination  Currency  Equivalent
                                 of the Unpaid Amounts owing to Y; and

                                 (B) if Loss applies,  each party will determine
                                 its Loss in respect of this  Agreement  (or, if
                                 fewer  than  all  the  Transactions  are  being
                                 terminated,   in  respect  of  all   Terminated
                                 Transactions)  and an  amount  will be  payable
                                 equal to one-half of the difference between the
                                 Loss of the party  with the  higher  Loss ("X")
                                 and the Loss of the party with the lower Loss
("Y").

                      If the amount payable is a positive  number, Y will pay it
                      to X; if it is negative  number,  X will pay the  absolute
                      value of that amount to Y.

           (iii)  ADJUSTMENT FOR  BANKRUPTCY.  In  circumstances  where an Early
           Termination Date occurs because "Automatic Early Termination" applies
           in respect of a party, the amount  determined under this Section 6(e)
           will be subject to such  adjustments as are appropriate and permitted
           by law to reflect any payments or deliveries made by one party to the
           other under this  Agreement (and retained by such other party) during
           the period from the relevant Early  Termination  Date to the date for
           payment determined under Sections 6(d)(ii).

           (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
           an  amount  recoverable  under  this  Section  6(e)  is a  reasonable
           pre-estimate  of loss and not a penalty.  Such  amount is payable for
           the loss of bargain and the loss of protection  against  future risks
           and except as otherwise provided in this

                                       18





           Agreement  neither  party will be entitled to recover any  additional
damages as a consequence of such losses.

7.         TRANSFER


Subject  to  Section  6(b)(ii),  neither  this  Agreement  nor any  interest  or
obligation  in or under this  Agreement  may be  transferred  (whether by way of
security or otherwise) by either party without the prior written  consent of the
other party, except that:--

(a)  a  party  may  make  such  a  transfer  of  this  Agreement  pursuant  to a
consolidation  or amalgamation  with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b) a party may make such a transfer  of all or any part of its  interest in any
amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.         CONTRACTUAL CURRENCY

(a) PAYMENT IN THE CONTRACTUAL CURRENCY.  Each payment under this Agreement will
be made in the relevant  currency  specified in this  Agreement for that payment
(the  "Contractual  Currency").  To the extent  permitted by applicable law, any
obligation to make payments  under this  Agreement in the  Contractual  Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual  Currency,  except to the extent such  tender  results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in  converting  the  currency  so  tendered  into the  Contractual
Currency,  of the full amount in the Contractual Currency of all amounts payable
in respect of this  Agreement.  If for any reason the amount in the  Contractual
Currency  so  received  falls  short of the amount in the  Contractual  Currency
payable in respect of this  Agreement,  the party  required  to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the  Contractual  Currency as may be necessary to  compensate  for the
shortfall.  If for any reason the amount in the Contractual Currency so received
exceeds  the  amount in the  Contractual  Currency  payable  in  respect of this
Agreement,  the party  receiving the payment will refund  promptly the amount of
such excess.

                                       19





(b)  JUDGMENTS.  To the extent  permitted by applicable  law, if any judgment or
order  expressed in a currency other than the  Contractual  Currency is rendered
(i) for the payment of any amount owing in respect of this  Agreement,  (ii) for
the payment of any amount  relating to any early  termination in respect of this
Agreement  or (iii) in respect of a judgment  or order of another  court for the
payment  of any  amount  described  in (i) or  (ii)  above,  the  party  seeking
recovery,  after recovery in full of the aggregate amount to which such party is
entitled  pursuant  to the  judgment  or  order,  will be  entitled  to  receive
immediately  from the other party the amount of any shortfall of the Contractual
Currency  received  by such  party as a  consequence  of sums paid in such other
currency  and  will  refund  promptly  to the  other  party  any  excess  of the
Contractual  Currency  received by such party as a  consequence  of sums paid in
such other  currency if such shortfall or such excess arises or results from any
variation  between  the rate of exchange  at which the  Contractual  Currency is
converted  into the  currency of the  judgment or order for the purposes of such
judgment or order and the rate of  exchange at which such party is able,  acting
in a reasonable  manner and in good faith in  converting  the currency  received
into the Contractual  Currency,  to purchase the  Contractual  Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange  payable in connection  with the purchase of or conversion  into the
Contractual Currency.

(c) SEPARATE  INDEMNITIES.  To the extent  permitted by  applicable  law,  these
indemnities  constitute  separate  and  independent  obligations  form the other
obligations in this  Agreement,  will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof  being  made for any other  sums  payable  in  respect of this
Agreement.

(d) EVIDENCE OF LOSS.  For the purpose of this Section 8, it will be  sufficient
for a party to  demonstrate  that it would  have  suffered  a loss had an actual
exchange or purchase been made.

9.         MISCELLANEOUS

(a) ENTIRE  AGREEMENT.  This  Agreement  constitutes  the entire  agreement  and
understanding  of the parties with respect to its subject  matter and supersedes
all oral communication and prior writings with respect thereto.

                                       20





(b)  AMENDMENTS.  No  amendment,  modification  or  waiver  in  respect  of this
Agreement will be effective unless in writing  (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)  SURVIVAL  OF  OBLIGATIONS.  Without  prejudice  to Sections  2(a)(iii)  and
6(c)(ii),  the  obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)  REMEDIES  CUMULATIVE.  Except as  provided in this  Agreement,  the rights,
powers,  remedies and  privileges  provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      COUNTERPARTS AND CONFIRMATIONS.

           (i) This Agreement (and each  amendment,  modification  and waiver in
           respect  of  it)  may  be  executed  and  delivered  in  counterparts
           (including by facsimile  transmission),  each of which will be deemed
           an original.

