<PAGE>   1
                                                                   EXHIBIT 10.25

                              THE BANK OF NEW YORK

                                                               November 25, 1996

Phoenix Home Life
Mutual Insurance Company
One American Row
Hartford, Connecticut 06115

Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167

Chase Securities Inc.
270 Park Avenue
New York, New York 10017-2070

Merrill Lynch & Co.
250 Vesey Street
New York, New York 10281-1325

     Re:  Phoenix Home Life Mutual Insurance Company
          6.95% Surplus Notes Scheduled to mature on
          December 1, 2006 (the "Notes").
          -------------------------------------------

Ladies and Gentlemen:

          As custodian for The Depository Trust Company, we hereby acknowledge
     safe receipt of one Global Note representing $175,000,000 principal amount
     of the Notes. The Global Note will be held in safe custody for the accounts
     of the persons respectively entitled thereto, subject to the terms and
     conditions of the Notes, and we will make the same available for inspection
     on reasonable request.

                                             Yours faithfully,

                                             THE BANK OF NEW YORK


                                             By: /s/ Timothy J. Sha
                                                 ---------------------------
                                             Name: Timothy J. Sha
                                             Title: Assistant Treasurer
<PAGE>   2
                                GLOBAL SECURITY

     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM AND IN ACCORDANCE WITH THE FISCAL AGENCY AGREEMENT, COPIES OF WHICH
ARE AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE FISCAL AGENT.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS
SECURITY MAY BE RELYING ON THE EXEMPTION FROM SUCH REGISTRATION PROVIDED BY RULE
144A UNDER THE ACT (TOGETHER WITH ANY SUCCESSOR PROVISION AND AS SUCH MAY BE
HEREAFTER AMENDED FROM TIME TO TIME, "RULE 144A").

     UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO PHOENIX HOME LIFE
MUTUAL INSURANCE COMPANY (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IN EXCHANGE FOR THIS
SECURITY OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE FISCAL AGENCY
AGREEMENT REFERRED TO HEREINAFTER. THIS GLOBAL SECURITY MAY NOT BE EXCHANGED, IN
WHOLE OR IN PART, FOR A SECURITY REGISTERED IN THE NAME OF ANY PERSON OTHER THAN
DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN
SECTION 5 OF THE FISCAL AGENCY AGREEMENT, AND MAY NOT BE TRANSFERRED, IN WHOLE
OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 6(C)
OF THE FISCAL AGENCY AGREEMENT.

                                       1
<PAGE>   3
Agency Agreement hereinafter referred to, to the person (the "registered
holder") in whose name this Security (or one or more predecessor Securities) is
registered at the close of business on the May 15 or the November 15 (whether
or not a Business Day (as defined on the reverse hereof)), as the case may be
(each a "Regular Record Date"), next preceding such Scheduled Interest Payment
Date. Interest on the Securities shall be calculated on the basis of a 360-day
year of twelve 30-day months. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the registered holder on
such Regular Record Date and shall be paid to the person in whose name this
Security (or one or more predecessor Securities) is registered at the close of
business on a special record date for the payment of such interest to be fixed
by the Issuer, notice whereof shall be given to registered holders of the
Securities not less than 15 days prior to such special record date.

     Principal of this Security shall be payable against surrender hereof at
the corporate trust office of the Fiscal Agent hereinafter referred to and at
the offices of such other Paying Agents as the Issuer shall have appointed
pursuant to the Fiscal Agency Agreement. Payments of principal of the Securities
shall be made only against surrender of the Securities. Payments of interest on
this Security may be made, in accordance with the foregoing and subject to
applicable laws and regulations, by check mailed on or before the Scheduled
Interest Payment Date of such payment to the person entitled thereto at such
person's address appearing on the aforementioned register. Any permitted
payment of principal of this Security may be made by check. Notwithstanding the
forgoing, permitted payments of principal of or any interest on this Security
shall be made, in the case of a registered holder of at least $5,000,000
aggregate principal amount of Securities, by wire transfer to an account
maintained by the payee with a bank in the United States if such registered
holder so elects by giving notice to the Fiscal Agent, not less than 15 days
(or such fewer days as the Fiscal Agent may accept at its discretion) prior to
the applicable Scheduled Maturity Date or Scheduled Interest Payment Date
hereof, of such election and of the account to which payment is to be made.
Unless such designation is revoked, any such designation made by such holder
with respect to such Securities shall remain in effect with respect to any
future payments with respect to such Securities payable to such holder. The
Issuer agrees that until this Secu-
<PAGE>   4
rity has been delivered to the Fiscal Agent for cancellation, or monies
sufficient to pay the full principal of and interest remaining unpaid on this
Security have been made available for payment and either paid or returned to
the Issuer as provided herein, it will at all times maintain offices or
agencies in the Borough of Manhattan, The City of New York for the payment of
the principal of and interest on the Securities as herein provided.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     This Security may be executed by the Issuer by manual or facsimile
signatures, and such signatures may be executed on separate counterparts.

