Document:

EXECUTION COPY

                                 XL CAPITAL LTD,

                    U.S. BANK TRUST NATIONAL ASSOCIATION, as
          Collateral Agent, Custodial Agent and Securities Intermediary

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION,

                           as Purchase Contract Agent

                                PLEDGE AGREEMENT

                           Dated as of March 23, 2004

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                                                 TABLE OF CONTENTS

                                                                                                               PAGE
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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   Delivery, Control and Perfection...........................................................6

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

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

ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES................................................9

         SECTION 4.1   Collateral Substitution and the Creation of Stripped Units.................................9
         SECTION 4.2   Collateral Substitution and the Re-Creation of Normal Units...............................10
         SECTION 4.3   Termination Event.........................................................................10
         SECTION 4.4   Early Settlement; Merger Early Settlement; Cash Settlement................................11
         SECTION 4.5   Remarketing; Application of Proceeds; Settlement..........................................11

ARTICLE V VOTING RIGHTS -- NOTES.................................................................................13

         SECTION 5.1   Exercise by Purchase Contract Agent.......................................................13

ARTICLE VI RIGHTS AND REMEDIES; SPECIAL EVENT REDEMPTION.........................................................14

         SECTION 6.1   Rights and Remedies of the Collateral Agent...............................................14
         SECTION 6.2   Substitutions.............................................................................15
         SECTION 6.3   Special Event Redemption..................................................................15
         SECTION 6.4   Cash Received from Holders of Normal Units not Participating in the Remarketing...........15

ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS............................................................16

         SECTION 7.1   Representations and Warranties of the Holders.............................................16
         SECTION 7.2   Representations and Warranties of the Collateral Agent, Custodial Agent and
                         Securities Intermediary.................................................................17
         SECTION 7.3   Covenants.................................................................................17

ARTICLE VIII THE COLLATERAL AGENT................................................................................18

         SECTION 8.1   Appointment, Powers and Immunities........................................................18
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         SECTION 8.2   Instructions of the Company...............................................................19
         SECTION 8.3   Reliance..................................................................................20
         SECTION 8.4   Rights in Other Capacities................................................................20
         SECTION 8.5   Non-Reliance on Collateral Agent..........................................................20
         SECTION 8.6   Compensation and Indemnity................................................................21
         SECTION 8.7   Failure to Act............................................................................21
         SECTION 8.8   Resignation; Replacement of Collateral Agent, Custodial Agent or Securities
                         Intermediary............................................................................22
         SECTION 8.9   Right to Appoint Agent or Advisor.........................................................23
         SECTION 8.10   Survival.................................................................................23
         SECTION 8.11   Exculpation..............................................................................23

ARTICLE IX AMENDMENT.............................................................................................24

         SECTION 9.1   Amendment Without Consent of Holders......................................................24
         SECTION 9.2   Amendment with Consent of Holders.........................................................24
         SECTION 9.3   Execution of Amendments...................................................................25
         SECTION 9.4   Effect of Amendments......................................................................25
         SECTION 9.5   Reference to Amendments...................................................................25

ARTICLE X MISCELLANEOUS..........................................................................................25

         SECTION 10.1   No Waiver................................................................................25
         SECTION 10.2   GOVERNING LAW............................................................................26
         SECTION 10.3   Judgment Currency........................................................................26
         SECTION 10.4   Notices..................................................................................27
         SECTION 10.5   Successors and Assigns...................................................................27
         SECTION 10.6   Counterparts.............................................................................27
         SECTION 10.7   Severability.............................................................................27
         SECTION 10.8   Expenses, Etc............................................................................28
         SECTION 10.9   Security Interest Absolute...............................................................28
         SECTION 10.10  Waiver of Jury Trial.....................................................................28
         SECTION 10.11  Incorporation by Reference...............................................................28
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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

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                                PLEDGE AGREEMENT

                  PLEDGE AGREEMENT, dated as of March 23, 2004 (this
"Agreement"), among XL Capital Ltd, a Cayman Islands exempted limited company
(the "Company"), U.S. Bank Trust National Association, a national banking
association, 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 U.S.
Bank National Association, a national banking association, 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, amended or 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 $25 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 1/40, or 2.5%, beneficial
ownership interest in a Note having a $1,000 principal amount or (ii) following
a Special Event Redemption in accordance with the Purchase Contract Agreement
and the terms of the Notes, beneficial ownership of the Treasury Consideration.

                  WHEREAS, in accordance with the terms of the Purchase Contract
Agreement, a Holder of Normal Units may separate the Notes or the Treasury
Consideration, as applicable, from the related Purchase Contracts by
substituting for such Notes or the Treasury Consideration, as the case may be,
Treasury Securities that will pay in the aggregate an amount equal to the
aggregate Stated 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 1/40 undivided beneficial interest in a Treasury
Security, or, in the case of an opt-out pursuant to Section 6.4, the Cash
Consideration.