           (ii) The parties  intend that they are legally  bound by the terms of
           each  Transaction  from the moment they agree to those terms (whether
           orally or otherwise). A Confirmation shall be entered into as soon as
           practicable  and  may  be  executed  and  delivered  in  counterparts
           (including by facsimile transmission) or be created by an exchange of
           telexes or by an exchange  of  electronic  messages on an  electronic
           messaging  system,  which in each  case  will be  sufficient  for all
           purposes  to evidence a binding  supplement  to this  Agreement.  The
           parties will specify therein or through another  effective means that
           any such  counterpart,  telex or  electronic  message  constitutes  a
           Confirmation.

(f) NO WAIVER OF RIGHTS.  A failure or delay in exercising  any right,  power or
privilege  in respect of this  Agreement  will not be  presumed  to operate as a
waiver,  and a single or partial exercise of any right,  power or privilege will
not be presumed to preclude any subsequent or further  exercise,  of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)  HEADINGS.  The  headings  used in this  Agreement  are for  convenience  of
reference  only and are not to affect  the  construction  of or to be taken into
consideration in interpreting this Agreement.

                                       21





10.        OFFICES; MULTIBRANCH PARTIES

(a) If Section  10(a) is specified in the Schedule as applying,  each party that
enters into a  Transaction  through an Office other than its head or home office
represents to the other party that,  notwithstanding the place of booking office
or jurisdiction of  incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office.  This  representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.

(b)  Neither  party may change the Office  through  which it makes and  receives
payment or deliveries for the purpose of a Transaction without the prior written
consent of the other party.

(c) If a party  is  specified  as a  Multibranch  Party  in the  Schedule,  such
Multibranch  Party  may  make and  receive  payments  or  deliveries  under  any
Transaction  through any Office listed in the Schedule,  and the Office  through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.        EXPENSES


A Defaulting Party will, on demand,  indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses,  including legal fees and
Stamp  Tax,  incurred  by such  other  party by  reason of the  enforcement  and
protection of its rights under this Agreement or any Credit Support  Document to
which the Defaulting  Party is a party or by reason of the early  termination of
any Transaction, including, but not limited to, costs of collection.

12.        NOTICES

(a)  EFFECTIVENESS.  Any  notice  or  other  communication  in  respect  of this
Agreement  may be given in any manner set forth below  (except  that a notice or
other  communication  under  Section  5 or 6  may  not  be  given  by  facsimile
transmission  or  electronic  messaging  system) to the  address or number or in
accordance  with the  electronic  messaging  system  details  provided  (see the
Schedule) and will be deemed effective as indicated:--

                                       22





           (i) if in writing and delivered in person or by courier,  on the date
           it is delivered;

           (ii) if sent by  telex,  on the date the  recipient's  answerback  is
           received;

           (iii)  if  sent  by   facsimile   transmission,   on  the  date  that
           transmission  is received by a responsible  employee of the recipient
           in legible form (it being  agreed that the burden of proving  receipt
           will be on the  sender and will not be met by a  transmission  report
           generated by the sender's facsimile machine);

           (iv) if sent by certified or registered  mail (airmail,  if overseas)
           or the equivalent (return receipt  requested),  on the date that mail
           is delivered or its delivery is attempted; or

           (v)  if  sent  by  electronic  messaging  system,  on the  date  that
           electronic message is received,

unless the date of that  delivery (or attempted  delivery) or that  receipt,  as
applicable,  is not a Local Business Day or that  communication is delivered (or
attempted) or received,  as  applicable,  after the close of business on a Local
Business  Day,  in which  case  that  communication  shall be  deemed  given and
effective on the first following day that is a Local Business Day.

(b)  CHANGE OF  ADDRESSES.  Either  party may by notice to the other  change the
address,  telex, or facsimile  number or electronic  messaging system details at
which notices or other communications are to be given to it.

13.        GOVERNING LAW AND JURISDICTION.

(a) GOVERNING LAW.This Agreement will be governed by and construed in accordance
with the law specified in the Schedule.

(b) JURISDICTION.  With respect to any suit,  action or proceedings  relating to
this Agreement ("Proceedings"), each party irrevocably:--

           (i)  submits  to the  jurisdiction  of the  English  courts,  if this
           Agreement  is  expressed  to be  governed  by English  law, or to the
           non-exclusive jurisdiction of the courts of the State of New York and
           the United States District Court

                                       23




           located  in the  Borough  of  Manhattan  in New  York  City,  if this
           Agreement is expressed to be governed by the laws of the State of New
           York; and

           (ii) waives any objection which it may have at any time to the laying
           of venue of any  Proceedings  brought in any such  court,  waives any
           claim that such  Proceedings  have been  brought  in an  inconvenient
           forum and further  waives the right to object,  with respect to other
           Proceedings, that such court does not have any jurisdiction over such
           party.

Nothing in this Agreement  precludes  either party from bringing  Proceedings in
any other jurisdiction  (outside,  if this Agreement is expressed to be governed
by English law, the Contracting  States, as defined in Section 1(3) of the Civil
Jurisdiction  and  Judgments  Act  1982  or  any   modification,   extension  or
re-enactment  thereof  for the time  being in force)  nor will the  bringing  of
Proceedings  in  any  one  or  more  jurisdictions   preclude  the  bringing  of
Proceedings in any other jurisdiction.