     Unless the certificate of authentication hereon has been executed by the
Fiscal Agent by manual signature, this Security shall not be valid or
obligatory for any purpose.

<PAGE>   5
          IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.

Dated: November 25, 1996

                                        PHOENIX HOME LIFE MUTUAL
                                           INSURANCE COMPANY

                                        By: /s/ Dona D. Young
                                            -------------------------------
                                            Name:  Dona D. Young
                                            Title: Executive Vice President


                                        By: /s/ David W. Searfoss
                                            -------------------------------
                                            Name:  David W. Searfoss
                                            Title: Executive Vice President


          This is one of the Securities referred to in the within-mentioned
Fiscal Agency Agreement.

                                        THE BANK OF NEW YORK
                                        as Fiscal Agent


                                        By: /s/ Timothy J. Sha
                                            -------------------------------
                                                Timothy J. Sha
                                                Authorized Signatory


<PAGE>   6
                           REVERSE OF GLOBAL SECURITY

     1.   This Security is one of a duly authorized issue of 6.95% Surplus
Notes scheduled to mature on December 1, 2006 of the Issuer (herein called the
"Securities" or "Notes"), limited in aggregate principal amount to
$175,000,000. The Issuer and The Bank of New York (as "Fiscal Agent") have
entered into a Fiscal Agency Agreement, dated as of November 25, 1996 (such
instrument, as it may be duly amended from time to time, is herein called the
"Fiscal Agency Agreement"), which provides for the mechanism for issuing the
Securities and, inter alia, sets forth certain duties of the Fiscal Agent in
connection therewith. As used herein, the term "Fiscal Agent" includes any
successor fiscal agent under the Fiscal Agency Agreement. Copies of the Fiscal
Agency Agreement are on file and available for inspection at the corporate
trust office of the Fiscal Agent in the Borough of Manhattan, The City of New
York. Holders of Securities are referred to the Fiscal Agency Agreement for a
statement of the terms thereof, including those relating to transfer, payment,
exchanges and certain other matters to all of which terms the Securities are
subject. The Fiscal Agent or any Paying Agent shall also act as Transfer Agent
and Securities registrar. Terms used herein which are defined in the Fiscal
Agency Agreement but not otherwise defined herein shall have the meanings
assigned to such terms in the Fiscal Agency Agreement.

     The Securities are direct and unsecured obligations of the Issuer and,
subject to the payment restrictions contained in paragraphs 4 and 10 hereof
(the "Payment Restrictions"), are scheduled to mature on December 1, 2006.
Section 1307 provides that the Securities are not part of the legal liabilities
of the Issuer and are not a basis of any set-off against the Issuer.

     The date upon which any state or federal agency obtains an order or grants
approval for the rehabilitation, liquidation, conservation or dissolution of
the Issuer shall also be deemed to be the Scheduled Maturity Date.

     2.   The Securities are issuable only in fully registered form without
coupons. Securities are issuable in minimum denominations of $250,000 and
integral multiples of $1,000 above that amount.

                                       7
<PAGE>   7
     3.   The Issuer shall maintain, in the Borough of Manhattan, The City of
New York, a Transfer Agent where Securities may be registered or surrendered for
registration of transfer or exchange. The Issuer has initially appointed the
corporate trust office of the Fiscal Agent as its Transfer Agent in the Borough
of Manhattan, The City of New York. The Issuer shall cause each Transfer Agent
to act as a Securities registrar and shall cause to be kept at the office of
each Transfer Agent a register in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of
Securities and registration of transfers of Securities. The Issuer reserves the
right to vary or terminate the appointment of any Transfer Agent or to appoint
additional or other Transfer Agents or to approve any change  in the office
through which any Transfer Agent acts, provided that there shall at all times be
a Transfer Agent in the Borough of Manhattan, The City of New York. The Issuer
shall cause notice of any resignation, termination or appointment of the Fiscal
Agent or any Paying Agent or Transfer Agent and of any change in the office
through which any such Agent shall act to be provided to holders of Securities.