                  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 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 and any Treasury Securities 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, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the

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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 agreement 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.

                  "CASH CONSIDERATION" has the meaning specified in the Purchase
Contract Agreement.

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

                  "COLLATERAL" has the meaning specified in Section 2.1(a)
hereof.

                  "COLLATERAL ACCOUNT" means the securities account (number
785068000) maintained at U.S. Bank Trust National Association, 225 Asylum
Street, 23rd Floor, Hartford, Connecticut 06103, in the name of "U.S. Bank
National Association, as Purchase Contract Agent on behalf of the holders of
certain securities of XL Capital Ltd, Collateral Account subject to the security
interest of U.S. Bank Trust National Association, as Collateral Agent, for the
benefit of XL Capital Ltd, 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.

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                  "CUSTODIAL AGENT" has the meaning specified in the first
paragraph of this Agreement.

                   "INDENTURE" means the Indenture dated as of January 23, 2003
between the Company and U.S. Bank National Association, as trustee, as
supplemented by the First Supplemental Indenture, dated as of March 23, 2004.

                  "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(c) hereof.

                  "PLEDGED NOTES" has the meaning specified in Section 2.1(c)
hereof.

                  "PLEDGED TREASURY CONSIDERATION" has the meaning specified in
Section 2.1(c) hereof.

                  "PLEDGED TREASURY SECURITIES" has the meaning specified in
Section 2.1(c) 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.

                  "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 certificated
          securities, delivery as provided in 8-301(a) of the UCC in appropriate
          physical form to the recipient accompanied by any duly executed
          instruments of transfer, assignments in blank,

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          transfer tax stamps and any other documents necessary to constitute a
          legally valid transfer to the recipient; and

                  (ii) in the case of Collateral consisting of security
          entitlements relating to 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 such "security entitlement"
          (as defined in Section 8-102(a)(17) of the Code) 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 hereby
pledge and grant to the Collateral Agent, for the benefit of the Company, as
collateral security for the payment and performance when due by such Holders of
their respective obligations to the Company under the related Purchase
Contracts, a security interest in, and right of set-off against, all of the
right, title and interest of the Purchase Contract Agent and such Holders in:

                  (i) the Notes constituting a part of the Units that have not
          been released by the Collateral Agent, other than a release to the
          Remarketing Agent in connection with a remarketing under Section 4.5
          hereof, to such Holders under the provisions of this Agreeement;

                  (ii) (A) the Treasury Consideration or Treasury Securities
          constituting a part of the Units, (B) any Treasury Securities
          delivered in exchange for any Notes or Treasury Consideration, as
          applicable, in accordance with Section 4.1 hereof, and (C) any Notes
          or Treasury Consideration, 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, other than
          a release to the Remarketing Agent in connection with a remarketing
          under Section 4.5 hereof, to such Holders under the provisions of this
          Agreement;

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

                  (iv) upon the occurrence of a Special Event Redemption, the
          Treasury Portfolio Transferred to the Collateral Account;

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                  (v) all Proceeds of the foregoing; and

                  (vi) all powers and rights now owned or hereafter acquired
          under or with respect to any 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, which
will be subject to the Pledge set forth in this Section 2.1, 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 (including any Notes that are delivered
pursuant to Section 6.2 hereof), Treasury Consideration and Treasury Securities
subject to the Pledge, excluding any Notes, Treasury Consideration or Treasury
Securities released from the Pledge as provided in Sections 4.1, 4.2 and 4.3
hereof, respectively, are hereinafter referred to as "Pledged Notes," "Pledged
Treasury Consideration" and "Pledged Treasury Securities," 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
reregister 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 Special Event
Redemption or with a Holder's election to convert its investment from a Normal
Unit to a Stripped Unit, or except as may be required in order to release
Treasury Securities in connection with a Holder's election to convert its
investment from a Stripped Unit to a Normal Unit, or except as otherwise
required to release Notes, Treasury Consideration or Treasury Securities as
specified herein, the Collateral Agent, shall not relinquish physical possession
of any certificate evidencing Notes, Treasury Securities or Treasury
Consideration, as applicable, prior to the termination of this Agreement. If it
becomes necessary for the Collateral Agent to relinquish physical possession of
a certificate in order to release a portion of the Notes evidenced thereby from
the Pledge, the Company shall use its commercially reasonable best efforts to
arrange for the Securities Intermediary 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 (or
accompanied by a bond power endorsed in blank) within fifteen calendar days of
the date the Securities Intermediary relinquished possession. The Securities
Intermediary shall promptly notify the Company and the Collateral Agent of its
inability to obtain possession of any such replacement certificate as required
hereby.

