<PAGE>

                                                                     EXHIBIT 4.4

                         NORTHROP GRUMMAN CORPORATION


                             THE BANK OF NEW YORK


                     as Collateral Agent, Custodial Agent

                          and Securities Intermediary


                                      AND

                              JPMORGAN CHASE BANK




                          as Purchase Contract Agent



                               PLEDGE AGREEMENT




                         Dated as of November 21, 2001
<PAGE>

                               TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.........................................................................................   2

 SECTION 1.1   Definitions....................................................................................   2

ARTICLE II PLEDGE; CONTROL AND PERFECTION.....................................................................   4

 SECTION 2.1   The Pledge.....................................................................................   4
 SECTION 2.2   Control and Perfection.........................................................................   6

ARTICLE III PAYMENTS ON PLEDGED COLLATERAL....................................................................   8

 SECTION 3.1   Payments.......................................................................................   8
 SECTION 3.2   Application of Payments........................................................................   9

ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES............................................  10

 SECTION 4.1   Collateral Substitution and the Creation of Stripped Units.....................................  10
 SECTION 4.2   Collateral Substitution and the Re-Creation of Normal Units....................................  11
 SECTION 4.3   Termination Event..............................................................................  11
 SECTION 4.4   Early Settlement; Merger Early Settlement; Cash Settlement.....................................  12
 SECTION 4.5   Remarketing; Application of Proceeds; Settlement...............................................  13

ARTICLE V VOTING RIGHTS -- NOTES..............................................................................  16

 SECTION 5.1   Exercise by Purchase Contract Agent............................................................  16

ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION..........................................................  16

 SECTION 6.1   Rights and Remedies of the Collateral Agent....................................................  16
 SECTION 6.2   Substitutions..................................................................................  18
 SECTION 6.3   Tax Event Redemption...........................................................................  18

ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS.........................................................  18

 SECTION 7.1   Representations and Warranties.................................................................  18
 SECTION 7.2   Covenants......................................................................................  19

ARTICLE VIII THE COLLATERAL AGENT.............................................................................  20

 SECTION 8.1   Appointment, Powers and Immunities.............................................................  20
 SECTION 8.2   Instructions of the Company....................................................................  21
 SECTION 8.3   Reliance.......................................................................................  22
 SECTION 8.4   Rights in Other Capacities.....................................................................  22
 SECTION 8.5   Non-Reliance on Collateral Agent...............................................................  22
</TABLE>

                                      -i-
<PAGE>

<TABLE>
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<S>                                                                                                             <C>
 SECTION 8.6   Compensation and Indemnity.....................................................................  23
 SECTION 8.7   Failure to Act.................................................................................  23
 SECTION 8.8   Resignation....................................................................................  24
 SECTION 8.9   Right to Appoint Agent or Advisor..............................................................  25
 SECTION 8.10  Survival.......................................................................................  26
 SECTION 8.11  Exculpation....................................................................................  26

ARTICLE IX AMENDMENT..........................................................................................  26

 SECTION 9.1   Amendment Without Consent of Holders...........................................................  26
 SECTION 9.2   Amendment with Consent of Holders..............................................................  27
 SECTION 9.3   Execution of Amendments........................................................................  27
 SECTION 9.4   Effect of Amendments...........................................................................  28
 SECTION 9.5   Reference to Amendments........................................................................  28

ARTICLE X MISCELLANEOUS.......................................................................................  28

 SECTION 10.1  No Waiver......................................................................................  28
 SECTION 10.2  GOVERNING LAW..................................................................................  29
 SECTION 10.3  Notices........................................................................................  29
 SECTION 10.4  Successors and Assigns.........................................................................  29
 SECTION 10.5  Counterparts...................................................................................  30
 SECTION 10.6  Severability...................................................................................  30
 SECTION 10.7  Expenses, Etc..................................................................................  30
 SECTION 10.8  Security Interest Absolute...................................................................... 31
 SECTION 10.9  Waiver of Jury Trial...........................................................................  31
</TABLE>


EXHIBIT A  Instruction from Purchase Contract Agent to Collateral Agent

EXHIBIT B  Instruction to Purchase Contract Agent

EXHIBIT C  Instruction to Custodial Agent Regarding Remarketing

EXHIBIT D  Instruction to Custodial Agent Regarding Withdrawal from Remarketing

                                     -ii-
<PAGE>

                                PLEDGE AGREEMENT

     PLEDGE AGREEMENT, dated as of November 21, 2001 (this "Agreement"), among
Northrop Grumman Corporation, a Delaware corporation (the "Company"), The Bank
of New York, a New York banking corporation, not individually but solely as
collateral agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), as custodial agent (in such capacity,
together with its successors in such capacity, the "Custodial Agent") and as
"securities intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors in such
capacity, the "Securities Intermediary"), and JPMorgan Chase Bank, a New York
banking corporation, not individually but solely as purchase contract agent and
as attorney-in-fact of the Holders from time to time of the Units (in such
capacity, together with its successors in such capacity, the "Purchase Contract
Agent") under the Purchase Contract Agreement (as defined herein).

                                    RECITALS

     WHEREAS, the Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued Units having a Stated Amount
of $100 per Unit, all of which will initially be Normal Units.

     WHEREAS, each Normal Unit will be comprised of (a) a Purchase Contract and
(b) either beneficial ownership of (i) a Note, (ii) following the successful
remarketing of the Notes in accordance with the Purchase Contract Agreement and
the Remarketing Agreement, the appropriate Treasury Consideration or (iii)
following a Tax Event Redemption in accordance with the Purchase Contract
Agreement, any Applicable Ownership Interest in the Treasury Portfolio.

     WHEREAS, in accordance with the terms of the Purchase Contract Agreement, a
holder of Normal Units may separate the Notes or the appropriate Treasury
Consideration or Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, from the related Purchase Contracts by substituting for such Notes
or the appropriate Treasury Consideration or Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, Treasury Securities that will pay in
the aggregate an amount equal to the aggregate principal amount of such Normal
Units.  Upon such separation, the Normal Units will become Stripped Units.  Each
Stripped Unit will be comprised of (a) a Purchase Contract and (b) a 1/10
undivided beneficial interest in a Treasury Security.

     WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Units have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among

                                      -1-
<PAGE>

other things, to execute and deliver this Agreement on behalf of such Holders
and to grant the pledge provided hereby of the Notes, any Treasury
Consideration, any Treasury Securities and any Applicable Ownership Interest in
the Treasury Portfolio delivered in exchange therefor to secure each Holder's
obligations under the related Purchase Contract, as provided herein and subject
to the terms hereof.

     NOW, THEREFORE, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company, the Collateral
Agent, the Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Units, agree as follows:


                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.1  Definitions.
                  -----------

     For all purposes of this agreement, except as otherwise expressly provided
or unless the context otherwise requires:

     (a)  capitalized terms used but not defined herein are used as defined in
the Purchase Contract Agreement;

     (b)  the defined terms in this Agreement have the meanings assigned to them
in this Article and include the plural as well as the singular; and

     (c)  the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.

     "Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.

     "Code" has the meaning specified in Section 6.1 hereof.

     "Collateral" has the meaning specified in Section 2.1 hereof.

     "Collateral Account" means the securities account (number 423831)
maintained at The Bank of New York in the name "JPMorgan Chase Bank, a New York
banking corporation, as Purchase Contract Agent on behalf of the holders of
certain securities of Northrop Grumman Corporation, Collateral Account subject
to the security interest

                                      -2-
<PAGE>

of The Bank of New York, as Collateral Agent, for the benefit of Northrop
Grumman Corporation, as pledgee" and any successor account.

     "Collateral Agent" has the meaning specified in the first paragraph of this
Agreement.

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

     "Custodial Agent" has the meaning specified in the first paragraph of this
Agreement.

     "Intermediary" means any entity that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.

     "Pledge" has the meaning specified in Section 2.1 hereof.

     "Pledged Applicable Ownership Interest in the Treasury Portfolio" has the
meaning specified in Section 2.1 hereof.

     "Pledged Notes" has the meaning specified in Section 2.1 hereof.