     Subject to the restrictions set forth herein and in the Fiscal Agency
Agreement, the transfer of a Security is registrable on the aforementioned
register upon surrender of such Security at any Transfer Agent duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Issuer duly executed by, the registered holder thereof or his attorney duly
authorized in writing. Upon such surrender of this Security for registration of
transfer, the Issuer shall execute, and the Fiscal Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities, dated the date of authentication thereof, of any authorized
denominations and of a like aggregate principal amount.

     Subject to the restrictions set forth herein and in the Fiscal Agency
Agreement, at the option of the registered holder upon request confirmed in
writing, Securities may be exchanged for Securities of any authorized
denominations and aggregate principal amount upon surrender of the Securities to
be exchanged at the office of any Transfer Agent. Whenever any Securities are so
surrendered for exchange, the Issuer shall execute, and

                                       8
<PAGE>   8
the Fiscal Agent shall authenticate and deliver, the Securities which the
registered holder making the exchange is entitled to receive. Any registration
of transfer or exchange shall be effected upon the Issuer being satisfied with
the documents of title and identity of the person making the request and subject
to the restrictions set forth in the immediately following paragraph and such
reasonable regulations as the Issuer may from time to time agree with the Fiscal
Agent.

     All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits, as the Securities surrendered upon
such registration of transfer or exchange. No service charge shall be made for
any registration of transfer or exchange, but the Issuer may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith and any other amounts, if any, required to be paid by the
provisions of the Securities in connection with a transfer or exchange thereof.

     Prior to due presentment of this Security for registration of transfer,
the Issuer, the Fiscal Agent and any agent of the Issuer or the Fiscal Agent
may treat the person in whose name this Security is registered as the absolute
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Issuer nor the Fiscal Agent nor any such agent shall be affected by
the notice to the contrary.

     4.  (a)  Notwithstanding anything to the contrary set forth herein or in
the Fiscal Agency Agreement, any payment of principal of, interest on or any
monies owing with respect to this Security, whether at the Scheduled Interest
Payment Date or Scheduled Maturity Date specified herein or otherwise, may be
made only (i) out of the free and divisible surplus of the Issuer which the
Superintendent determines to be available for such payments under Section 1307
and (ii) with the prior approval of the Superintendent whenever, in his
judgment, the financial condition of the Issuer warrants such payment, in
accordance with Section 1307. If the Superintendent does not approve the making
of any payment of principal of or interest on this Security on the Scheduled
Interest Payment Date or Scheduled Maturity Date

                                       9

<PAGE>   9
thereof, as specified herein, the Scheduled Interest Payment Date or Scheduled
Maturity Date, as the case may be, shall be extended and such payment shall be
made by the Issuer on the next following Business Day on which the Issuer shall
have the approval of the Superintendent to make such payment. Interest will
continue to accrue on any such unpaid principal through the actual date of
payment at the rate of interest stated on the face hereof. Interest will not
accrue on interest with respect to which the Scheduled Interest Payment Date has
been extended, during the period of such extension. If the Superintendent
approves a payment of principal of or interest on the Securities in an amount
that is less than the full amount of principal of and interest on the Securities
then scheduled to be paid in respect of the Securities, payment of such partial
amount shall be made pro rata among Security holders as their interests may
appear.

     (b)  Any payment of principal of or interest on any Security as to which
the approval of the Superintendent has been obtained and which is not
punctually paid or duly provided for on the Scheduled Interest Payment Date or
Scheduled Maturity Date thereof, as set forth herein (such payment being
referred to as an "Unpaid Amount"), will forthwith cease to be payable to the
registered owner of this Security on the relevant record date designated
herein, and such Unpaid Amount will instead be payable to the registered owner
of this Security on a subsequent special record date. The Issuer shall fix the
special record date and payment date for the payment of any Unpaid Amount. At
least 15 days before the special record date, the Issuer shall mail to each
holder of the Securities and the Fiscal Agent a notice that states the special
record date, payment date and amount of interest or principal to be paid. On the
payment date set forth in such notice, the Paying Agent shall pay the amount of
interest or principal to be so paid to each holder of the Securities in the
manner set forth in Section 4(a) of the Fiscal Agency Agreement.