                  (e) Notwithstanding anything contained herein to the contrary,
for avoidance of doubt, (i) the cash payments at the rate of 2.53% per year of
the Stated Amount of the Notes and (ii) after a Special Event Redemption, the
quarterly payments with respect to the Treasury Consideration (as specified in
clause (B) of the definition of Treasury Consideration) that are a

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part of the Normal Units to Holders of Normal Units shall not be subject to the
Pledge and therefore are not part of the Collateral.

                  SECTION 2.2 DELIVERY, CONTROL AND PERFECTION. (a) The Purchase
Contract Agent shall immediately deliver to the Collateral Agent all
certificates or instruments representing the Collateral accompanied by stock or
bond powers duly executed in blank or other instruments of reasonable
satisfaction to the Collateral Agent.

                  (b) Except as provided in Section 5.1, at all times prior to
the termination of the Pledge, the Collateral Agent shall have sole control of
the Collateral Account, and the Securities Intermediary shall take instructions
and directions with respect to the Collateral Account solely from the Collateral
Agent. 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 pursuant to the terms hereof or upon the written
direction of the Company with respect to the Collateral Account, the Collateral
credited thereto and any Security Entitlements with respect thereto. Such
instructions and entitlement orders may, without limitation, direct the
Securities Intermediary to transfer, redeem, assign, or otherwise deliver the
Notes, the Treasury Consideration and the Treasury Securities, 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 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
entitlement orders to the Securities Intermediary when and as required by the
terms hereof or as otherwise directed in writing by the Company.

                  (c) 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, endorsed 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 endorsed to the Securities Intermediary
          or in blank;

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

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                  (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.

                  (d) 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.

                  (e) 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, as may be amended pursuant to Article IX
hereof, shall prevail.

                  (f) 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, the Custodial Agent, the Securities Intermediary or the Purchase Contract
Agent 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.

                  (g) The Purchase Contract Agent shall file with the United
States Internal Revenue Service and deliver to the Holders Forms 1099 (or
successor or comparable forms), to the extent required by law, with respect to
payments to the Holders.

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                                  ARTICLE III

                             PAYMENTS ON COLLATERAL

                  SECTION 3.1 PAYMENTS. So long as the Purchase Contract Agent
is the registered owner of the Pledged Notes, Pledged Treasury Consideration 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 or other
amounts on, the Pledged Notes and all payments of the principal of, or cash
distributions on, any Pledged Treasury Consideration or Pledged Treasury
Securities, 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) any interest payments with respect to
          the Pledged Notes or Pledged Treasury Consideration (including as
          specified in clause (B) of the definition of Treasury Consideration),
          as the case may be, with respect to Normal Units and (B) any payments
          with respect to any Notes or Treasury Consideration (including as
          specified in clause (A) of the definition of Treasury Consideration),
          as the case may be, that have been released from the Pledge 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 11:00
          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 or
          payment instructions are received by the Collateral Agent on a day
          that is not a Business Day or after 10:30 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 and
          in such amounts designated by the Purchase Contract Agent (subject to
          the Purchase Contract Agent receiving such information from the
          Holders) 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 or payment
          instructions are received by the Collateral Agent on a day that is not
          a Business Day or after 12:30 p.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); any payment to
          be made directly to the Holders of such Stripped Units shall be
          subject to applicable federal withholding law, including the
          requirement that a Holder shall have provided to the Collateral Agent
          its certified taxpayer identification number by furnishing appropriate
          Forms W-9 (or such other forms as shall be applicable); and

                  (iii) in the case of payments in respect of any Pledged Notes,
          Pledged Treasury Consideration (as specified in clause (A) of the
          definition of Treasury Consideration) or Pledged Treasury Securities,
          as the case may be, to be paid upon settlement of such Holder's
          obligations to purchase Ordinary Shares under the Purchase Contract,
          to the Company on the Stock Purchase Date in accordance with the
          procedure set forth in

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          Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the
          respective obligations of the Holders under the related Purchase
          Contracts and, to the extent such payments exceed the Purchase Price,
          to the Purchase Contract Agent for the benefit of the Holders.

                  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 Notes or Treasury Consideration (which,
shall be as specified in clause (A) of the definition of Treasury
Consideration), as applicable, that, at the time of such payments, are Pledged
Notes or Pledged Treasury Consideration (which, shall be as specified in clause
(A) of the definition of Treasury Consideration), 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 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 thirteenth 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 or
Pledged Treasury Consideration, 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 40 Normal Units, or after a Special Event Redemption,
in integral multiples of Normal Units so that Treasury Securities to be
deposited and the Treasury Consideration, as the case may be, 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, with a copy of such notice to
the Company, stating that such Holder has Transferred Treasury Securities to the
Collateral Agent pursuant to clause (a) above (stating the principal amount, the
maturities 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 or Pledged Treasury
Consideration related to such Normal Units, whereupon the Purchase Contract
Agent shall promptly give such instruction to the Collateral Agent, with a copy
of such instruction to the Company, in the form provided in EXHIBIT A. Upon
receipt of Treasury Securities from a Holder of Normal Units and the related
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Pledged Notes or Pledged Treasury Consideration and shall promptly Transfer
such Pledged Notes or Pledged Treasury Consideration 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

                                       9
<PAGE>

pursuant to this 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, except as otherwise set forth herein.