     "Pledged Treasury Consideration" has the meaning specified in Section 2.1
hereof.

     "Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.

     "Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of the Code) and other
property from time to time received, receivable or otherwise distributed upon
the sale, exchange, collection or disposition of the Collateral or any proceeds
thereof.

     "Purchase Contract Agent" has the meaning specified in the first paragraph
of this Agreement.

     "Purchase Contract Agreement" has the meaning specified in the Recitals.

     "Securities Intermediary" has the meaning specified in the first paragraph
of this Agreement.

     "Security Entitlement" has the meaning set forth in Section 8-102(a) (17)
of the Code.

     "Separate Notes" means any Notes that are not Pledged Notes.

                                      -3-
<PAGE>

     "Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.

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

     "Transfer" means, with respect to the Collateral and in accordance with the
instructions of the Collateral Agent, the Purchase Contract Agent or the Holder,
as applicable:

          (i)  in the case of Collateral consisting of securities which cannot
     be delivered by book-entry or which the parties agree are to be delivered
     in physical form, delivery in appropriate physical form to the recipient
     accompanied by any duly executed instruments of transfer, assignments in
     blank, transfer tax stamps and any other documents necessary to constitute
     a legally valid transfer to the recipient;

          (ii) in the case of Collateral consisting of securities maintained in
     book-entry form by causing a "securities intermediary" (as defined in
     Section 8-102(a)(14) of the Code) to (a) credit a "security entitlement"
     (as defined in Section 8-102(a)(17) of the Code) with respect to such
     securities to a "securities account" (as defined in Section 8-501(a) of the
     Code) maintained by or on behalf of the recipient and (b) to issue a
     confirmation to the recipient with respect to such credit. In the case of
     Collateral to be delivered to the Collateral Agent, the securities
     intermediary shall be the Securities Intermediary and the securities
     account shall be the Collateral Account. In addition, any Transfer of
     Treasury Securities and Treasury Consideration hereunder shall be made in
     accordance with the TRADES Regulations and other applicable law.

                                  ARTICLE II

                         PLEDGE; CONTROL AND PERFECTION

     SECTION 2.1  The Pledge.
                  ----------

     (a)  The Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, and the Purchase Contract Agent, as such
attorney-in-fact, hereby pledge and grant to the Collateral Agent, for the
benefit of the Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related Purchase
Contracts, a security interest in all of the right, title and interest of the
Purchase Contract Agent and such Holders in:

                                      -4-
<PAGE>

          (i)    (A) the Notes, Treasury Consideration, Treasury Securities
     and any Applicable Ownership Interest in the Treasury Portfolio
     constituting a part of the Units, (B) any Treasury Securities delivered in
     exchange for any Notes, Treasury Consideration or any Applicable Ownership
     Interest in the Treasury Portfolio, as applicable, in accordance with
     Section 4.1 hereof, and (C) any Notes, Treasury Consideration or any
     Applicable Ownership Interest in the Treasury Portfolio, as applicable,
     delivered in exchange for any Treasury Securities in accordance with
     Section 4.2 hereof, in each case that have been Transferred to or otherwise
     received by the Collateral Agent and not released by the Collateral Agent
     to such Holders under the provisions of this Agreement;

          (ii)   the Collateral Account and all securities, financial assets,
     security entitlements, cash and other property credited thereto and all
     Security Entitlements related thereto; and

          (iii)  all Proceeds of the foregoing (all of the foregoing,
     collectively, the "Collateral").

     (b)  Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Units, shall cause the Notes comprising a part of the Normal Units to be
Transferred to the Collateral Agent for the benefit of the Company.

     (c)  The pledge provided in this Section 2.1 is herein referred to as the
"Pledge" and the Notes (or the Notes that are delivered pursuant to Section 6.2
hereof), Treasury Consideration, Treasury Securities or Applicable Ownership
Interest in the Treasury Portfolio subject to the Pledge, excluding any Notes,
Treasury Consideration, Treasury Securities or Applicable Ownership Interest in
the Treasury Portfolio released from the Pledge as provided in Sections 4.1 and
4.2 hereof, respectively, are hereinafter referred to as "Pledged Notes,"
"Pledged Treasury Consideration," "Pledged Treasury Securities" or "Pledged
Applicable Ownership Interest in the Treasury Portfolio," respectively. Subject
to the Pledge and the provisions of Section 2.2 hereof, the Holders from time to
time shall have full beneficial ownership of the Collateral. For purposes of
perfecting the Pledge under applicable law, including, to the extent applicable,
the TRADES Regulations or the Uniform Commercial Code as adopted and in effect
in any applicable jurisdiction, the Collateral Agent shall be the agent of the
Company as provided herein. Whenever directed by the Collateral Agent acting on
behalf of the Company, the Securities Intermediary shall have the right to re-
register in its name the Notes or any other securities held in physical form.

     (d)  Except as may be required in order to release Notes or Treasury
Consideration, as applicable, in connection with a Tax Event Redemption or with
a Holder's election to convert its investment from a Normal Unit to a Stripped
Unit, or

                                      -5-
<PAGE>

except as otherwise required to release Notes as specified herein, neither the
Collateral Agent, the Custodial Agent nor the Securities Intermediary shall
relinquish physical possession of any certificate evidencing a Note prior to the
termination of this Agreement. If it becomes necessary for the Securities
Intermediary to relinquish physical possession of a certificate in order to
release a portion of the Notes evidenced thereby from the Pledge, the Company or
the Purchase Contract Agent shall use its best efforts to obtain physical
possession of a replacement certificate evidencing any Notes remaining subject
to the Pledge hereunder registered to the Securities Intermediary or endorsed in
blank within fifteen days of the date the Securities Intermediary relinquished
possession. The Securities Intermediary shall promptly notify the Company and
the Collateral Agent of the Securities Intermediary's failure to obtain
possession of any such replacement certificate as required hereby.

     SECTION 2.2  Control and Perfection.
                  ----------------------

     (a)  In connection with the Pledge granted in Section 2.1, and subject to
the other provisions of this Agreement, the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions and
entitlement orders (as defined in Section 8-102(a)(8) of the Code) that the
Collateral Agent may deliver with respect to the Collateral Account, the
Collateral credited thereto and any Security Entitlements with respect to any
thereof. In the event the Securities Intermediary receives from the Holders or
the Purchase Contract Agent entitlement orders which conflict with entitlement
orders received from the Collateral Agent, the Securities Intermediary shall
follow the entitlement orders received from the Collateral Agent. Such
instructions and entitlement orders may, without limitation, direct the
Securities Intermediary to transfer, redeem, assign, or otherwise deliver the
Notes, the Treasury Consideration, the Treasury Securities, any Applicable
Ownership Interest in the Treasury Portfolio and any Security Entitlements with
respect thereto or sell, liquidate or dispose of such assets through a broker
designated by the Company, and to pay and deliver any income, proceeds or other
funds derived therefrom to the Company. The Holders from time to time acting
through the Purchase Contract Agent hereby further authorize and direct the
Collateral Agent, as agent of the Company, to itself issue instructions and
entitlement orders, and to otherwise take action, with respect to the Collateral
Account, the Collateral credited thereto and any Security Entitlements with
respect thereto, pursuant to the terms and provisions hereof, all without the
necessity of obtaining the further consent of the Purchase Contract Agent or any
of the Holders. The Collateral Agent shall be the agent of the Company and shall
act only in accordance with the terms hereof or as otherwise directed in writing
by the Company. Without limiting the generality of the foregoing, the Collateral
Agent shall issue

                                      -6-
<PAGE>

entitlement orders to the Securities Intermediary as directed in writing by the
Company.