     5.   (a)  For so long as the Fiscal Agent is acting as a Paying Agent
hereunder, the Issuer shall provide, subject to the Payment Restrictions, to
the Fiscal Agent in immediately available funds on or prior to 10:00 a.m., New
York time, of each date on which a payment of principal of or any interest
on this Security


                                       10
<PAGE>   10
is payable, as set forth herein, such amounts as are necessary (with any amounts
then held by the Fiscal Agent and available for the purpose) to make such
payment, and the Issuer hereby authorizes and directs the Fiscal Agent from
funds so provided to it to make or cause to be made payment of the principal of
and any interest, as the case may be, on this Security as set forth herein and
in the Fiscal Agency Agreement. Payments of interest on this Security may be
made, in accordance with the foregoing and subject to applicable laws and
regulations, by check mailed on or before the Scheduled Interest Payment Date of
such payment to the person entitled thereto at such person's address appearing
on the aforementioned register. Any permitted payment of principal on this
Security may be made by check. Notwithstanding the foregoing, permitted payments
of principal of or any interest on this Security may be made, in the case of a
registered holder of at least $5,000,000 aggregate principal amount of
Securities, by wire transfer to an account maintained by the payee with a bank
in the United States if such registered holder so elects by giving notice to the
Fiscal Agent, not less than 15 days (or such fewer days as the Fiscal Agent may
accept at its discretion) prior to the date on which such payment is scheduled
to be made, of such election and of the account to which payments are to be
made. Unless such designation is revoked, any such designation made by such
holder with respect to such Securities shall remain in effect with respect to
any future payments with respect to such Securities payable to such holder. The
Issuer shall pay any reasonable administrative costs in connection with making
any such payments. The Fiscal Agent shall arrange directly with any other Paying
Agent who may have been appointed by the Issuer pursuant to the provisions of
Section 2 of the Fiscal Agency Agreement for the payment from funds so paid by
the Issuer of the principal of and any interest on this Security. Any monies
held by the Fiscal Agent for the payment of the principal of or interest on any
of the Securities remaining unclaimed for two years after such principal or
interest has become payable in accordance with the Payment Restrictions (whether
at the Scheduled Maturity Date or otherwise) and monies sufficient therefor
shall have been duly made available for payment shall, together with any
interest made available for payment thereon, be repaid to the Issuer upon
written request and upon such repayment all liability of the Fiscal Agent with
respect thereto shall

                                       11
<PAGE>   11
cease, without, however, limiting in any way any obligation the Issuer may have
to pay the principal of and interest on this Security, subject to the Payment
Restrictions.

     (b)  In any case where the Scheduled Interest Payment Date or Scheduled
Maturity Date of any Security shall be at any place of payment a day on which
banking institutions are not carrying out transactions in U.S. dollars or are
authorized or obligated by law or executive order to close, then payment of
principal or interest need not be made on such date at such place but may be
made on the next succeeding day at such place which is not a day on which
banking institutions in the applicable jurisdiction are generally authorized or
obligated by law or executive order to close (a "Business Day"), with the same
force and effect as if made on the Scheduled Maturity Date thereof, and no
interest shall accrue for the period after such date.

     6. The Issuer shall pay all stamp and other duties, if any, which may be
imposed by the United States of America or any governmental entity or any
political subdivision thereof or taxing authority of or in the foregoing with
respect to the Fiscal Agency Agreement or the initial issuance of this Security.
Except as otherwise specifically provided in this Security, the Issuer shall not
be required to make any payment with respect to any tax, duty, assessment or
other governmental charge of whatever nature imposed or levied by any government
or any political subdivision or taxing authority thereof or therein.

     7. For so long as any of the Securities remain Outstanding or any amount
remains unpaid on any of the Securities.

     (a) Except with respect to transactions covered by Paragraph 8 hereof, the
Issuer will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, material rights (charter and
statutory) and franchise; provided, however, that the Issuer shall not be
required to preserve any such right or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuer and that the Issuer has used its best efforts to


                                       12
<PAGE>   12
not disadvantage in any material respect the holders of the Securities, or that
not preserving such right or franchise is in the best interest of the
policyholders of the Issuer having considered the interests of the holders of
the Securities.

     (b) The Issuer will not be or become an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), if such action would cause the Issuer to be in
violation of the Investment Company Act at any time prior to payment in full of
the Securities.