                  SECTION 4.2 COLLATERAL SUBSTITUTION AND THE RE-CREATION OF
NORMAL UNITS.

                  (a) At any time on or prior to the thirteenth 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 40 Normal Units, or (b) after a
Special Event Redemption, consisting of the Purchase Contracts and the 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 so that the Treasury
Consideration 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 Treasury Consideration, 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,
with a copy of such notice to the Company, stating that such Holder has
transferred Notes or Treasury Consideration 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, with a copy of such instruction to the
Company, in the form provided in EXHIBIT A. Upon receipt of the Notes or the
Treasury Consideration, 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 Treasury Securities, free
and clear of any lien, pledge or security interest created hereby, to the
Purchase Contract Agent.

                  (b) Holders of Stripped Units who reestablish Normal Units
shall be responsible for any fees or expenses payable to the Collateral Agent
for its services as Collateral Agent in respect of the substitution, and the
Company shall not be responsible for any such fees or expenses.

                  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 and identifying the nature of
the Termination Event, the Collateral Agent shall release all Collateral from
the Pledge and shall promptly Transfer any Pledged Notes or Pledged Treasury
Consideration, as the case may be, and Pledged 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 in favor of the Collateral Agent hereby.

                  (b) If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code or becoming subject to a petition
under clause (ii) of the definition of Bankruptcy Law, and if the Collateral
Agent shall fail for any reason to promptly effectuate, the release and Transfer
of all Pledged Notes, Pledged Treasury Consideration or

                                       10
<PAGE>

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 or becoming
          subject to a petition under clause (ii) of the definition of
          Bankruptcy Law, 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 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 applicable Bankruptcy Law
          seeking an order requiring the Collateral Agent to effectuate the
          release and transfer of all Pledged Notes, Pledged Treasury
          Consideration 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, Merger Early Settlement or Cash Settlement), and that
the Purchase Contract Agent has received from such Holders, and paid to the
Company as confirmed by written notice to the Collateral Agent 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 or Pledged Treasury Consideration, 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, identified by the Purchase Contract Agent as
relating to such Purchase Contracts as to which such Holders have paid such
Early Settlement Amounts, Merger Early Settlement Amounts or Cash Settlement
Amounts, and shall Transfer all such Pledged Notes, Pledged Treasury
Consideration 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
the 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.,

                                       11
<PAGE>

New York City time, on the second Business Day immediately preceding the
Remarketing Date, 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 Remarketing Date, without any
instruction from Holders of Normal Units, deliver (i) the Pledged Notes to be
remarketed to the Remarketing Agent for remarketing and (ii) the remaining
Pledged Notes to the Purchase Contract Agent for distribution to the Holders
that have elected not to participate in the remarketing in accordance with the
Purchase Contract Agreement. Upon completion of a successful remarketing, after
deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%)
of the Remarketing Value of such Pledged Notes, the Remarketing Agent will
deliver the proceeds of such remarketing to the Collateral Agent for the benefit
of the Company to be held in Trust for the Company. Upon receipt of the proceeds
following a successful remarketing, (i) the Collateral Agent, for the benefit of
the Company, shall thereupon apply such proceeds in an amount equal to the
aggregate Stated Amount of the related Normal Units in direct settlement and
satisfaction in full of such Normal Units Holders' obligations to pay to the
Company the Purchase Price under the Purchase Contracts 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 on a pro rata basis to such Normal Units Holders
participating in such remarketing.

                  (b) The Remarketing Agent shall agree to 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 between the
Remarketing Date and the last Subsequent Remarketing Date. If by 4:00 p.m., New
York City time, on the third Business Day immediately preceding the Stock
Purchase Date the Remarketing Agent has failed to remarket the Notes at a price
equal to 100.25% of the aggregate principal amount of the Notes participating in
the remarketing, the "Last Failed Remarketing" shall be deemed to have occurred.
In this case, the Remarketing Agent will agree to advise the Collateral Agent in
writing that it cannot remarket the related Pledged Notes of such Holders of
Normal Units and the Remarketing Agent will agree pursuant to the Remarketing
Agreement to return to the Collateral Agent the Notes delivered to it pursuant
to Section 4.5(a) within three Business Days of the Last Failed Remarketing. The
Collateral Agent, for the benefit of the Company will, at the written direction
of the Company, deliver or dispose of the Pledged Notes in accordance with the
Company's written instructions to satisfy in full, from any such disposition or
retention, such Holders' obligations to pay the Purchase Price for the Ordinary
Shares; provided that if upon the Last Failed Remarketing, the Collateral Agent
delivers or disposes of the Pledged Notes in accordance with the written
instructions of the Company, any accumulated 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 an
Early Settlement, Merger Early Settlement or Cash Settlement of the Purchase
Contracts underlying its Stripped Units, such Holder shall be deemed to have
elected to pay for the Ordinary Shares 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 of Stripped
Units, the Collateral Agent shall apply such payments to the Company in
settlement of such Purchase