(c) SERVICE OF PROCESS.  Each party  irrevocably  appoints the Process Agent (if
any) specified  opposite its name in the Schedule to receive,  for it and on its
behalf,  service of process in any  Proceedings.  If for any reason any  party's
Process  Agent is unable to act as such,  such  party will  promptly  notify the
other party and within 30 days appoint a substitute  process  agent to the other
party. The parties irrevocably consent to service of process given in the manner
provided for notices in Section 12.  Nothing in this  Agreement  will affect the
right of either party to serve process in any other manner permitted by law.

(d) WAIVER OF IMMUNITIES.  Each party irrevocably  waives, to the fullest extent
permitted by applicable  law, with respect to itself and its revenues and assets
(irrespective  of their use or  intended  use),  all  immunity on the grounds of
sovereignty or other similar  grounds from (i) suit,  (ii)  jurisdiction  of any
court, (iii) relief by way of injunction,  order for specific performance or for
recovery of property,  (iv)  attachments of its assets  (whether before or after
judgment)  and (v) execution or  enforcement  of any judgment to which it or its
revenues or assets might  otherwise be entitled in any Proceedings in the courts
of  any  jurisdiction  and  irrevocably  agrees,  to  the  extent  permitted  by
applicable law, that it will not claim any such immunity in any Proceedings.

                                       24





14.        DEFINITIONS

As used in this Agreement.


"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).

"AFFECTED PARTY" has the meaning specified in Section 5(b).

"AFFECTED  TRANSACTIONS"  means  (a)  with  respect  to  any  Termination  Event
consisting  of  an  Illegality,   Tax  Event  or  Tax  Event  Upon  Merger,  all
Transactions  affected by the occurrence of such Termination  Event and (b) with
respect to any other Termination Event, all Transactions.

"AFFILIATE"  means,  subject to the  Schedule,  in relation  to any person,  any
entity  controlled,  directly  or  indirectly,  by the  person,  any entity that
controls,  directly  or  indirectly,  the  person  or  any  entity  directly  or
indirectly under common control with the person. For this purpose,  "control" of
any entity or person  means  ownership  of a majority of the voting power of the
entity or person.

"APPLICABLE RATE" means: --

(a) in respect of obligations  payable or deliverable  (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b) in respect of an  obligation  to pay an amount under  Section 6(e) of either
party from and after the date  (determined in accordance with Section  6(d)(ii))
on which that amount is payable, the Default Rate;

(c) in respect of all other  obligations  payable or deliverable (or which would
have  been  but  for  Section   2(a)(iii))  by  a   Non-defaulting   Party,  the
Non-defaulting Rate; and

(d) in all other cases, the Terminating Rate.

"BURDENED PARTY" has the meaning specified in Section 5(b).

"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official

                                       25





interpretation  of any  law)  that  occurs  on or after  the  date on which  the
relevant Transaction is entered into.

"CONSENT"  includes  a  consent,  approval,  action,  authorisation,  exemption,
notice, filing, registration or exchange control consent.

"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).

"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.

"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.

"DEFAULT  RATE"  means a rate per  annum  equal to the  cost  (without  proof or
evidence of any actual  cost) to the relevant  payee (as  certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

"DEFAULTING PARTY" has the meaning specified in Section 6(a).

"EARLY  TERMINATION  DATE" means the date  determined in accordance with Section
6(a) or 6(b)(iv).

"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"ILLEGALITY" has the meaning specified in Section 5(b).

"INDEMNIFIABLE  TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation  authority  imposing such
Tax and the  recipient  of such  payment or a person  related to such  recipient
(including,  without  limitation,  a connection  arising from such  recipient or
related person being or having been a citizen or resident of such  jurisdiction,
or being or having been organised,  present or engaged in a trade or business in
such  jurisdiction,  or having or having had a permanent  establishment or fixed
place of business in such  jurisdiction,  but  excluding  a  connection  arising
solely  from such  recipient  or  related  person  having  executed,  delivered,
performed  its  obligations  or  received a payment  under,  or  enforced,  this
Agreement or a Credit Support Document).

                                       26





"LAW" includes any treaty, law, rule or regulation (as modified,  in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.

"LOCAL BUSINESS DAY" means,  subject to the Schedule,  a day on which commercial
banks are open for business  (including dealings in foreign exchange and foreign
currency  deposits) (a) in relation to any obligation under Section 2(a)(i),  in
the place(s) specified in the relevant Confirmation or, if not so specified,  as
otherwise agreed by the parties in writing or determined  pursuant to provisions
contained, or incorporated by reference,  in this Agreement,  (b) in relation to
any other  payment,  in the place where the relevant  account is located and, if
different,  in the principal  financial  centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication,  including notice
contemplated  under Section  5(a)(i),  in the city  specified in the address for
notice  provided by the recipient and, in the case of a notice  contemplated  by
Section  2(b),  in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"LOSS"  means,  with  respect  to  this  Agreement  or  one or  more  Terminated
Transactions,  as the  case  may  be,  and a  party,  the  Termination  Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case  expressed as a negative  number)
in connection  with this  Agreement or that  Terminated  Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the  election of such party but without  duplication,  loss or
cost  incurred  as a  result  of  its  terminating,  liquidating,  obtaining  or
reestablishing any hedge or related trading position (or any gain resulting from
any of them).  Loss  includes  losses  and costs (or  gains) in  respect  of any
payment or delivery  required to have been made (assuming  satisfaction  of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid  duplication,  if Section 6(e)(i)(1) or (3)
or  6(e)(ii)(2)(A)  applies.  Loss does not  include a  party's  legal  fees and
out-of-pocket  expenses referred to under Section 11. A party will determine its
Loss as of the relevant  Early  Termination  Date, or, if that is not reasonably
practicable,  as of the earliest date thereafter as is reasonably practicable. A
party  may (but need not)  determine  its Loss by  reference  to  quotations  of
relevant  rates or  prices  from one or more  leading  dealers  in the  relevant
markets.