     (b)  The Securities Intermediary hereby confirms and agrees that:

          (i)   all securities or other property underlying any financial assets
     credited to the Collateral Account shall be registered in the name of the
     Securities Intermediary, or its nominee, indorsed to the Securities
     Intermediary, or its nominee, or in blank or credited to another Collateral
     Account maintained in the name of the Securities Intermediary and in no
     case will any financial asset credited to the Collateral Account be
     registered in the name of the Purchase Contract Agent, the Collateral
     Agent, the Company or any Holder, payable to the order of, or specially
     indorsed to, the Purchase Contract Agent, the Collateral Agent, the Company
     or any Holder except to the extent the foregoing have been specially
     indorsed to the Securities Intermediary or in blank;

          (ii)  all property delivered to the Securities Intermediary pursuant
     to this Pledge Agreement (including, without limitation, any Notes,
     Treasury Consideration, Treasury Securities or any Applicable Ownership
     Interest in the Treasury Portfolio) will be promptly credited to the
     Collateral Account;

          (iii) the Collateral Account is an account to which financial assets
     are or may be credited, and the Securities Intermediary shall, subject to
     the terms of this Agreement, treat the Purchase Contract Agent as entitled
     to exercise the rights of any financial asset credited to the Collateral
     Account;

          (iv)  the Securities Intermediary has not entered into, and until the
     termination of this Agreement will not enter into, any agreement with any
     other Person relating to the Collateral Account and/or any financial assets
     credited thereto pursuant to which it has agreed to comply with entitlement
     orders (as defined in Section 8-102(a)(8) of the Code) of such other
     Person; and

          (v)   the Securities Intermediary has not entered into, and until the
     termination of this Agreement will not enter into, any agreement with the
     Company, the Collateral Agent or the Purchase Contract Agent purporting to
     limit or condition the obligation of the Securities Intermediary to comply
     with entitlement orders as set forth in this Section 2.2 hereof.

          (vi)  The Securities Intermediary hereby agrees that each item of
     property (whether investment property, financial asset, security,
     instrument or cash) credited to the Collateral Account shall be treated as
     a "financial asset" within the meaning of Section 8-102(a)(9) of the Code.

                                      -7-
<PAGE>

          (vii)  In the event of any conflict between this Agreement (or any
     portion thereof) and any other agreement now existing or hereafter entered
     into, the terms of this Agreement shall prevail.

     (c)  The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in
the name, place and stead of, the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1. The grant of such power-
of-attorney shall not be deemed to require of the Collateral Agent any specific
duties or obligations not otherwise assumed by the Collateral Agent hereunder.
Notwithstanding the foregoing, in no event shall the Collateral Agent or
Securities Intermediary be responsible for the preparation or filing of any
financing or continuation statements in the appropriate jurisdictions or
responsible for maintenance or perfection of any security interest hereunder.

                                  ARTICLE III

                         PAYMENTS ON PLEDGED COLLATERAL

     SECTION 3.1  Payments.
                  --------

     So long as the Purchase Contract Agent is the registered owner of the
Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury Securities, it shall
receive all payments thereon.  If the Pledged Notes are reregistered, such that
the Collateral Agent becomes the registered holder, all payments of the
principal of, or interest on, the Pledged Notes and all payments of the
principal of, or cash distributions on, any Pledged Treasury Consideration,
Pledged Treasury Securities or any Pledged Applicable Ownership Interest in the
Treasury Portfolio, that are received by the Collateral Agent and that are
properly payable hereunder, shall be paid by the Collateral Agent by wire
transfer in same day funds:

          (i)     in the case of (A) quarterly cash distributions on Normal
     Units which include Pledged Notes, Pledged Treasury Consideration or any
     Pledged Applicable Ownership Interest in the Treasury Portfolio, any
     interest payments with respect to the Pledged Notes or the appropriate
     Pledged Applicable Ownership Interest in the Treasury Portfolio (as
     specified in clause (B) of the definition of Applicable Ownership Interest)
     of the Treasury Portfolio, as the case may be, and (B) any payments of
     principal or, if applicable, the appropriate Applicable Ownership Interest
     (as specified in clause (A) of the definition of such term) of the Treasury
     Portfolio with respect to any Notes, Treasury Consideration or the
     appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
     case may be, that have been released from the Pledge

                                      -8-
<PAGE>

     pursuant to Section 4.3 hereof, to the Purchase Contract Agent, for the
     benefit of the relevant Holders of the Normal Units, to the account
     designated by the Purchase Contract Agent for such purpose, no later than
     10:00 a.m., New York City time, on the Business Day such payment is
     received by the Collateral Agent (provided that in the event such payment
     is received by the Collateral Agent on a day that is not a Business Day or
     after 9:00 a.m., New York City time, on a Business Day, then such payment
     shall be made no later than 9:30 a.m., New York City time, on the next
     succeeding Business Day);

          (ii)   in the case of any payments with respect to any Treasury
     Securities that have been released from the Pledge pursuant to Section 4.3
     hereof, to the Holders of the Stripped Units to the accounts designated by
     them in writing for such purpose no later than 2:00 p.m., New York City
     time, on the Business Day such payment is received by the Collateral Agent
     (provided that in the event such payment is received by the Collateral
     Agent on a day that is not a Business Day or after 10 a.m., New York City
     time, on a Business Day, then such payment shall be made no later than
     10:30 a.m., New York City time, on the next succeeding Business Day); and

          (iii)  in the case of payments in respect of any Pledged Notes,
     Pledged Treasury Consideration, Pledged Treasury Securities or the
     appropriate Pledged Applicable Ownership Interest (as specified in clause
     (A) of the definition of such term) of the Treasury Portfolio, as the case
     may be, to be paid upon settlement of such Holder's obligations to purchase
     Common Stock under the Purchase Contract, to the Company on the Stock
     Purchase Date in accordance with the procedure set forth in Section 4.5(a)
     or 4.5(b) hereof, in full satisfaction of the respective obligations of the
     Holders under the related Purchase Contracts.

     SECTION 3.2  Application of Payments.
                  -----------------------

     All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions of
the Purchase Contract Agreement.  If, notwithstanding the foregoing, the
Purchase Contract Agent shall receive any payments of principal on account of
any Note, Treasury Consideration or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as applicable, that, at the time of such payment, is a
Pledged Note, Treasury Consideration or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, or a Holder of a Stripped Unit shall
receive any payments of principal on account of any Treasury Securities that, at
the time of such payment, are Pledged Treasury Securities, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company (and promptly deliver the same over to the Company) for
application

                                      -9-
<PAGE>

to the obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of
principal so received.

                                  ARTICLE IV

            SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES

     SECTION 4.1  Collateral Substitution and the Creation of Stripped Units.
                  ----------------------------------------------------------

     At any time on or prior to the second Business Day immediately preceding
the Stock Purchase Date, a Holder of Normal Units shall have the right to
substitute Treasury Securities for the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, securing such Holder's obligations under the
Purchase Contracts comprising a part of such Normal Units, in integral multiples
of 10 Normal Units, or after a remarketing of the Notes pursuant to the Purchase
Contract Agreement, in integral multiples of Normal Units such that Treasury
Securities to be deposited and the applicable Treasury Consideration to be
released are in integral multiples of $1,000, by (a) Transferring to the
Collateral Agent Treasury Securities having an aggregate principal amount equal
to the aggregate Stated Amount of such Normal Units and (b) delivering such
Normal Units to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase Contract Agent
stating that such Holder has Transferred Treasury Securities to the Collateral
Agent pursuant to clause (a) above (stating the principal amount and the CUSIP
numbers of the Treasury Securities Transferred by such Holder) and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release from
the Pledge the Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
related to such Normal Units, whereupon the Purchase Contract Agent shall
promptly give such instruction in writing to the Collateral Agent in the form
provided in Exhibit A; provided that, such Holder may not substitute such
Treasury Securities for such Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury Portfolio pursuant to this
Section 4.1 during the period from four Business Days prior to any Remarketing
Period until the expiration of three Business Days after the end of such
Remarketing Period.  Upon receipt of Treasury Securities from a Holder of Normal
Units and the related written instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Pledged Notes, Pledged Treasury Consideration
or the Pledged Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, and shall promptly Transfer such Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, free and clear of any lien, pledge or security
interest created hereby, to the Purchase Contract Agent.  All items Transferred
and/or substituted by any Holder pursuant to this

                                      -10-
<PAGE>

Section 4.1, Section 4.2 or any other Section of this Agreement shall be
Transferred and/or substituted free and clear of all liens, claims and
encumbrances.