                                       12
<PAGE>

Contracts on the Stock Purchase Date pursuant to written instructions from the
Purchase Contract Agent. 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
payment to such Holders of Stripped Units.

                  (d) Pursuant to the Remarketing Agreement and the Purchase
Contract Agreement, on or prior to the thirteenth Business Day immediately
preceding the Stock Purchase Date, but no earlier than the sixteenth Business
Day immediately preceding the Stock Purchase Date, 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 second Business Day immediately
prior to the Remarketing Date, by 10:00 a.m., New York City time, the Custodial
Agent shall notify the Remarketing Agent of the aggregate principal amount 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 thirteenth
Business Day immediately preceding the Stock Purchase Date, upon which notice
the Custodial Agent will return such Separate Notes to such holder. On the
Business Day immediately preceding the Remarketing Date, 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. In the event of a successful remarketing, after deducting as
the remarketing fee an amount not exceeding 25 basis points (0.25%) of the
Remarketing Value of such Separate Notes, the Remarketing Agent will remit to
the Custodial Agent, for the benefit of the holders of such Separate Notes, 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. If, despite using reasonable best efforts, the Remarketing
Agent advises the Custodial Agent in writing that there has been a Last Failed
Remarketing, the Remarketing Agent will promptly return such Notes to the
Custodial Agent for redelivery to the holders of such Separate Notes. For
purposes of this Section 4.5(d), a "holder" of Separate Notes shall mean the
Person in whose name such Separate Notes are registered on the books of the
registrar for the Notes.

                                   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

                                       13
<PAGE>

Agent at least five Business Days' prior written notice of the manner in which
it intends to exercise, or its reasons for refraining from exercising, any such
right. Upon receipt of any notices and other communications in respect of any
Pledged Notes, including notice of any meeting at which holders of 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; SPECIAL 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 any of the Purchase Contracts by a Holder thereof, 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 applicable law, at the direction of the Company (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 or otherwise 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 or Pledged Treasury Securities as provided in Article III hereof
in full 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, any such inability to make a
payment 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 or such 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

                                       14
<PAGE>

collect all payments of (i) the principal amount of, or interest on, the Pledged
Notes, or (ii) the principal amount of the Pledged Treasury Consideration or
Pledged Treasury Securities, subject, in each case, to the provisions of Article
III.

                  (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 may be necessary, including 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 grossly
negligent act, its own grossly negligent failure to act, its own bad faith or
its own willful misconduct.

                  SECTION 6.2 SUBSTITUTIONS. Whenever a Holder has the right to
substitute Treasury Securities, Notes, or Treasury Consideration, 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 SPECIAL EVENT REDEMPTION. Upon the occurrence of a
Special Event Redemption prior to the Stock Purchase Date and the receipt of the
Redemption Price of the Pledged Notes by the Collateral Agent, the Collateral
Agent will, at the written direction of the Company, apply the Redemption Price
to purchase on behalf of the Holders of Normal Units the Treasury Portfolio. The
Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account
to secure the obligation of all Holders of Normal Units to purchase Ordinary
Shares 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 corresponding
distributions on such Treasury Portfolio. Upon the occurrence of a Special Event
Redemption and the satisfaction of all terms and conditions related thereto as
forth in the Indenture, including receipt of the Redemption Price, the
Collateral Agent shall be authorized to surrender the Notes in accordance with
the provisions of the Indenture.

                  SECTION 6.4 CASH RECEIVED FROM HOLDERS OF NORMAL UNITS NOT
PARTICIPATING IN THE REMARKETING.

                  If a Holder of Normal Units shall opt not to participate in
the remarketing in accordance with the Purchase Contract Agreement and upon the
receipt by the Collateral Agent of the Cash Consideration paid by such Holder
sufficient to satisfy the Holder's obligations to the Company under the related
Purchase Contracts in full, the Collateral Agent shall transfer such Cash
Consideration to the Collateral Account to secure and be applied in direct
settlement and satisfaction in full of the obligations of such Holder to
purchase Ordinary Shares of the

                                       15
<PAGE>

Company under the Purchase Contracts constituting a part of such Normal Units.
Thereupon, the Collateral Agent shall deliver the related Pledged Notes to the
Purchase Contract Agent on the Business Day immediately preceding the first day
of the Remarketing Period, free and clear of any lien, claim and security
interest created hereby. Thereafter, such Units will be Stripped Units and the
Collateral Agent shall have a first priority perfected security interest in such
Cash Consideration paid by such Holder. In such event, all references in this
Agreement, including for purposes of Section 4.3, to the Treasury Securities or
Pledged Treasury Securities shall be deemed to include such Cash Consideration
(the Cash Consideration subject to the Pledge referred to as the "Pledged Cash
Consideration") or Pledged Cash Consideration, as the case may be, in addition
to the Treasury Securities or Pledged Treasury Securities, as the case may be,
with respect to the applicable Units.