"MARKET  QUOTATION" means,  with respect to one or more Terminated  Transactions
and a party  making  the  determination,  an amount  determined  on the basis of
quotations

                                       27





from Reference Market-makers. Each quotation will be for an amount, if any, that
would be paid to such party  (expressed  as a negative  number) or by such party
(expressed as a positive number) in  consideration of an agreement  between such
party (taking into account any existing Credit Support  Document with respect to
the obligations of such party) and the quoting  Reference  Market-maker to enter
into a transaction (the "Replacement Transaction") that would have the effect of
preserving  for such party the  economic  equivalent  of any payment or delivery
(whether the  underlying  obligation was absolute or contingent and assuming the
satisfaction  of each  applicable  condition  precedent)  by the  parties  under
Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated
Transactions   that  would,  but  for  the  occurrence  of  the  relevant  Early
Termination  Date, have been required after that date. For this purpose,  Unpaid
Amounts  in  respect  of the  Terminated  Transaction  or  group  of  Terminated
Transactions are to be excluded but, without limitation, any payment or delivery
that would,  but for the relevant  Early  Termination  Date,  have been required
(assuming  satisfaction of each applicable condition precedent) after that Early
Termination Date is to be included. The Replacement Transaction would be subject
to such documentation as such party and the Reference  Market-maker may, in good
faith,  agree.  The party making the  determination  (or its agent) will request
each Reference  Market-maker  to provide its quotation to the extent  reasonably
practicable as of the same day and time (without regard to different time zones)
on or as soon as reasonably  practicable  after the relevant  Early  Termination
Date.  The day and time as of which those  quotations are to be obtained will be
selected  in good  faith by the  party  obliged  to make a  determination  under
Section  6(e),  and, if each party is so obliged,  after  consultation  with the
other. If more than three quotations are provided,  the Market Quotation will be
the arithmetic mean of the quotations,  without regard to the quotations  having
the highest and lowest  values.  If exactly three such  quotations are provided,
the Market  Quotation will be the quotation  remaining  after  disregarding  the
highest and lowest quotations.  For this purpose, if more than one quotation has
the same highest value or lowest  value,  then one of such  quotations  shall be
disregarded. If fewer than three quotations are provided, it will be deemed that
the  Market  Quotation  in respect of such  Terminated  Transaction  or group of
Terminated Transactions cannot be determined.

"NON-DEFAULT  RATE" means a rate per annum equal to the cost  (without  proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).

                                       28





"OFFICE" means a branch or office of a party,  which may be such party's head or
home office.

"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"REFERENCE  MARKET-MAKERS"  means four leading  dealers in the  relevant  market
selected  by the party  determining  a Market  Quotation  in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an  extension  of credit  and (b) to the  extent  practicable,  from  among such
dealers having an office in the same city.

"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its  seat,  (b) where an Office  through  which the party is acting  for
purposes of this  Agreement  is located,  (c) in which the party  executes  this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"SCHEDULED  PAYMENT  DATE"  means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"SET-OFF" means set-off, offset,  combination of accounts, right of retention or
withholding  or  similar  right or  requirement  to which the payer of an amount
under Section 6 is entitled or subject  (whether  arising under this  Agreement,
another contract,  applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"SETTLEMENT  AMOUNT"  means,  with respect to a party and any Early  Termination
Date, the sum of:--

(a) the  Termination  Currency  Equivalent  of the  Market  Quotations  (whether
positive or negative)  for each  Terminated  Transaction  or group of Terminated
Transactions for which a Market Quotation is determined; and

(b) such party's Loss (whether positive or negative and without reference to any
Unpaid  Amounts)  for  each  Terminated   Transaction  or  group  of  Terminated
Transactions  for which a market Quotation cannot be determined or would not (in
the  reasonable  belief  of  the  party  making  the  determination)  produce  a
commercially reasonable result.

                                       29





"SPECIFIED ENTITY" has the meaning specified in the Schedule.

"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"SPECIFIED  TRANSACTION"  means,  subject to the Schedule,  (a) any  transaction
(including an agreement with respect thereto) now existing or hereafter  entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable  Specified  Entity of such party) and the other party to
this  Agreement  (or any Credit  Support  Provider  of such  other  party or any
applicable  Specified  Entity  of  such  other  party)  which  is  a  rate  swap
transaction,  basis swap,  forward rate transaction,  commodity swap,  commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option,  foreign  exchange  transaction,  cap  transaction,  floor
transaction, collar transaction, currency swap transaction,  cross-currency rate
swap transaction,  currency option or any other similar  transaction  (including
any option with respect to any of these  transactions),  (b) any  combination of
these  transactions  and (c) any other  transaction  identified  as a  Specified
Transaction in this Agreement or the relevant confirmation.

"STAMP TAX" means any stamp, registration, documentation or similar tax.

"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest,  penalties and additions thereto) that is
imposed by any  government  or other taxing  authority in respect of any payment
under this Agreement other than a stamp, registration,  documentation or similar
tax.

"TAX EVENT" has the meaning specified in Section 5(b).

"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).

"TERMINATED  TRANSACTIONS"  means with respect to any Early Termination Date (a)
if resulting  from a Termination  Event,  all Affected  Transactions  and (b) if
resulting from an Event of Default,  all Transactions (in either case) in effect
immediately  before  the  effectiveness  of the  notice  designating  that Early
Termination  Date (or, if "Automatic  Early  Termination"  applies,  immediately
before that Early Termination Date).