     (c) The Issuer shall use its best efforts to obtain the approval of the
Superintendent in accordance with Section 1307 for the payment by the Issuer of
interest on and principal of the Securities on the Scheduled Interest Payment
Dates on Scheduled Maturity Date thereof, and, in the event any such approval
has not been obtained for any such payment at or prior to the Scheduled Interest
Payment Date or Scheduled Maturity Date thereof, as the case may be, to continue
to use its best efforts to obtain such approval promptly thereafter. Not less
than 45 days prior to the Scheduled Interest Payment Date or Scheduled Maturity
Date thereof (excluding any such Scheduled Maturity Date which arises as a
result of the obtaining of an order or the granting of approval for the
rehabilitation, liquidation, conservation or dissolution of the Issuer), the
Issuer will seek the approval of the Superintendent to make each payment of
interest on and principal of the Securities. In addition, the Issuer shall
notify or cause to be notified the Fiscal Agent no later than 5 Business Days
(as defined herein), and the Fiscal Agent will notify each holder, prior to the
Scheduled Interest Payment Date for interest on or the Scheduled Maturity Date
for principal of any Security (excluding any such Scheduled Maturity Date which
arises as a result of the obtaining of an order or the granting of approval for
the rehabilitation, liquidation, conservation or dissolution of the Issuer) in
the event that the Superintendent has not then approved the making of any such
payment on such Scheduled Interest Payment Date or such Scheduled Maturity Date,
and thereafter shall promptly notify the Fiscal Agent, and the Fiscal Agent will
notify each holder, in the event that the Issuer


                                       13
<PAGE>   13
shall have failed to make any such payment on any such Scheduled Interest
Payment Date or such Scheduled Maturity Date. Without limiting the Issuer's
obligations set forth in this paragraph, it is understood that, to the extent
authorized by the Issuer's Board of Directors, the Issuer may continue to
declare policyowner dividends and to make dividend payments on its
participating policies even though payments on the Securities may not have been
approved by the Superintendent, regardless of the effect any such declaration
or payment may have on the Superintendent's decision regarding payment of
interest on or principal of the Securities.

     8.   For so long as any of the Securities remain Outstanding or any
amounts remain unpaid on any of the Securities, the Issuer may convert itself
in any legal manner from a mutual life insurance company into a stock life
insurance company (such conversion, a "demutualization"), merge or consolidate
with or into any other corporation or sell, convey, transfer or otherwise
dispose of all or substantially all of its assets to any person, firm or
corporation, if (i)(A) in the case of a demutualization, merger or
consolidation, the Issuer is the surviving corporation or (B) in the case of a
demutualization, merger or consolidation where the Issuer is not the surviving
corporation and in the case of any such sale, conveyance, transfer or other
disposition, the successor corporation is a corporation organized and existing
under the laws of the United States or a State thereof and such corporation
expressly assumes by supplemental fiscal agency agreement all the obligations
of the Issuer under the Securities and the Fiscal Agency Agreement, (ii) at the
time of any such demutualization, merger or consolidation, or such sale,
conveyance, transfer or other disposition, the Issuer shall not have failed to
make payment of interest on or principal of the Securities after having
received the Superintendent's prior approval to make such payment and (iii) the
Issuer has delivered to the Fiscal Agent an Officer's Certificate stating that
such demutualization, merger, consolidation, sale, conveyance, transfer or
other disposition complies with this paragraph and that all conditions
precedent herein provided for relating to such transaction have been complied
with. In the event of the assumption by a successor corporation of the
obligations of the Issuer as provided in clause (i)(B) of the immediately
preceding sentence, such successor corporation shall

                                       14
<PAGE>   14
succeed to and be substituted for the Issuer hereunder and under the Fiscal
Agency Agreement and all such obligations of the Issuer shall terminate.

     9.   No "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is
subject to Title I of ERISA, or "plan" within the meaning of Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"), as to which the
Issuer or any of its affiliates is a "party in interest" within the meaning of
Section 3(14) of ERISA or a "disqualified person" within the meaning of Section
4975(e)(2) of the Code (each a "Plan"), and no person using the assets of any
such Plan, may acquire this Security, unless the acquisition and continued
holding of the Security is exempt under one or more of Prohibited Transaction
Class Exemptions ("PTCE") 84-14, 90-1, 91-38 or 96-23 (or any amendment thereof)
issued by the United States Department of Labor or another applicable exemption
from the prohibitions under Section 406 of ERISA and Section 4975 of the Code.
The purchase by any person of this Security shall constitute a representation by
such person to the Issuer and the Fiscal Agent that such person either (i) is
not a Plan or a person using the assets of any Plan or (ii) is a Plan or is
using the assets of a Plan to purchase this Security and such Plan either (x) is
not a Plan as to which the Issuer is a party in interest or disqualified person
or (y) may acquire and hold this Security under PTCE 84-14, 90-1, 91-38 or 96-23
or another applicable exemption from the prohibited transaction rules under
Section 406 of ERISA and Section 4975 of the Code. The restrictions on purchases
(and continued holding) of the Securities set forth in this Paragraph 9 are in
addition to those otherwise set forth in Section 6 of the Fiscal Agency
Agreement and under applicable law.