                                  ARTICLE VII

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

                  SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. 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,
and on each day a person becomes a Holder, that:

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

                  (b) such Holder is the sole beneficial owner of the Collateral
          and, in the case of Collateral delivered in physical form, is the sole
          holder of such Collateral and is the sole beneficial owner of, or has
          the right to Transfer, the Collateral it Transfers to the Collateral
          Agent, 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;

                  (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); 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 or
          violate any provision of any existing law or regulation applicable to
          it or of

                                       16
<PAGE>

          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 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
AGENT, CUSTODIAL AGENT AND SECURITIES INTERMEDIARY. The Collateral Agent,
Custodial Agent and Securities Intermediary (each an "Agent") hereby represents
and warrants:

                  (a) The Collateral Agent, Custodial Agent and Securities
          Intermediary is a national banking association duly organized and
          existing under the laws of the United States of America;

                  (b) The Securities Intermediary is a "securities intermediary"
          as defined in Article 8-102(a)(14) of the Code and the Collateral
          Account is a "securities account" as such term is defined in Section
          8-501(a) of the Code;

                  (c) The execution, delivery and performance by the Collateral
          Agent, the Custodial Agent and the Securities Intermediary of this
          Agreement have each been duly authorized by all necessary corporate
          action on the part of each such Agent; this Agreement has been duly
          executed and delivered by the Collateral Agent, the Custodial Agent
          and the Securities Intermediary and constitutes a valid and legally
          binding obligation of each of the Agents, enforceable against such
          Agents in accordance with its terms, subject, as to enforcement, to
          bankruptcy, insolvency, reorganization and other laws of general
          applicability relating to or affecting creditors' rights and to
          general equity principles;

                  (d) The execution, delivery and performance by the Collateral
          Agent, the Custodial Agent and the Securities Intermediary of this
          Agreement do not violate or constitute a breach of the Articles of
          Incorporation or By-Laws of any of such Agents; and

                  (e) No consent of any federal or state banking authority
          having regulatory authority over the Agents in their individual
          capacity is required for the execution and delivery of, or performance
          by the Agents of their respective obligations under, this Agreement.

                  SECTION 7.3 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

                                       17
<PAGE>

          beneficial interest therein, subject to the pledge hereunder,
          transferred in connection with the Transfer of the Units.

                                  ARTICLE VIII

                              THE COLLATERAL AGENT

                  SECTION 8.1 APPOINTMENT, POWERS AND IMMUNITIES. (a) The
Collateral Agent, the Custodial Agent or the Securities Intermediary shall act
as agent for the Company hereunder with such powers as are specifically vested
in the Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be, 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 Custodial
          Agent or the Securities Intermediary, as the case may be), 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, except as expressly required
          hereby, for the existence, validity, perfection, priority 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, bad faith or willful
          misconduct;

                  (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;

                  (vi) may perform any of their duties hereunder directly or by
          or through agents or attorneys appointed with due care;

                                       18
<PAGE>

                  (vii) shall be entitled to consult with counsel and to act in
          full reliance upon the advice of such counsel concerning matters
          pertaining to the agencies created hereby and its duties hereunder,
          and shall not be liable for any action taken or omitted to be taken by
          it in good faith and in reliance upon and in accordance with the
          reasonable advice of counsel selected by it;

                  (viii) shall not be liable with respect to any action taken by
          it in good faith in accordance with any direction of the Company or
          its agents except for its own gross negligence or willful misconduct;
          and

                  (ix) shall not be liable for any failure or delay in the
          performance of its obligations hereunder because of circumstances
          beyond its control, including, but not limited to, acts of God, flood,
          war (whether declared or undeclared), terrorism, fire, riot, embargo,
          government action, including any laws, ordinances, regulations,
          governmental action or the like which delay, restrict or prohibit the
          providing of services contemplated by this Agreement.

                  Subject to the foregoing, during the term of this Agreement,
each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary, in connection with the safekeeping and preservation of the
Collateral hereunder, shall use the same standard of care it applies for similar
property held for its own account.

                  (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. 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 set-off, banker's 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.