                                       30





"TERMINATION CURRENCY" has the meaning specified in the Schedule.

"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination  Currency,  such Termination  Currency amount and, in respect of
any amount  denominated in a currency other than the  Termination  Currency (the
"Other  Currency"),  the amount in the  Termination  Currency  determined by the
party  making the  relevant  determination  as being  required to purchase  such
amount of such Other Currency as at the relevant Early  Termination Date, or, if
the relevant Market  Quotation or Loss (as the case may be), is determined as of
a later date, that later date,  with the Termination  Currency at the rate equal
to the spot exchange rate of the foreign  exchange  agent  (selected as provided
below) for the purchase of such Other Currency with the Termination  Currency at
or about  11:00  a.m.  (in the  city in which  such  foreign  exchange  agent is
located) on such date as would be customary for the determination of such a rate
for the  purchase  of such  Other  Currency  for  value  on the  relevant  Early
Termination  Date or that later date.  The foreign  exchange agent will, if only
one party is obliged to make a determination  under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"TERMINATION EVENT" means an Illegality,  a Tax Event or a Tax Event Upon Merger
or, if specified to be  applicable,  a Credit Event Upon Merger or an Additional
Termination Event.

"TERMINATION  RATE" means a rate per annum equal to the  arithmetic  mean of the
cost (without  proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"UNPAID AMOUNTS" owing to any party means,  with respect to an Early Termination
Date,  the  aggregate  of (a) in respect  of all  Terminated  Transactions,  the
amounts that became  payable (or that would have become  payable but for Section
2(a)(iii)  to such  party  under  Section  2(a)(i)  on or  prior  to such  Early
Termination  Date and which remain unpaid as at such Early  Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii))  required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market  value of that which was (or would have been)  required to be
delivered  as of the  originally  scheduled  date  for  delivery,  in each  case
together with (to the extent  permitted under  applicable law) interest,  in the
currency  of such  amounts,  from  (and  including)  the date  such  amounts  or
obligations were or would have been required to have been paid

                                       31





or performed to (but excluding) such Early  Termination  Date, at the Applicable
Rate.  Such  amounts  of  interest  will be  calculated  on the  basis  of daily
compounding and the actual number of days elapsed.  The fair market value of any
obligation referred to in clause (b) above shall be reasonably determined by the
party obliged to make the determination  under Section 6(e) or, if each party is
so obliged, it shall be the average of the Termination  Currency  Equivalents of
the fair market values reasonably determined by both parties.

IN WITNESS  WHEREOF the parties have executed  this  document on the  respective
dates  specified  below with effect from the date specified on the first page of
this document.


   SWISS BANK CORPORATION, LONDON BRANCH       INTERNEURON PHARMACEUTICALS, INC.


By:  /s/ Thomas Eggenschwiler                  By:  Thomas F. Farb
     ------------------------------                 ----------------------------
Name:  Thomas Eggenschwiler                    Name:  Thomas F. Farb
Title:  Attorney-in-Fact                       Title: Executive Vice President -
                                                       Finance
Date: 5 - May 1997                             Date:  May 5, 1997


By: /s/ Alfred C. Kellogg
    -------------------------------
Name:  Alfred C. Kellogg
Title:  Attorney-in-Fact
Date:  May 5, 1997





                                       32








                                    SCHEDULE
                             TO THE MASTER AGREEMENT

                             DATED AS OF MAY 5, 1997

                                     BETWEEN

SWISS BANK CORPORATION,          AND            INTERNEURON                    
LONDON BRANCH                                   PHARMACEUTICALS, INC., a       
                                                corporation organized under the
                                                laws of the State of Delaware  
                                                  
  ("Party A")                                          ("Party B")


                                     PART 1
                             TERMINATION PROVISIONS

In this Agreement:

(a)      "SPECIFIED ENTITY" means in relation to Party A for the purpose of:

         Section 5(a)(v),                                               NONE

         Section 5(a)(vi),                                              NONE

         Section 5(a)(vii),                                             NONE

         Section 5(b)(iv),                                              NONE

         and in relation to Party B for the purpose of:

         Section 5(a)(v),                                               NONE

         Section 5(a)(vi),                                              NONE

         Section 5(a)(vii),                                             NONE

         Section 5(b)(iv),                                              NONE

(b)      The  definition  of  "SPECIFIED  TRANSACTION"  shall  have the  meaning
specified in Section 14 of the Agreement.

(c)      The "CROSS DEFAULT"  provisions of Section 5 (a)(vi) will apply to both
parties,  as amended by deleting the phrase "or becoming capable at such time of
being  declared,"  and shall  exclude any default that results  solely from wire
transfer   difficulties  or  an  error  or  omission  of  an  administrative  or
operational  nature (so long as  sufficient  funds are available to the relevant
party on the relevant  date),  but only if payment is made within three Business
Days  after  such  transfer  difficulties  have been  corrected  or the error or
omission has been discovered.

         If such provisions apply:


                                        1





         "SPECIFIED  INDEBTEDNESS"  means any  obligation  (whether  present  or
future, contingent or otherwise, as principal or surety or otherwise) in respect
of  borrowed  money or any  Derivative  Transaction  other  than  any  Specified
Transaction.

         "THRESHOLD AMOUNT"  means

         (i)      with respect to Party A, 2% of "Total Capital and Reserves" of
                  Swiss  Bank  Corporation  as shown on the most  recent  annual
                  audited financial statements of Swiss Bank Corporation and

         (ii)     with respect to Party B, U.S. Dollars 10mm.

(d)      The "CREDIT EVENT UPON MERGER" provisions of Section 5 (b)(iv) will not
apply to either Party A or Party B.