     10.  (a)  The Issuer agrees, and each Security holder by accepting a
Security agrees, that the indebtedness evidenced by the Securities is
subordinated in right of payment, to the extent and in the manner provided in
this Paragraph, to the prior payment in full of all Indebtedness, Policy Claims
and Other Creditor Claims (each as hereinafter defined), in accordance with
Section 7435 of the New York Insurance law (together with any successor
provision, and as may be hereafter amended from time to time, "Section 7435").

                                       15
<PAGE>   15
     (b) Upon any distribution to creditors of the Issuer in any
rehabilitation, liquidation, conservation, dissolution or reorganization
proceeding relating to the Issuer or its property, the priority of claims of
Security holders shall be determined in accordance with Section 7435. In a
proceeding commenced under Article 74 of the New York Insurance Law, claims for
principal of or interest on the Securities constitute Class 7 claims under
Section 7435, as currently in effect. If the Superintendent approves a payment
of principal of or interest on the Securities in an amount that is less than
the full amount of principal of and interest on the Securities then scheduled
to be paid in respect of the Securities, payment of such partial amount shall
be made pro rata among Security holders as their interests may appear.

     (c) If a distribution is made to Security holders that, because of this
Paragraph, should not have been made to them, the Security holders who receive
the distribution shall hold it in trust for holders of Policy Claims,
Indebtedness and Other Creditor Claims and pay it over to them as their
interests may appear.

     (d) The Issuer shall promptly notify the Fiscal Agent and the Paying Agent
of any facts known to the Issuer that would cause a payment of principal of or
interest on the Securities to violate this Paragraph.

     (e) This Paragraph defines the relative rights of Security holders, on the
one hand, and holders of any other claims, in accordance with Section 7435, on
the other hand. Nothing in this Security or the Fiscal Agency Agreement shall
(i) impair, as between the Issuer and Security holders, the obligation of the
Issuer which is, subject to the Payment Restrictions, absolute and
unconditional to pay principal of and interest on the Securities in accordance
with their terms; (ii) affect the relative rights of Security holders and
creditors of the Issuer, other than holders of Policy Claims, Indebtedness or
Other Creditor Claims; or (iii) prevent the Fiscal Agent or any Security holder
from exercising any available remedies upon a breach by the Issuer of its
obligations hereunder, subject to the rights of holders of Policy Claims,
Indebtedness or Other Creditor Claims to receive distributions otherwise
payable to Security holders.

                                       16

<PAGE>   16
     (f)  No right of any holder of Policy Claims, Indebtedness or Other
Creditor claims to enforce the subordination of the indebtedness evidenced by
the Securities shall be impaired by any act or failure to act by the Issuer or
by its failure to comply with the terms of this Fiscal Agency Agreement.

     (g)  Each holder of Securities, by acceptance thereof, authorizes and
directs the Fiscal Agent on its behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this Paragraph and
appoints the Fiscal Agent its attorney-in-fact for any and all such purposes.

     As used herein, "Indebtedness" of the Issuer shall mean (i) all existing or
future indebtedness of the Issuer for borrowed money (ii) all existing or future
indebtedness for borrowed money of other persons, the payment of which is
guaranteed by the Issuer, (iii) all existing or future obligations of the Issuer
under any agreement obligating the Issuer to cause another person to maintain a
minimum level of net worth, or otherwise to ensure the solvency of such person
and (iv) any expense or any claim or amount, to the extent that payment of
principal of and interest on the Securities is required by law to be
subordinated to the prior payment thereof. Any indebtedness of the Issuer which
by its express terms is subordinated in right of payment to, or ranks equally
with, the Securities shall not constitute Indebtedness. However, under current
law the Issuer cannot issue any indebtedness which by its terms is subordinate
to the Securities. In addition, any other surplus notes or similar obligations
of the Issuer shall not constitute Indebtedness and will rank pari passu with
the Securities.