     SECTION 4.2  Collateral Substitution and the Re-Creation of Normal Units.
                  -----------------------------------------------------------

     At any time on or prior to the second Business Day immediately preceding
the Stock Purchase Date, a Holder of Stripped Units shall have the right to
reestablish Normal Units (a) consisting of the Purchase Contracts and Notes in
integral multiples of 10 Normal Units, or (b) after a remarketing of the Notes
pursuant to the Purchase Contract Agreement or a Tax Event Redemption,
consisting of the Purchase Contracts and the appropriate Treasury Consideration
(identified and calculated by reference to the Treasury Consideration then
comprising Normal Units) or the appropriate portion of the Treasury Portfolio in
integral multiples of Stripped Units such that the Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio to be deposited and the
Treasury Securities to be released are in integral multiples of $1,000, by (x)
Transferring to the Collateral Agent Notes or the appropriate Treasury
Consideration or the Applicable Ownership Interest (as defined in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case may be, then
comprising such number of Normal Units as is equal to such Stripped Units and
(y) delivering such Stripped Units to the Purchase Contract Agent, accompanied
by a notice, substantially in the form of Exhibit B hereto, to the Purchase
Contract Agent stating that such Holder has transferred Notes, Treasury
Consideration or Applicable Ownership Interest in the Treasury Portfolio to the
Collateral Agent pursuant to clause (a) above and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release from the Pledge the
Pledged Treasury Securities related to such Stripped Units, whereupon the
Purchase Contract Agent shall give such instruction to the Collateral Agent in
the form provided in Exhibit A; provided that, such Holder of Stripped Units
shall not have the right to reestablish Normal Units pursuant to this Section
4.2 during the period from four Business Days prior to any Remarketing Period
until the expiration of three Business Days after the end of such Remarketing
Period.  Upon receipt of the Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
from such Holder and the instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Pledged Treasury Securities and shall
promptly Transfer such Pledged Treasury Securities, free and clear of any lien,
pledge or security interest created hereby, to the Purchase Contract Agent.

     SECTION 4.3  Termination Event.
                  -----------------
     (a)  Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that there has occurred a Termination
Event, the Collateral Agent shall release all Collateral from the Pledge and
shall promptly Transfer any Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case may
be, and Pledged

                                      -11-
<PAGE>

Treasury Securities to the Purchase Contract Agent for the benefit of the
Holders of the Normal Units and the Stripped Units, respectively, free and clear
of any lien, pledge or security interest or other interest created hereby.

     (b)  If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interest in
the Treasury Portfolio, or Pledged Treasury Securities, as the case may be, as
provided by this Section 4.3, the Purchase Contract Agent shall

          (i)  use its best efforts to obtain at the expense of the Company an
     opinion of a nationally recognized law firm reasonably acceptable to the
     Collateral Agent to the effect that, as a result of the Company's being the
     debtor in such a bankruptcy case, the Collateral Agent will not be
     prohibited from releasing or Transferring the Collateral as provided in
     this Section 4.3, and shall deliver such opinion to the Collateral Agent
     within ten days after the occurrence of such Termination Event, and if (y)
     the Purchase Contract Agent shall be unable to obtain such opinion within
     ten days after the occurrence of such Termination Event or (z) the
     Collateral Agent shall continue, after delivery of such opinion, to refuse
     to effectuate the release and Transfer of all Pledged Notes, Pledged
     Treasury Consideration, Pledged Applicable Ownership Interest in the
     Treasury Portfolio or Pledged Treasury Securities, as the case may be, as
     provided in this Section 4.3, then the Purchase Contract Agent shall within
     fifteen days after the occurrence of such Termination Event commence an
     action or proceeding in the court with jurisdiction of the Company's case
     under the Bankruptcy Code seeking an order requiring the Collateral Agent
     to effectuate the release and transfer of all Pledged Notes, Pledged
     Treasury Consideration, Pledged Applicable Ownership Interest in the
     Treasury Portfolio or Pledged Treasury Securities, as the case may be, as
     provided by this Section 4.3 or

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

     SECTION 4.4  Early Settlement; Merger Early Settlement; Cash Settlement.
                  ----------------------------------------------------------

     Upon written notice to the Collateral Agent by the Purchase Contract Agent
that one or more Holders of Units have elected to effect Early Settlement,
Merger Early Settlement or Cash Settlement of their respective obligations under
the Purchase Contracts forming a part of such Units in accordance with the terms
of the Purchase Contracts and the Purchase Contract Agreement (setting forth the
number of such Purchase Contracts as to which such Holders have elected to
effect Early Settlement,

                                      -12-
<PAGE>

Merger Early Settlement or Cash Settlement), and that the Purchase Contract
Agent has received from such Holders, and paid to the Company, as confirmed to
the Collateral Agent in writing by the Company, the related Early Settlement
Amounts, Merger Early Settlement Amounts or Cash Settlement Amounts, as the case
may be, pursuant to the terms of the Purchase Contracts and the Purchase
Contract Agreement and that all conditions to such Early Settlement, Merger
Early Settlement or Cash Settlement, as the case may be, have been satisfied,
then the Collateral Agent shall release from the Pledge (a) Pledged Notes,
Pledged Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, in the case of a Holder of Normal Units
or (b) Pledged Treasury Securities, in the case of a Holder of Stripped Units,
relating to such Purchase Contracts as to which such Holders have elected to
effect Early Settlement, Merger Early Settlement or Cash Settlement, and shall
Transfer all such Pledged Notes, Pledged Treasury Consideration, Pledged
Applicable Ownership Interest in the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge created hereby, to
the Purchase Contract Agent for the benefit of such Holders.

     SECTION 4.5  Remarketing; Application of Proceeds; Settlement.
                  ------------------------------------------------

     (a)  Pursuant to the Purchase Contract Agreement, the Purchase Contract
Agent shall notify, by 10:00 a.m., New York City time, on the third Business Day
preceding the Remarketing Date or any Subsequent Remarketing Date, as the case
may be, the Remarketing Agent and the Collateral Agent of the aggregate
principal amount of Notes comprising part of Normal Units to be remarketed. The
Collateral Agent shall, by 10:00 a.m., New York City time, on the Business Day
immediately preceding the first day of any Remarketing Period or any Subsequent
Remarketing Period, as the case may be, without any instruction from Holders of
Normal Units, deliver the Pledged Notes to be remarketed to the Remarketing
Agent for remarketing. After deducting as the remarketing fee an amount not
exceeding 25 basis points (.25%) of the total proceeds of such remarketing of
Pledged Notes, the Remarketing Agent will deliver the Agent-purchased Treasury
Consideration (as defined in the Purchase Contract Agreement) purchased from the
proceeds of the remarketing to the Purchase Contract Agent, which shall
thereupon deliver such Agent-purchased Treasury Consideration to the Collateral
Agent. Upon receipt of the Agent-purchased Treasury Consideration from the
Purchase Contract Agent following a successful remarketing, (i) the Collateral
Agent, for the benefit of the Company, shall thereupon hold in the Collateral
Account such Agent-Purchased Treasury Consideration to secure such Normal Units
Holders' obligations under the Purchase Contracts and to fund the quarterly
interest payment due to Normal Units Holders on the Stock Purchase Date, and
(ii) the remaining portion, if any, of the proceeds of such successful
remarketing shall be distributed by the Remarketing Agent to the Purchase
Contract Agent for payment to such Normal Units Holders participating in such
remarketing. On the Stock Purchase Date, the Collateral Agent shall, at the
direction of the Company,

                                      -13-
<PAGE>

(i) apply that portion of the payments received in respect of the Pledged
Treasury Consideration equal to the aggregate Stated Amount of the related
Normal Units to satisfy in full the obligations of such Normal Units Holders to
pay the Purchase Price under the related Purchase Contracts and (ii) apply the
remaining portion to pay the quarterly interest payment due to Normal Units
Holders on such Stock Purchase Date, which such quarterly interest payment shall
be paid on the Pledged Notes in an amount equal to the Coupon Rate for such
quarterly interest payment.