(e)      The "AUTOMATIC EARLY  TERMINATION"  provision of Section 6 (a) will not
apply to Party A or Party B.

(f)      "PAYMENTS  ON EARLY  TERMINATION".  For the purpose of Section 6 (e) of
this Agreement:

         (i)      Market Quotation will apply.

         (ii)     The Second Method will apply.

(g)      "TERMINATION CURRENCY" means United States Dollars.

(h)      "ADDITIONAL TERMINATION EVENT" will not apply.


                                     PART 2
                               TAX REPRESENTATIONS


(a)      Payer  Representation.   For  the  purpose  of  Section  3(e)  of  this
Agreement,  Party A will make the following representation and Party B will make
the following representation:-

                  It is not required by any  applicable  law, as modified by the
         practice  of  any  relevant  governmental  revenue  authority,  of  any
         Relevant  Jurisdiction  to make any deduction or withholding  for or on
         account of any Tax from any payment  (other than interest under Section
         2(e),  6 (d) (ii) or 6 (e) of this  Agreement)  to be made by it to the
         other party under this Agreement. In making this representation, it may
         rely on (i) the accuracy of any representations made by the other party
         pursuant to Section 3 (f) of this Agreement,  (ii) the  satisfaction of
         the agreement contained in Section 4 (a)(iii) of this Agreement and the
         accuracy and  effectiveness of any document provided by the other party
         pursuant to Section 4 (a)(i) or 4 (a)(iii) of this  Agreement and (iii)
         the  satisfaction  of the  agreement  of the other party  contained  in
         Section 4 (d) of this Agreement, provided that it shall not be a breach
         of this representation  where reliance is placed on clause (ii) and the
         other  party  does not  deliver  a form or  document  under  Section  4
         (a)(iii) by reason of  material  prejudice  to its legal or  commercial
         position.

(b)      Payee  Representations.  For  the  purpose  of  Section  3 (f) of  this
Agreement, Party A makes the following representation:


                                        2





        Each payment  received or to be received by it in  connection  with this
        Agreement will be  effectively  connected with its conduct of a trade or
        business in the United States of America.


                                     PART 3
                         AGREEMENT TO DELIVER DOCUMENTS

        For the purpose of Sections  4(a) (i) and (ii) of this  Agreement,  each
        party agrees to deliver the following documents, as applicable:

        (a)  Tax forms, documents or certificates to be delivered are:

PARTY REQUIRED TO
DELIVER DOCUMENT    FORM/DOCUMENT/CERTIFICATE     DATE BY WHICH TO BE DELIVERED

Party A             Department of the Treasury    On or before execution of this
                    Internal Revenue Service      Agreement and on an annual 
                    Form 4224                     basis thereafter              
                                                   

Party B             Department of the Treasury    On or before execution of this
                    Internal Revenue Service      Agreement                     
                    Form W-9                      
                   

        (b)  Other documents to be delivered are:


PARTY REQUIRED                                                    COVERED BY    
TO DELIVER                                    DATE BY WHICH TO    SECTION 3(D)  
DOCUMENT         FORM/DOCUMENT/CERTIFICATE    BE DELIVERED        REPRESENTATION
                                                                      
Party A and      Signature authentication     On or before        YES
Party B          satisfactory to the          execution of            
                 other party hereto           this Agreement
                                              

Party B          Copy (certified by an        On or before        YES
                 officer) of the board        execution of  
                 resolution (or equivalent    this Agreement
                 authorizing documentation)   
                 permitting the entering   
                 into of this Agreement    
                 and Transactions hereunder
                 

      

                                     PART 4
                                  MISCELLANEOUS

(a) ADDRESSES FOR NOTICES.  For the purposes of Section 12(a) of this Agreement:

         (i) All  notices  or  communications  to  Party A shall  be sent to the
         address, telex number, or facsimile number reflected below:

         Address:          Swiss Bank Corporation, London Branch
                           1 High Timber Street
                           London EC4V 3SB
         Attention:        Swaps Group
         Telex:            887434                    Answerback:  SBCO G
         Facsimile:        44-71-711-2364

                                        3


       

         (ii)  All  notices  or  communications  to Party B shall be sent to the
         address, telex number, or facsimile number reflected below:

         Address:          Interneuron Pharmaceuticals, Inc.
                           99 Hayden Avenue
                           Lexington, MA  02173
         Attention:        Thomas Farb, Executive Vice President, Finance
         Facsimile:        617-674-2448       Telephone No:  617-861-8444

(b)      PROCESS AGENT.  For the purpose of Section 13 (c) of this Agreement:

         Party A appoints as its Process Agent:  
                           Swiss Bank Corporation, New York Branch
                           222 Broadway, New York, NY 10038
                           Attention:  Legal Affairs

         Party B appoints as its Process Agent:    NOT APPLICABLE

(c)  OFFICES. The provisions of Section 10(a) will apply to Party A and Party B,
it being the understanding of the parties that while obligations entered into by
an Office of a party  pursuant to this Agreement  constitute  obligations of the
company  (and not merely of such  Office),  each party  will,  in respect of any
Transaction and in the ordinary course of business, send payments and notices to
and receive payments and notices from the Office of the other party specified in
the Confirmation of such Transaction rather than any other office of such party.
A party (the "owed  party") may seek  payment  from the head office of the other
party (the "owing  party") with  respect to this  Agreement in the event that an
amount  payable to the owed party by the owing party  pursuant to this Agreement
(including any amount payable as a result of the occurrence or designation of an
Early Termination Date) has not been paid in full when due.

(d)  MULTIBRANCH  PARTY.  For the  purpose of  Section 10 (c) of this  Agreement
neither Party A nor Party B is a Multibranch Party.