                  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,
the Custodial Agent or the Securities Intermediary, as the case may be, 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 that
(i) such direction shall be in writing and shall not conflict with the
provisions of any law or of this Agreement and (ii) the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall each receive indemnity
reasonably

                                       19
<PAGE>

satisfactory to it as provided herein. Nothing in this Section 8.2 shall impair
the right of each of the Collateral Agent, the Custodial Agent or the Securities
Intermediary 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, in absence of bad faith, shall be
entitled conclusively to rely upon any certification, order, judgment,
instructions, 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 written 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 written
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 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 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.

                                       20
<PAGE>

                  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 and
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 negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable fees and
expenses of one 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 control the defense of such claim with counsel reasonably
satisfactory to the indemnified party, provided no conflict of interest exists
(if such a conflict of interests exists, the Collateral Agent, the Custodial
Agent and the Securities Intermediary will be entitled to one separate counsel
payable by the Company), and if the Company so elects to assume such defense,
the Company shall in good faith defend the Collateral Agent, the Custodial Agent
or the Securities Intermediary (in which case all attorney's fees and expenses
shall be borne by the Company). No compromise or settlement of any claims may be
effected by any party without the other parties' consent (which consent shall
not be unreasonably withheld) unless (i) there is no finding or omission of any
violation of law and no effect on any other claims that may be made against any
of such other parties and (ii) the sole relief provided is monetary damages that
are paid in full by the party seeking the compromise or settlement. The
provisions of this Section 8.6(b) shall survive the termination of this
Agreement or the resignation or removal of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.

                  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 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 neither the
Collateral Agent, Custodial Agent nor 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,

                                       21
<PAGE>

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 bad faith, willful
misconduct or negligence. The Collateral Agent, Custodial Agent or the
Securities Intermediary may, but shall not be required, in addition elect to
commence an interpleader action or seek other judicial relief or orders at the
expense of the Company 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, neither the Collateral Agent,
Custodial Agent nor the Securities Intermediary shall be required to take any
action that is in the reasonable opinion of its counsel contrary to law or to
the terms of this Agreement, or which would in its reasonable opinion subject it
or any of its officers, employees or directors to liability.

                  SECTION 8.8 RESIGNATION; REPLACEMENT OF COLLATERAL AGENT,
CUSTODIAL AGENT OR SECURITIES INTERMEDIARY. 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 or
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 or the Securities
Intermediary may be removed at any time by the Company (with or without cause)
by notice to the Purchase Contract Agent and the Collateral Agent, the Custodial
Agent and the Securities Intermediary 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. Upon
notice of 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 any
notice of such 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. Upon removal of the Collateral Agent,
Custodial Agent or Securities Intermediary, no fees paid to the retiring
Collateral Agent, Custodial Agent or Securities Intermediary pursuant to Section
8.6(a) of this Agreement shall be refunded. Each successor Collateral Agent,
Custodial Agent and the Securities Intermediary shall be a bank which has an
office or agency in New York, New York with a combined capital and surplus of at
least $50,000,000 or any affiliate of a bank holding company having such capital
and surplus. 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, upon payment of any of its

                                       22
<PAGE>

unpaid fees and expenses, shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to such
successor. The retiring Collateral Agent, Custodial Agent or Securities
Intermediary shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent, Custodial Agent or Securities Intermediary
hereunder. After any retiring Collateral Agent's, Custodial Agent's or
Securities Intermediary's resignation hereunder as Collateral Agent, Custodial
Agent or Securities Intermediary, the provisions of this 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.

                  So long as it meets the requirements of this Section 8.8, any
corporation into which the Collateral Agent, the Custodial Agent or the
Securities Intermediary, in its individual capacity, may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Collateral Agent in its
individual capacity shall be a party, or any corporation to which substantially
all the corporate trust business of the Collateral Agent in its individual
capacity may be transferred, shall be the Collateral Agent, the Custodial Agent,
or the Securities Intermediary, as the case may be, respectively, under this
Agreement without further act.

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

                  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 or loss of business, relating to, arising from or in connection with
this Agreement, 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, incurred without any act or deed that is found to be attributable
to negligence, bad faith or willful misconduct on the part of the Collateral
Agent, the Custodial Agent or the Securities Intermediary.

                                       23
<PAGE>

                                   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, 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 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 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, 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 that no such amendment shall, as to
any Holder of an Outstanding Unit adversely affected thereby, without the
consent of such Holder,

                  (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 or the Pledged Treasury
          Consideration, as the case may be, or the rights of Holders of
          Stripped Units to substitute Notes or the Treasury Consideration, 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

                                       24
<PAGE>

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

         provided that if any amendment or proposal referred to above would
adversely affect only the Normal Units or the Stripped Units, then only the
affected class of Holders as of the record date for the Holders entitled to vote
thereon will be entitled to vote on or consent to such amendment or proposal.