     (b)  Within three Business Days following the Last Failed Remarketing, the
Notes delivered to the Remarketing Agent pursuant to Section 4.5(a) hereof shall
be returned to the Collateral Agent, together with written notice from the
Remarketing Agent of the Last Failed Remarketing. The Collateral Agent, for the
benefit of the Company, shall thereupon hold such Notes to secure the Normal
Units Holders' obligations under the Purchase Contracts. The Remarketing Agent
shall make one or more attempts to remarket the Notes in accordance with the
procedures set forth in the Purchase Contract Agreement and the Remarketing
Agreement, provided that the requirements of Section 5.4(b)(ii) of the Purchase
Contract Agreement have been met. If by 4:00 p.m., New York City time, on the
Business Day immediately preceding the Stock Purchase Date, the Remarketing
Agent has failed to remarket the Notes at 100.5% of the Remarketing Value (as
described in the Purchase Contract Agreement), the Last Failed Remarketing shall
be deemed to have occurred. In this case, the Remarketing Agent shall advise the
Collateral Agent in writing that it cannot remarket the related Pledged Notes of
such Holders of Normal Units. If any Holder of Notes exercises it right to put
such Holder's Notes to the Company pursuant to the terms of the Indenture, the
proceeds of the put shall be paid (a) to the Collateral Agent on behalf of such
Holder to satisfy such Holder's obligation under the Purchase Contract if such
Notes are part of a Normal Unit and (b) to the Holder of such Notes if the Notes
are Separate Notes. The Collateral Agent, for the benefit of the Company will,
at the written direction of the Company, retain or dispose of the Pledged Notes
in accordance with applicable law and satisfy in full, from any such disposition
or retention, such Holders' obligations to pay the Purchase Price for the Common
Stock; provided, that if upon a Failed Remarketing, the Collateral Agent
exercises such rights for the benefit of the Company with respect to such Notes,
any accrued and unpaid interest on such Notes will become payable by the Company
to the Purchase Contract Agent for payment to the Holder of the Normal Units to
which such Notes relate in accordance with the Purchase Contract Agreement.

     (c)  In the event a Holder of Stripped Units has not made a Cash
Settlement, Early Settlement or Merger Early Settlement of the Purchase
Contracts underlying its Stripped Units, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under such Purchase
Contracts from the payments received in respect of the related Pledged Treasury
Securities. Without receiving any instruction from any such Holder, the
Collateral Agent shall apply such payments to

                                      -14-
<PAGE>

the settlement of such Purchase Contracts on the Stock Purchase Date. In the
event the payments received in respect of the related Pledged Treasury
Securities are in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent shall distribute such
excess, when received, to the Purchase Contract Agent for the benefit of such
Holders of Stripped Units.

     (d)  On or prior to the fourth Business Day preceding the first day of any
Remarketing Period, but no earlier than the Payment Date immediately preceding
August 16, 2004, holders of Separate Notes may elect to have their Separate
Notes remarketed by delivering their Separate Notes, together with a notice of
such election, substantially in the form of Exhibit C hereto, to the Custodial
Agent. On the third Business Day prior to the first day of any Remarketing
Period, by 10:00 a.m., New York City time, the Custodial Agent shall notify the
Remarketing Agent of the number of such Separate Notes to be remarketed. The
Custodial Agent will hold such Separate Notes in an account separate from the
Collateral Account. A holder of Separate Notes electing to have its Separate
Notes remarketed will also have the right to withdraw such election by written
notice to the Custodial Agent, substantially in the form of Exhibit D hereto, on
or prior to the fifth Business Day immediately preceding the first day of any
Remarketing Period and any Subsequent Remarketing Period, upon which notice the
Custodial Agent will return such Separate Notes to such holder. On the third
Business Day immediately preceding the first day of any Remarketing Period and
any Subsequent Remarketing Period, the Custodial Agent at the written direction
of the Remarketing Agent will deliver to the Remarketing Agent for remarketing
all Separate Notes delivered to the Custodial Agent pursuant to this Section
4.5(d) and not withdrawn pursuant to the terms hereof prior to such date. The
portion of the proceeds from such remarketing equal to the amount calculated in
respect of such Separate Notes as set forth in Section 5.4(b) of the Purchase
Contract Agreement will automatically be remitted by the Remarketing Agent to
the Custodial Agent for the benefit of the holders of such Separate Notes. In
addition, after deducting as the remarketing fee an amount not exceeding 25
basis points (.25%) of the total proceeds of such remarketing of such Separate
Notes, the Remarketing Agent will remit to the Custodial Agent the remaining
portion of the proceeds, if any, for the benefit of such holders of such
Separate Notes. If, despite using its reasonable best efforts, the Remarketing
Agent advises the Custodial Agent in writing that there has been a Failed
Remarketing, the Remarketing Agent will promptly return such Separate Notes to
the Custodial Agent for redelivery to such holders of such Separate Notes.

                                      -15-
<PAGE>

                                   ARTICLE V

                             VOTING RIGHTS -- NOTES

     SECTION 5.1  Exercise by Purchase Contract Agent.
                  -----------------------------------

     The Purchase Contract Agent may exercise, or refrain from exercising, any
and all voting and other consensual rights pertaining to the Pledged Notes or
any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or, as the case
may be, shall not refrain from exercising such right if, in the judgment of the
Company, such action would impair or otherwise have a material adverse effect on
the value of all or any of the Pledged Notes; and provided, further, that the
Purchase Contract Agent shall give the Company and the Collateral Agent at least
five days' prior written notice of the manner in which it intends to exercise,
or its reasons for refraining from exercising, any such right.  Upon receipt of
any notices and other communications in respect of any Pledged Notes, including
notice of any meeting at which holders of Notes are entitled to vote or
solicitation of consents, waivers or proxies of holders of Notes, the Collateral
Agent shall use reasonable efforts to send promptly to the Purchase Contract
Agent such notice or communication, and as soon as reasonably practicable after
receipt of a written request therefor from the Purchase Contract Agent, execute
and deliver to the Purchase Contract Agent such proxies and other instruments in
respect of such Pledged Notes (in form and substance satisfactory to the
Collateral Agent) as are prepared by the Purchase Contract Agent with respect to
the Pledged Notes.

                                  ARTICLE VI

                   RIGHTS AND REMEDIES; TAX EVENT REDEMPTION

     SECTION 6.1  Rights and Remedies of the Collateral Agent.
                  -------------------------------------------

     (a)  In addition to the rights and remedies available at law or in equity,
after an event of default under the Purchase Contracts, the Collateral Agent
shall have all of the rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code (or any successor thereto) as in
effect in the State of New York from time to time (the "Code") (whether or not
the Code is in effect in the jurisdiction where the rights and remedies are
asserted) and the TRADES Regulations and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Wherever reference is
made in this Agreement to any section of the Code, such reference shall be
deemed to include a reference to any provision of the Code which is a successor
to, or amendment of, such section. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by

                                      -16-
<PAGE>

applicable law, (i) retention of the Pledged Notes or other Collateral in full
satisfaction of the Holders' obligations under the Purchase Contracts or (ii)
sale of the Pledged Notes or other Collateral in one or more public or private
sales, in each case at the written direction of the Company.

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

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

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

                                      -17-
<PAGE>

     SECTION 6.2  Substitutions.
                  -------------

     Whenever a Holder has the right to substitute Treasury Securities, Notes,
Treasury Consideration or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, for Collateral held by the Collateral
Agent, such substitution shall not constitute a novation of the security
interest created hereby.