(e)  CALCULATION  AGENT.  The  Calculation  Agent is Party A,  unless  otherwise
specified in a Confirmation in relation to the relevant Transaction.

(f)  CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:

     NONE

(g)  CREDIT SUPPORT PROVIDER.  Credit Support Provider means:

     NOT APPLICABLE

(h)  GOVERNING  LAW.  THIS  AGREEMENT  WILL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT  REFERENCE TO CHOICE
OF LAW DOCTRINE).

(i)  NETTING OF PAYMENTS.  Subparagraph  (ii) of Section 2 (c) of this Agreement
will apply.

(j)  "AFFILIATE"  will  have  the  meaning  specified  in  Section  14  of  this
Agreement.


                                        4




                                     PART 5
                                OTHER PROVISIONS

(a)  SET-OFF.  Without  affecting the provisions of the Agreement  requiring the
calculation  of certain net payment  amounts,  all payments under this Agreement
will be made without set-off or counterclaim;  provided,  however, that upon the
designation of any Early  Termination Date, in addition to and not in limitation
of any other right or remedy (including any right to set off,  counterclaim,  or
otherwise withhold payment or any recourse to any Credit Support Document) under
applicable law the  Non-defaulting  Party or Non-affected Party (in either case,
"X") may  without  prior  notice  to any  person  set off any sum or  obligation
(whether or not arising under this  Agreement and whether  matured or unmatured,
whether or not contingent and irrespective of the currency,  place of payment or
booking  office  of the sum or  obligation)  owed  by the  Defaulting  Party  or
Affected Party (in either case,  "Y") to X or any Affiliate of X against any sum
or obligation  (whether or not arising under this Agreement,  whether matured or
unmatured,  whether or not contingent and irrespective of the currency, place of
payment or booking office of the sum or  obligation)  owed by X or any Affiliate
of X to Y and,  for this  purpose,  may convert one  currency  into another at a
market rate determined by X. If any sum or obligation is unascertained, X may in
good  faith  estimate  that sum or  obligation  and  set-off  in respect of that
estimate,  subject to X or Y, as the case may be,  accounting to the other party
when such sum or obligation is ascertained.

(b)  REPRESENTATIONS  AND  WARRANTIES.  Section  3(a) is  amended  by adding the
following paragraphs (vi) and (vii):

         "(vi)  NO  AGENCY.   It  is  entering  into  this  Agreement  and  each
         Transaction  as principal  (and not as agent or in any other  capacity,
         fiduciary or otherwise).

         (vii) ELIGIBLE SWAP  PARTICIPANT.  It is an "eligible swap participant"
         as that term is defined by the United States Commodity  Futures Trading
         Commission  in 17 C.F.R.  ss.  35.1(b)(2)  and it has entered into this
         Agreement and it is entering into each  Transaction in connection  with
         its line of business (including financial  intermediation  services) or
         the financing of its business; and the material terms of this Agreement
         and such Transaction have been individually tailored and negotiated."

(c)  RELATIONSHIP BETWEEN PARTIES. Each party will be deemed to represent to the
other party on the date on which it enters  into a  Transaction  that  (absent a
written  agreement  between  the  parties  that  expressly  imposes  affirmative
obligations to the contrary for that Transaction):

         (i) NON-RELIANCE. It is acting for its own account, and it has made its
         own  independent  decisions  to enter into that  Transaction  and as to
         whether that Transaction is appropriate or proper for it based upon its
         own  judgment  and upon  advice  from such  advisers  as it has  deemed
         necessary.  It is not relying on any communication (written or oral) of
         the other party as investment  advice or as a  recommendation  to enter
         into  that  Transaction;  it  being  understood  that  information  and
         explanations related to the terms and conditions of a Transaction shall
         not be considered  investment  advice or a recommendation to enter into
         that Transaction.  No communication (written or oral) received from the
         other party shall be deemed to be an  assurance  or guarantee as to the
         expected results of that Transaction.

         (ii)  ASSESSMENT  AND  UNDERSTANDING.  It is capable of  assessing  the
         merits of and understanding  (on its own behalf or through  independent
         professional advice), and understands and accepts the terms, conditions
         and risks of that  Transaction.  It is also  capable of  assuming,  and
         assumes, the risks of that Transaction.

         (iii) STATUS OF PARTIES.  The other party is not acting as a fiduciary 
         for or an adviser to it in respect of that Transaction.


                                        5




(d)  TRANSFER.  Section  7 is  amended  by the  deletion  of "and" at the end of
paragraph (a), the deletion of the full stop at the end of paragraph (b) and the
insertion of a semi-colon followed by "and" in its place, and the insertion of a
new paragraph  after  paragraph (b) at the end thereof "(c) Party A may transfer
its rights and  obligations  under this  Agreement in whole (but not in part) to
any branch of Swiss Bank Corporation provided that as a result of such transfer:

         (i)      it does not become  unlawful  for either  party to perform any
                  obligation under this Agreement;

         (ii)     neither  party  is  required  to  pay to the  other  party  an
                  additional  amount under  Section  2(d)(i)(4)  or to receive a
                  payment  from which an amount is  required  to be  deducted or
                  withheld for or on account of a Tax and no  additional  amount
                  is  required  to be paid in respect of such Tax under  Section
                  2(d)(i)(4); and

         (iii)    no Event of Default occurs in respect of either party."

(e)  WAIVER OF JURY  TRIAL.  Each party  hereby  irrevocably  waives any and all
right to trial by jury in any  suit,  action  or  proceeding  arising  out of or
relating to this Agreement or any Transaction and acknowledges  that this waiver
is a material inducement to the other party's entering into this Agreement.