     As used herein, "Policy Claims" shall mean all existing or future claims
of policyholders or beneficiaries, as the case may be, under any and all
existing or future policies, endorsements, riders and other contracts of
insurance, annuity contracts, including, without limitation, guaranteed
investment contracts, and funding agreements issued, assumed or renewed by the
Issuer on or prior to the date hereof or hereafter created, all claims under
separate account agreements to the extent such claims are not fully discharged
by the assets held by the Issuer in the applicable separate accounts and all
claims

                                       17

<PAGE>   17
of The Life Insurance Company Guarantee Corporation of New York or any other
guaranty corporation or association of New York or any other jurisdiction, other
than claims described in clause (i) of the definition of "Other Creditor
Claims" below and claims for interest.

     As used herein, "Other Creditor Claims" shall mean all other claims which,
pursuant to Section 7435, have priority over claims with respect to the
Securities. Under Section 7435 as currently in effect, such other claims
include (i) claims with respect to the actual and necessary costs and expenses
of administration incurred by a liquidator, conservator, rehabilitator or
ancillary rehabilitator under Section 7435; (ii) claims with respect to the
actual and necessary costs and expenses of administration incurred by The Life
Insurance Guaranty Corporation or The Life Insurance Company Guaranty
Corporation of New York; (iii) claims of The Life Insurance Company Guaranty
Corporation for certain funds loaned to the Superintendent under Section
7713(d) of the New York Insurance Law; (iv) debts up to $1,200 due to employees
for services performed within one year of the commencement of rehabilitation,
liquidation, conservation, dissolution or reorganization proceedings; (v) claims
for payment for goods furnished or services rendered in the ordinary course of
business within 90 days of the declaration of the impairment or insolvency of
the Issuer; (vi) claims of the federal or any state or local government (except
in the case of claims for a penalty or forfeiture which are included only to the
extent of pecuniary loss and reasonable costs occasioned by the act giving rise
to the forfeiture or penalty); and (vii) claims of general creditors and all
other claims having priority under Section 7435.

     11. For so long as any of the Securities remain Outstanding or any amount
remains unpaid on any of the Securities, the Issuer shall, in accordance with
Rule 144A, comply with the terms of the agreements set forth in Section 7 of the
Fiscal Agency Agreement. The provisions of Sections 7 and 8 of the Fiscal Agency
Agreement are hereby incorporated mutatis mutandis herein.

     12. In case this Security shall become mutilated, defaced, destroyed, lost
or stolen, the Issuer will execute and upon the Issuer's request the Fiscal
Agent shall authenticate and deliver a new Security,

                                       18

<PAGE>   18
having a number not contemporaneously outstanding, of like tenor (including the
same date of issuance) and equal principal amount, registered in the same
manner, dated the date of its authentication and bearing interest from the date
to which interest has been paid on this Security, in exchange and substitution
for this Security (upon surrender and cancellation thereof) or in lieu of and
substitution for this Security. In the case where this Security is destroyed,
lost or stolen, the applicant for a substituted Security shall furnish to the
Issuer such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft of this
Security, the applicant shall also furnish to the Issuer satisfactory evidence
of the destruction, loss or theft of this Security and of the ownership
thereof, provided, however, that if the registered holder hereof is, in the
judgment of the Issuer, an institution of recognized responsibility, such
holder's written agreement or indemnity shall be deemed to be satisfactory for
the issuance of a new Security in lieu of and substitution for this Security.
The Fiscal Agent shall authenticate any such substituted Security and deliver
the same only upon written request or authorization of the Issuer. Upon the
issuance of any substituted Security, the Issuer may require the payment by the
registered holder thereof of a sum sufficient to cover fees and expenses
connected therewith. In case this Security has matured or is about to mature
and shall become mutilated or defaced or be destroyed, lost or stolen, the
Issuer may, subject to the Payment Restrictions, instead of issuing a
substitute Security, pay or authorize the payment of the same (without
surrender thereof except if this Security is mutilated or defaced) upon
compliance by the registered holder with the provisions of this Paragraph 12 as
hereinabove set forth.

     13.  Section 10 of the Fiscal Agency Agreement, which Section is hereby
incorporated mutatis mutandis by reference herein, provides that, with certain
exceptions as therein provided and with the consent of the holders of a
majority of the principal amount of the Outstanding Securities present at a
meeting duly called pursuant thereto or by written consent of such percentage
of the principal amount of all Outstanding Securities, the Issuer and the
Fiscal Agent may, with the prior approval of the Superintendent, modify, amend
or supplement the Fiscal Agency Agreement or the terms of the Securities or