     SECTION 6.3  Tax Event Redemption.
                  --------------------

     Upon the occurrence of a Tax Event Redemption prior to a successful
remarketing of the Pledged Notes, the aggregate Redemption Price payable on the
Tax Event Redemption Date with respect to such Pledged Notes shall be delivered
to the Collateral Agent by the Trustee on or prior to 12:00 p.m., New York City
time, by wire transfer in immediately available funds at such place and at such
account as may be designated by the Collateral Agent in exchange for the Pledged
Notes.  In the event the Collateral Agent receives such Redemption Price, the
Collateral Agent will, at the written direction of the Company, apply an amount,
out of such Redemption Price, equal to the aggregate Redemption Amount with
respect to the Pledged Notes to purchase from the Quotation Agent the Treasury
Portfolio and promptly remit the remaining portion of such Redemption Price to
the Purchase Contract Agent for payment to the Holders of Normal Units.  The
Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account
to secure the obligation of all Holders of Normal Units to purchase Common Stock
of the Company under the Purchase Contracts constituting a part of such Normal
Units, in substitution for the Pledged Notes.  Thereafter the Collateral Agent
shall have such security interests, rights and obligations with respect to the
Treasury Portfolio as it had in respect of the Pledged Notes as provided in
Articles II, III, IV, V and VI, and any reference herein to the Notes shall be
deemed to be reference to such Treasury Portfolio, and any reference herein to
interest on the Notes shall be deemed to be a reference to distributions on such
Treasury Portfolio.

                                  ARTICLE VII

                   REPRESENTATIONS AND WARRANTIES; COVENANTS

     SECTION 7.1  Representations and Warranties.
                  ------------------------------

     The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent, which
representations and warranties shall be deemed repeated on each day a Holder
Transfers Collateral that:

                                      -18-
<PAGE>

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

     (b)  such Holder is the sole beneficial owner of the Collateral and, in the
case of Collateral delivered in physical form, is the sole holder of such
Collateral and is the sole beneficial owner of, or has the right to Transfer,
the Collateral it Transfers to the Collateral Agent, free and clear of any
security interest, lien, encumbrance, call, liability to pay money or other
restriction other than the security interest and lien granted under Section 2.1
hereof;

     (c)  upon the Transfer of the Collateral to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming that any central
clearing operation or any Intermediary or other entity not within the control of
the Holder involved in the Transfer of the Collateral, including the Collateral
Agent, gives the notices and takes the action required of it hereunder and under
applicable law for perfection of that interest and assuming the establishment
and exercise of control pursuant to Section 2.2 hereof); and

     (d)  the execution and performance by the Holder of its obligations under
this Agreement will not result in the creation of any security interest, lien or
other encumbrance on the Collateral other than the security interest and lien
granted under Section 2.1 hereof or violate any provision of any existing law or
regulation applicable to it or of any mortgage, charge, pledge, indenture,
contract or undertaking to which it is a party or which is binding on it or any
of its assets.

     SECTION 7.2  Covenants.
                  ---------

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

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

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

                                      -19-
<PAGE>

                                 ARTICLE VIII

                             THE COLLATERAL AGENT

     SECTION 8.1  Appointment, Powers and Immunities.
                  ----------------------------------

     (a)  The Collateral Agent shall act as agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary:

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

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

          (iii)  shall not be required to initiate or conduct any litigation or
     collection proceedings hereunder (except in the case of the Collateral
     Agent, pursuant to written directions furnished under Section 8.2 hereof,
     subject to Section 8.6 hereof);

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

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

                                      -20-
<PAGE>

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

     (b)  No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or
the Securities Intermediary be liable for any amount in excess of the value of
the Collateral or for any special, indirect, individual, consequential damages
or lost profits or loss of business, arising in connection with this Agreement
even if the Collateral Agent, the Custodial Agent or the Securities Intermediary
has been advised of the likelihood of such loss or damage being incurred and
regardless of the form of action. Notwithstanding the foregoing, the Collateral
Agent, the Custodial Agent, the Purchase Contract Agent and Securities
Intermediary, each in its individual capacity, hereby waive any right of setoff,
bankers lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.

     (c)  The Collateral Agent, Custodial Agent and Securities Intermediary
shall have no liability whatsoever for the action or inaction of any Clearing
Agency or any book-entry system thereof. In no event shall any Clearing Agency
or any book-entry system thereof be deemed an agent or subcustodian of the
Collateral Agent, Custodial Agent and Securities Intermediary. The Collateral
Agent, Custodial Agent and Securities Intermediary shall not be responsible or
liable for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fires; floods; war (whether declared or undeclared); terrorism;
civil or military disturbances; sabotage; epidemics; riots; interruptions, loss
or malfunctions of utilities, computer (hardware or software) or communications
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.

     SECTION 8.2  Instructions of the Company.
                  ---------------------------

     The Company shall have the right, by one or more instruments in writing
executed and delivered to the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, to direct the time, method and
place of conducting any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power conferred on the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction shall
not conflict with the provisions of any law or of this Agreement and (ii) the
Collateral Agent, the Custodial Agent and the Securities

                                      -21-
<PAGE>

Intermediary shall each receive indemnity reasonably satisfactory to it as
provided herein. Nothing in this Section 8.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any action
which it deems proper and which is not inconsistent with such direction.

     SECTION 8.3  Reliance.
                  --------

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

     SECTION 8.4  Rights in Other Capacities.
                  --------------------------

     The Collateral Agent, the Custodial Agent and the Securities Intermediary
and their affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make their investments in and generally
engage in any kind of banking, trust or other business with the Purchase
Contract Agent, any Holder of Units and any holder of Separate Notes (and any of
their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent, any Holder of Units or any holder of Separate Notes
without having to account for the same to the Company; provided that each of the
Securities Intermediary, the Custodial Agent and the Collateral Agent covenants
and agrees with the Company that, except as provided in this Agreement, it shall
not accept, receive or permit there to be created in favor of itself (and waives
any right of set-off or banker's lien with respect to) and shall take no
affirmative action to permit there to be created in favor of any other Person,
any security interest, lien or other encumbrance of any kind in or upon the
Collateral and the Collateral shall not be commingled with any other assets of
any such Person.

     SECTION 8.5  Non-Reliance on Collateral Agent.
                  --------------------------------

     None of the Securities Intermediary, the Custodial Agent or the Collateral
Agent shall be required to keep itself informed as to the performance or
observance by

                                      -22-
<PAGE>

the Purchase Contract Agent or any Holder of Units of this Agreement, the
Purchase Contract Agreement, the Units or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Purchase Contract Agent or any Holder of Units. The Collateral Agent, the
Custodial Agent and the Securities Intermediary shall not have any duty or
responsibility to provide the Company or the Remarketing Agent with any credit
or other information concerning the affairs, financial condition or business of
the Purchase Contract Agent, any Holder of Units or any holder of Separate Notes
(or any of their respective subsidiaries or affiliates) that may come into the
possession of the Collateral Agent, the Custodial Agent or the Securities
Intermediary or any of their respective affiliates.

     SECTION 8.6  Compensation and Indemnity.
                  --------------------------

     The Company agrees:

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

     (b)  to indemnify the Collateral Agent, the Custodial Agent, the Securities
Intermediary and their officers, directors and agents for, and to hold each of
them harmless from and against, any loss, liability or reasonable out-of-pocket
expense incurred without gross negligence or willful misconduct on its part,
arising out of or in connection with the acceptance or administration of its
powers and duties under this Agreement, including the out-of-pocket costs and
expenses (including fees and expenses of counsel) of defending itself against
any claim or liability in connection with the exercise or performance of such
powers and duties or collecting such amounts. The Collateral Agent, the
Custodial Agent and the Securities Intermediary shall each promptly notify the
Company of any third party claim which may give rise to the indemnity hereunder
and give the Company the opportunity to participate in the defense of such claim
with counsel reasonably satisfactory to the indemnified party, and no such claim
shall be settled without the written consent of the Company, which consent shall
not be unreasonably withheld. The provisions of this Section 8.6 shall survive
the resignation or removal of the Collateral Agent, the Custodial Agent and the
Securities Intermediary or the termination of this Agreement.