(f)  CONSENT TO RECORDING. The parties agree that each may electronically record
all telephonic  conversations  between them and that any such  recordings may be
submitted  in  evidence  to any court or in any  Proceedings  for the purpose of
establishing any matters pertinent to any Transaction.

(g)  SEVERANCE. In the event any one or more of the provisions contained in this
Agreement should be held invalid,  illegal or unenforceable in any respect, such
provisions  shall  be  severed  from  this  Agreement  to  the  extent  of  such
invalidity,   illegality  or  unenforceability,   unless  such  severance  shall
substantially  impair the benefits of the remaining  portions of this Agreement.
The  Agreement  after  such  severance  shall  remain  the  valid,  binding  and
enforceable obligation of the parties hereto.

(h)  NETTING PROVISIONS. If an Early Termination Date occurs, amounts determined
in respect of all Terminated  Transactions  shall be aggregated  with and netted
against one another in performing the calculations contemplated by Section 6(e).
If the calculation of the amount payable  pursuant to Section 6(e) in respect of
an Early  Termination  Date would involve the  aggregation or netting of amounts
determined in respect of Transactions of different  types,  and under applicable
law amounts determined in respect of one or more types of Transactions hereunder
may not be aggregated  with or netted against  amounts  determined in respect of
one or more other types of Transactions in performing  such  calculation,  then,
notwithstanding  the  foregoing  or  any  other  provision  of  this  Agreement,
aggregation  and  netting  will  be  performed   within  and  between  types  of
Transactions  to  the  fullest  extent  permitted  by  law  in  performing  such
calculation,  and the set-off  provisions of this  Agreement and  applicable law
shall be applied to the resulting amount or amounts.

(i)  DEFINITIONS.  The following definition shall appear in Section 14 after the
definition of "Defaulting Party":

          "Derivative Transaction" means:

         (a)      any transaction  (including an agreement with respect thereto)
                  which is a rate swap  transaction,  basis swap,  forward  rate
                  transaction,  commodity  swap,  commodity  option,  equity  or
                  equity index swap, equity or equity index option, bond option,
                  interest rate option, foreign exchange transaction, repurchase
                  transaction,  reverse repurchase transaction,  precious metals
                  transaction,  cap  transaction,   floor  transaction,   collar
                  transaction,  currency swap transaction,  cross-currency  rate
                  swap


                                        6




                  transaction,  currency option or any other similar transaction
                  (including   any   option   with   respect  to  any  of  these
                  transactions); and

         (b)     any combination of these transactions."

(j)  ONE-WAY  TRANSACTION.  Party B agrees that in the event the  parties  enter
into a Transaction, other than a call option transaction written by either Party
A or Party B where the property  underlying the  transaction is the common stock
of Party B, then Party B will enter into a new Master  Agreement with Party A or
will amend this Agreement,  in either case in a form satisfactory to Party A and
Party B.



                                     PART 6
            ADDITIONAL TERMS FOR EQUITY AND EQUITY INDEX TRANSACTIONS

Notwithstanding  anything  to the  contrary  in this  Agreement,  the  following
provisions will apply for the purposes of any Transaction  which is an option on
a single security, a basket of securities or an index, including any Transaction
which  contemplates by its terms the physical delivery of shares,  participation
certificates or other equity securities ("Shares"):

(a)  DIVIDENDS  AND  EXPENSES.  The  following  provision  shall be  included as
Section 2(f):

         "(f) DIVIDENDS AND EXPENSES ON DELIVERY: All dividends on the Shares to
be  delivered  shall be  payable  to and all  costs  and  expenses  incurred  in
connection with the delivery of Shares (including,  without prejudice to Section
2(d),  any Tax or Stamp Tax and any interest or penalties  payable in connection
therewith)  shall be payable  by the party who would  customarily  receive  such
dividend or bear such costs or expenses under a contract for the purchase of the
Shares by the deliveree  through the clearance  system specified in the relevant
Confirmation."

(b)  REPRESENTATIONS.  Each party acknowledges that (i) certain Transactions may
be securities that have not been registered  under the Securities Act of 1933 of
the United States of America,  as amended (the "1933 Act"), or under the laws of
any state,  (ii) no federal or state agency has passed upon such Transactions or
made any finding or  determination  as to the fairness of such  Transactions and
(iii) such  Transactions are intended to be exempt from  registration  under the
1933 Act. In addition to the representations  made pursuant to Section 3 of this
Agreement,each  party  represents  to the other  party with  respect to any such
Transaction that (i) it is an "accredited  investor," as such term is defined in
Regulation  D  promulgated  under the 1933 Act,  (ii) it has had  access to such
information  regarding  such  Transaction  and the other party as it  requested,
(iii) it has knowledge and  experience in financial and business  matters and is
capable of evaluating  the merits and risks of such  Transaction  and is able to
bear the economic risk of its investment,  including without limitation the risk
of  complete  loss on the  investment,  (iv) it  acquired  its  interest in such
Transaction  for its own  account for  investment  and not with a view to, or in
connection  with,  any  distribution  of such  interests,  (v) it will not sell,
transfer,  assign or otherwise  dispose such Transaction or interests herein and
therein in violation of the 1933 Act and the rules and  regulations  promulgated
thereunder,  and (vi) with respect to any Transaction which  contemplates by its
terms the physical  delivery of Shares,  at the time of the delivery of any such
Shares to the other party, it possesses full legal and beneficial  title thereto
and it is delivering the same free and clear of any lien, claim,  encumbrance or
security interest of any kind whatsoever created by the deliveror.


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