                                       19
<PAGE>   19
may give consents or waivers or take other actions with respect thereto. Any
such modification, amendment, supplement, consent, waiver or other action shall
be conclusive and binding on the holder of this Security and on all future
holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange heretofore or in lieu hereof, whether or not
notation thereof is made upon this Security. The Fiscal Agency Agreement and the
terms of the Securities may, with the prior approval of the Superintendent, be
modified or amended by the Issuer and the Fiscal Agent, without the consent of
any holders of Securities, for the purpose of (a) adding to the covenants of the
Issuer for the benefit of the holders of Securities, or (b) surrendering any
right or power conferred upon the Issuer, or (c) securing the Securities
pursuant to the requirements hereof, thereof or otherwise, or (d) evidencing the
succession of another corporation to the Issuer and the assumption by such
successor of the covenants and obligations of the Issuer herein and in the
Fiscal Agency Agreement as permitted by the Securities and the Fiscal Agency
Agreement, or (e) modifying the restrictions on, and procedures for, resale and
other transfers of the Securities to the extent required by any change in
applicable law or regulation (or the interpretation thereof) or in practices
relating to the resale or transfer of restricted securities generally, or (f)
accommodating the issuance, if any, of Securities in book-entry or certificated
form and matters related thereto which do not adversely affect the interest of
any Security holder in any material respect, or (g) curing any ambiguity or
correcting or supplementing any defective provision contained herein or in the
Fiscal Agency Agreement in a manner which does not adversely affect the interest
of any Security holder in any material respect, or (h) effecting any amendment
which the Issuer and the Fiscal Agent may determine is necessary or desirable
and which shall not adversely affect the interest of any Security holder, to all
of which each holder of any Security, by acceptance thereof, consents.

     14.  Holders of Securities may enforce the Fiscal Agency Agreement or the
Securities only in the manner set forth below.

     (a)  In the event that any state or federal agency shall obtain an order or
grant approval for the

                                       20
<PAGE>   20
rehabilitation, liquidation, conservation or dissolution of the Issuer, the
Securities will upon the obtaining of such an order or the granting of such
approval immediately mature in full without any action on the part of the
Fiscal Agent or any holder of the Securities, with payment thereon being
subject to the Payment Restrictions, and any restrictions imposed as a
consequence of, or pursuant to, such proceedings. Notwithstanding any other
provision of this Security or the Fiscal Agency Agreement, in no event shall
the Fiscal Agent or any holder of the Securities be entitled to declare the
Securities to immediately mature or otherwise be immediately payable.

     (b) In the event that the Superintendent approves in whole or in part a
payment of any interest on or principal of any Securities and the Issuer fails
to pay the full amount of such approved payment on the date such amount is
scheduled to be paid, such approved amount will be immediately payable on such
date without any action on the part of the Fiscal Agent or any holder of
Securities. In the event that the Issuer fails to perform any of its other
obligations hereunder or under the Fiscal Agency Agreement, each holder of the
Securities may pursue any available remedy to enforce the performance of any
provision of such Securities or the Fiscal Agency Agreement, provided, however,
that such remedy shall in no event include the right to declare the Securities
immediately payable, and shall in no circumstances be inconsistent with the
provisions of Section 1307. A delay or omission by any Security holder in
exercising any right or remedy accruing as a result of the Issuer's failure to
perform its obligations hereunder or under the Fiscal Agency Agreement and the
continuation thereof shall not impair such right or remedy or constitute a
waiver of or acquiescence in such non-performance by the Issuer. To the extent
permitted by law, no remedy is exclusive of any other remedy and all remedies
are cumulative.

     (c) Notwithstanding any other provision of this Security or the Fiscal
Agency Agreement, the right of any holder of Securities to receive payment of
the principal of and interest on such holder's Securities on or after the
respective Scheduled Interest Payment Dates or Scheduled Maturity Date
expressed in such Securities, or to bring suit for the enforcement of any such
payment on or after such respective Scheduled Interest Payment

                                       21
<PAGE>   21
Dates or Scheduled Maturity Date, in each case subject to such payment on such
dates having received the approval of the Superintendent pursuant to the Payment
Restrictions, including the approval of the Superintendent pursuant to Section
1307, is absolute and unconditional and shall not be impaired or affected
without the consent of the holder.

     15.  No reference herein to the Fiscal Agency Agreement and no provision
of this Security or of the Fiscal Agency Agreement shall alter or impair the
obligation of the Issuer, subject to the Payment Restrictions, to pay the
principal of and interest on this Security at the times, place and rate, and in
the coin or currency, herein prescribed.

     16.  THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE
TO CONFLICTS OF LAWS PROVISIONS.


                                       22