     SECTION 8.7  Failure to Act.
                  --------------

     In the event of any ambiguity in the provisions of this Agreement or any
dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the

                                      -23-
<PAGE>

Company and the Purchase Contract Agent, at its sole option, to refuse to comply
with any and all claims, demands or instructions with respect to such property
or funds so long as such dispute or conflict shall continue, and none of the
Collateral Agent, Custodial Agent or the Securities Intermediary shall be or
become liable in any way to any of the parties hereto for its failure or refusal
to comply with such conflicting claims, demands or instructions. The Collateral
Agent, Custodial Agent and the Securities Intermediary shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the conflicting parties as evidenced in a writing,
reasonably satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, or (ii) the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be, shall have
received security or an indemnity reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be,
sufficient to save the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, may incur by
reason of its acting without willful misconduct or gross negligence. The
Collateral Agent, Custodial Agent or the Securities Intermediary may in addition
elect to commence an interpleader action or seek other judicial relief or orders
as the Collateral Agent, Custodial Agent or the Securities Intermediary, as the
case may be, may deem necessary. Notwithstanding anything contained herein to
the contrary, none of the Collateral Agent, Custodial Agent or the Securities
Intermediary shall be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.

     SECTION 8.8  Resignation.
                  -----------

     Subject to the appointment and acceptance of a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as provided below, (a) the
Collateral Agent, Custodial Agent and the Securities Intermediary may resign at
any time by giving notice thereof to the Company and the Purchase Contract Agent
as attorney-in-fact for the Holders of Units, (b) the Collateral Agent,
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, Custodial Agent or the Securities
Intermediary fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary
may be removed by the Purchase Contract Agent.  The Purchase Contract Agent
shall promptly notify the Company of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (c) of the
immediately preceding sentence.  The Company shall promptly notify

                                      -24-
<PAGE>

the Purchase Contract Agent of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (b) of the
second preceding sentence. Upon any such resignation or removal, the Company
shall have the right to appoint a successor Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be. If no successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
giving of notice of resignation or such removal, then the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, may at
the Company's expense petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. Each of the Collateral Agent, Custodial Agent
and the Securities Intermediary shall be a bank which has an office in New York,
New York with a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, hereunder by a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, and the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor after the payment of any
outstanding fees, expenses and indemnities due and owing to such remaining
party. The retiring Collateral Agent, Custodial Agent or Securities Intermediary
shall, upon such succession, be discharged from its duties and obligations as
Collateral Agent, Custodial Agent or Securities Intermediary hereunder. After
any retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
resignation hereunder as Collateral Agent, Custodial Agent or Securities
Intermediary, the provisions of this Section 8.8, and Section 8.6 hereof, shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Collateral Agent, Custodial Agent or
Securities Intermediary. Any resignation or removal of the Collateral Agent
hereunder shall be deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Custodial Agent and the Securities Intermediary
hereunder.

     SECTION 8.9  Right to Appoint Agent or Advisor.
                  ---------------------------------

     The Collateral Agent shall have the right to appoint or consult with agents
or advisors in connection with any of its duties hereunder, and the Collateral
Agent shall not be liable for any action taken or omitted by, or in reliance
upon the advice of, such agents or advisors selected in good faith.  The
appointment of agents (other than legal counsel) pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.

                                      -25-
<PAGE>

     SECTION 8.10 Survival.
                  --------

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

     SECTION 8.11 Exculpation.
                  -----------

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

                                  ARTICLE IX

                                   AMENDMENT

     SECTION 9.1  Amendment Without Consent of Holders.
                  ------------------------------------

     Without the consent of any Holders or the holders of any Separate Notes,
the Company, when authorized by a Board Resolution, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, at
any time and from time to time, may amend this Agreement, in form satisfactory
to the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, for any of the following purposes:

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

          (ii)   to add to the covenants of the Company for the benefit of the
     Holders, or to surrender any right or power herein conferred upon the
     Company so long as such covenants or such surrender do not adversely affect
     the validity, perfection or priority of the security interests granted or
     created hereunder; or

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

          (iv)   to cure any ambiguity, to correct or supplement any provisions
     herein which may be inconsistent with any other such provisions herein, or
     to make any other provisions with respect to such matters or questions
     arising

                                      -26-
<PAGE>

     under this Agreement, provided such action shall not adversely affect the
     interests of the Holders.

     SECTION 9.2  Amendment with Consent of Holders.
                  ---------------------------------

     With the consent of the Holders of not less than a majority of the Purchase
Contracts at the time outstanding, by Act of said Holders delivered to the
Company, the Purchase Contract Agent or the Collateral Agent, as the case may
be, the Company, when duly authorized by a Board Resolution, the Purchase
Contract Agent, the Collateral Agent, the Custodial Agent and the Securities
Intermediary may amend this Agreement for the purpose of modifying in any manner
the provisions of this Agreement or the rights of the Holders in respect of the
Units; provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Unit adversely affected thereby,

          (i)    change the amount or type of Collateral underlying a Unit
     (except for the rights of holders of Normal Units to substitute the
     Treasury Securities for the Pledged Notes, Pledged Treasury Consideration
     or the appropriate Pledged Applicable Ownership Interest of the Treasury
     Portfolio, as the case may be, or the rights of Holders of Stripped Units
     to substitute Notes or the appropriate Treasury Consideration or the
     appropriate Applicable Ownership Interest of the Treasury Portfolio, as
     applicable, for the Pledged Treasury Securities), impair the right of the
     Holder of any Unit to receive distributions on the underlying Collateral or
     otherwise adversely affect the Holder's rights in or to such Collateral; or

          (ii)   otherwise effect any action that would require the consent of
     the Holder of each Outstanding Unit affected thereby pursuant to the
     Purchase Contract Agreement if such action were effected by an agreement
     supplemental thereto; or

          (iii)  reduce the percentage of Purchase Contracts the consent of
     whose Holders is required for any such amendment.

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

     SECTION 9.3  Execution of Amendments.
                  -----------------------

     In executing any amendment permitted by this Section, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent
shall receive and (subject to Section 8.1 hereof, with respect to the Collateral
Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the
Purchase Contract

                                      -27-
<PAGE>

Agent) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution and
delivery of such amendment have been satisfied and, in the case of an amendment
pursuant to Section 9.1, that such amendment does not adversely affect the
validity, perfection or priority of the security interests granted or created
hereunder.

     SECTION 9.4   Effect of Amendments.
                   --------------------

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

     SECTION 9.5   Reference to Amendments.
                   -----------------------

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

                                   ARTICLE X

                                 MISCELLANEOUS

     SECTION 10.1  No Waiver.
                   ---------

     No failure on the part of any party hereto or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by any party hereto or any of its agents of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.  The remedies
herein are cumulative and are not exclusive of any remedies provided by law.

                                      -28-
<PAGE>

     SECTION 10.2  GOVERNING LAW.
                   -------------

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAWS.  Without limiting the foregoing, the above choice of law is expressly
agreed to by the Securities Intermediary, the Collateral Agent, the Custodial
Agent and the Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, in connection with the establishment and
maintenance of the Collateral Account, which law, for purposes of the Code,
shall be deemed to be the law governing all Security Entitlements related
thereto.  In addition, such parties agree that, for purposes of the Code, New
York shall be the Securities Intermediary's jurisdiction.  The Company, the
Collateral Agent and the Holders from time to time of the Units, acting through
the Purchase Contract Agent as their attorney-in-fact, hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby.  The Company, the Collateral
Agent and the Holders from time to time of the Units, acting through the
Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

     SECTION 10.3  Notices.
                   -------

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

     SECTION 10.4  Successors and Assigns.
                   ----------------------

     This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
and the Holders from time to time of the Units, by their acceptance of the same,
shall be deemed to have agreed to

                                      -29-
<PAGE>

be bound by the provisions hereof and to have ratified the agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.

     SECTION 10.5  Counterparts.
                   ------------

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

     SECTION 10.6  Severability.
                   ------------

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

     SECTION 10.7  Expenses, Etc.
                   -------------

     The Company agrees to reimburse the Collateral Agent, the Securities
Intermediary and the Custodial Agent for:

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

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

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

                                      -30-
<PAGE>

     SECTION 10.8  Security Interest Absolute.
                   --------------------------

     All rights of the Collateral Agent and security interests hereunder, and
all obligations of the Holders from time to time hereunder, shall be absolute
and unconditional irrespective of:

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

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

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

     SECTION 10.9  Waiver of Jury Trial.
                   --------------------

     EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

                                      -31-
<PAGE>

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

                                        NORTHROP GRUMMAN CORPORATION

                                        By:  /s/ John H. Mullan
                                             ----------------------------------
                                             Name: John H. Mullan
                                             Title: Corporate Vice President and
                                                    Secretary

                                        Address for Notices:

                                        Northrop Grumman Corporation
                                        1840 Century Park East
                                        Los Angeles, California 90067
                                        Attention: Secretary
                                        Telecopy: (310) 556-4556

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

                                        By:  /s/ James P. Freeman
                                             ----------------------------------
                                             Name: James P. Freeman
                                             Title: Vice President

                                        Address for Notices:

                                        JPMorgan Chase Bank
                                        450 West 33rd Street
                                        New York, New York, 10001
                                        Attention: Institutional Trust Services
                                        Telecopy: (212) 946-8160

                                      -32-
<PAGE>

                                       The Bank of New York, as Collateral
                                       Agent, Custodial Agent and Securities
                                       Intermediary

                                       By:  /s/ Remo J. Reale
                                            ----------------------------------
                                            Name: Remo J. Reale
                                            Title: Vice President

                                       Address for Notices:

                                       101 Barclay Street
                                       New York, NY 10286

                                      -33-
<PAGE>

                                   EXHIBIT A

                      INSTRUCTION FROM PURCHASE CONTRACT
                           AGENT TO COLLATERAL AGENT


The Bank of New York,
as Collateral Agent
101 Barclay Street
New York, NY 10286


Re:  Equity Security Units of Northrop Grumman Corporation (the "Company")
               _______________________________________________

     We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of November 21, 2001, (the "Pledge Agreement") among the
Company, you, as Collateral Agent, Custodial Agent and Securities Intermediary
and us, as Purchase Contract Agent and as attorney-in-fact for the holders of
[Normal Units] [Stripped Units] from time to time, that the holder of Units
listed below (the "Holder") has elected to substitute [$_____ aggregate
principal amount of Treasury Securities (CUSIP No. _________)] [$_______
aggregate principal amount of Notes or $_____ aggregate principal amount of
Treasury Consideration (CUSIP No. _____) or the Applicable Ownership Interest of
the Treasury Portfolio, as the case may be,] in exchange for the related
[Pledged Notes, Pledged Treasury Consideration or the appropriate Pledged
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,]
[Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Notes, the Treasury Consideration or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] to you, as Collateral Agent.  We hereby instruct you, upon receipt of
such [Pledged Treasury Securities] [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest of the
Treasury Portfolio, as the case may be,], and upon the payment by such Holder of
any applicable fees, to release the [Notes, the Treasury Consideration or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Treasury Securities] related to such [Normal Units] [Stripped Units]
to us in accordance with the Holder's instructions.  Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.

                                      A-1
<PAGE>

Date: _____________________________

                                    JPMorgan Chase Bank,
                                    as Purchase Contract Agent

                                    By:  ___________________________________
                                         Name:
                                         Title:


Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Notes, Treasury Consideration or the appropriate
Applicable Ownership Interest in the Treasury Portfolio] for the [Pledged Notes,
Pledged Treasury Consideration or the appropriate Pledged Applicable Ownership
Interest in the Treasury Portfolio] [Pledged Treasury Securities]:

Name:

Social Security or other Taxpayer
Identification Number, if any:

Address:

                                      A-2
<PAGE>

                                   EXHIBIT B

                    INSTRUCTION TO PURCHASE CONTRACT AGENT

JPMorgan Chase Bank,
As Purchase Contract Agent
450 West 33rd Street
New York, New York 10001
Attn: Institutional Trust Services
Telecopy: (212) 946-8160

Re: Equity Security Units of Northrop Grumman Corporation (the "Company")

          The undersigned Holder hereby notifies you that it has delivered to
The Bank of New York, as Collateral Agent, Custodial Agent and Securities
Intermediary [$_______ aggregate principal amount of Treasury Securities (CUSIP
No. _________)] [$_______ aggregate principal amount of Notes or $_____
principal amount of Treasury Consideration (CUSIP No. _____) or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the case may be] in
exchange for the related [Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio, as
the case may be] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section [4.1] [4.2] of the Pledge Agreement, dated November 21,
2001 (the "Pledge Agreement"), among you, the Company and the Collateral Agent.
The undersigned Holder has paid the Collateral Agent all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Notes, Pledged Treasury Consideration or the appropriate
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case may
be] [Pledged Treasury Securities] related to such [Normal Units] [Stripped
Units].  Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

Date: ___________________     Signature:___________________________________

                              Signature Guarantee: ________________________


Please print name and address of Registered Holder:

Name:

Social Security or other Taxpayer Identification Number, if any:

Address:

                                      B-1
<PAGE>

                                   EXHIBIT C

             INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING


The Bank of New York,
as Custodial Agent
101 Barclay Street
New York, NY 10286


          Re: Notes of Northrop Grumman Corporation (the "Company")

          The undersigned hereby notifies you in accordance with Section 4.5(d)
of the Pledge Agreement, dated as of November 21, 2001 (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Normal Units and Stripped Units from time to
time, that the undersigned elects to deliver $__________ aggregate principal
amount of Notes for delivery to the Remarketing Agent on the fourth Business Day
immediately preceding the first day of any Remarketing Period or any Subsequent
Remarketing Period for remarketing pursuant to Section 4.5(d) of the Pledge
Agreement.  The undersigned will, upon request of the Remarketing Agent, execute
and deliver any additional documents deemed by the Remarketing Agent or by the
Company to be necessary or desirable to complete the sale, assignment and
transfer of the Notes tendered hereby.

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

          With this notice, the undersigned hereby (i) represents and warrants
that the undersigned has full power and authority to tender, sell, assign and
transfer the Notes tendered hereby and that the undersigned is the record owner
of any Notes tendered herewith in physical form or a participant in The
Depositary Trust Company ("DTC") and the beneficial owner of any Notes tendered
herewith by book-entry transfer to your account at DTC and (ii) agrees to be
bound by the terms and

                                      C-1
<PAGE>

conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.

Date: _______________              Signature:__________________________




                                   Signature Guarantee:


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

Address:


A. PAYMENT INSTRUCTIONS

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

Name(s):  ________________________________
              (Please Print)

Address:  ________________________________
              (Please Print)

          (Zip Code)

          (Tax Identification or Social Security Number):


B. DELIVERY INSTRUCTIONS

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

Name(s):  ________________________________
              (Please Print)

                                      C-2
<PAGE>

Address:  ________________________________
              (Please Print)


          (Zip Code)

          (Tax Identification or Social Security Number):

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

Name of Account Party:                  DTC Account Number:

                                      C-3
<PAGE>

                                   EXHIBIT D

                   INSTRUCTION TO CUSTODIAL AGENT REGARDING

                          WITHDRAWAL FROM REMARKETING


The Bank of New York
as Collateral Agent
101 Barclay Street
New York, NY 10286


          Re: Notes of Northrop Grumman Corporation (the "Company")

          The undersigned hereby notifies you in accordance with Section 4.5(d)
of the Pledge Agreement, dated as of November 21, 2001 (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Normal Units and Stripped Units from time to
time, that the undersigned elects to withdraw the $_____ aggregate principal
amount of Notes delivered to the Custodial Agent on ___________, 2004 for
remarketing pursuant to Section 4.5(d) of the Pledge Agreement.  The undersigned
hereby instructs you to return such Notes to the undersigned in accordance with
the undersigned's instructions.  With this notice, the Undersigned hereby agrees
to be bound by the terms and conditions of Section 4.5(d) of the Pledge
Agreement.  Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

Date: _______________              Signature:__________________________


                                   Signature Guarantee:


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

Address:

                                      D-1
<PAGE>

A. DELIVERY INSTRUCTIONS

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

Name(s):  ________________________________
          (Please Print)


Address:  ________________________________
          (Please Print)


          (Zip Code)

          (Tax Identification or Social Security Number):

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

Name of Account Party:                  DTC Account Number:

                                      D-2