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 Article IX, the Collateral Agent, the Custodial
Agent, the Securities Intermediary and the Purchase Contract Agent shall be
entitled to 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 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 Article IX 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

                                       25
<PAGE>

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.

                  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
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 the Borough of Manhattan 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. The Company hereby designates and appoints CT
Corporation System, 111 Eighth Avenue, New York, New York 10011 as its
authorized agent upon which process may be served in any legal suit, action or
proceeding arising out of or relating to this Agreement which may be instituted
in any federal or state court in the Borough of Manhattan, The City of New York,
New York, and agrees that service of process upon such agent, and written notice
of said service to the Company by the Person serving the same, shall be deemed
in every respect effective service of process upon the Company in any such suit,
action or proceeding and further designates its domicile, the domicile of CT
Corporation System specified above and any domicile CT Corporation System may
have in the future as its domicile to receive any notice hereunder (including
service of process). If for any reason CT Corporation System (or any successor
agent for this purpose) shall cease to act as agent for service of process as
provided above, the Company will promptly appoint a successor agent for this
purpose reasonably acceptable to the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent. The Company agrees to
take any and all actions as may be necessary to maintain such designation and
appointment of such agent in full force and effect.

                  SECTION 10.3 JUDGMENT CURRENCY. The Company agrees, to the
fullest extent that it may effectively do so under applicable law, that (a) if
for the purpose of obtaining judgment in any court it is necessary to convert
the sum due (the "Required Currency") into a currency in which a judgment will
be rendered (the "Judgment Currency"), the rate of exchange used shall be the
rate at which in accordance with normal banking procedures the Purchase Contract
Agent could purchase in The City of New York the requisite amount of the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which a final unappealable judgment is given and (b) its
obligations under this Agreement to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or

                                       26
<PAGE>

any recovery pursuant to any judgment (whether or not entered in accordance with
clause (a)), in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the actual receipt, by the
payee, of the full amount of the Required Currency expressed to be payable in
respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Agreement. For purpose of the foregoing, "New York Banking Day" means any
day except a Saturday, Sunday or a legal holiday in The City of New York or a
day on which banking institutions in The City of New York are authorized or
obligated by law, regulation or executive order to be closed.

                  SECTION 10.4 NOTICES. Unless otherwise stated herein, all
notices, requests, instructions, 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) and, if sent to the Company, will be mailed,
delivered or telecopied to XL House, One Bermudiana Road, Hamilton HM11,
Bermuda, Attention: Paul S. Giordano (fax no.: (441) 292-5280); or if sent to
the Purchase Contract Agent as attorney-in-fact of the Holders from time to time
of the Units, will be mailed, delivered or telefaxed to 225 Asylum Street, 23rd
Floor, Hartford, Connecticut 06103, Attention: Arthur Blakeslee (fax no.: (503)
258-5977); or if sent to the Collateral Agent, Custodial Agent and Securities
Intermediary, will be mailed, delivered or telefaxed to 225 Asylum Street, 23rd
Floor, Hartford, Connecticut 06103, Attention: Elizabeth Hammer (fax no.: (860)
241-6897), 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 10.5 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders from time to time
of the Units, by their acceptance of the same, shall be deemed to have agreed to
be bound by the provisions hereof and to have ratified the agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.

                  SECTION 10.6 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 10.7 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.

                                       27
<PAGE>

                  SECTION 10.8 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
one 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,
the Custodial Agent and the Securities Intermediary (including, without
limitation, reasonable fees and expenses of one 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, if any, incurred in
connection with any filing, registration, recording or perfection of any
security interest to the extent contemplated hereby.

                  SECTION 10.9 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 10.10 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.

                  SECTION 10.11 INCORPORATION BY REFERENCE. Each of the Company,
the Collateral Agent and the Securities Intermediary agrees that the Purchase
Contract Agent is, in

                                       28
<PAGE>

acting hereunder with respect to the Company, entitled to all rights,
privileges, benefits, protections, immunities and indemnities provided to it
under the Purchase Contract Agreement.

                                       29
<PAGE>

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

                                  XL CAPITAL LTD

                                  By:  /s/ Paul S. Giordano
                                       ----------------------------------------
                                       Name:  Paul S. Giordano
                                       Title: Executive Vice President,
                                              General Counsel and Secretary

                                  U.S. BANK NATIONAL ASSOCIATION,
                                       as Purchase Contract Agent and
                                       as attorney-in-fact of the Holders
                                       from time to time of the Units

                                  By:  /s/ Arthur L. Blakeslee
                                       ----------------------------------------
                                       Name:  Arthur L. Blakeslee
                                       Title: Assistant Vice President

                                  U.S. BANK TRUST NATIONAL ASSOCIATION,
                                       as Collateral Agent, Custodial Agent and
                                       Securities Intermediary

                                  By:  /s/ Arthur L. Blakeslee
                                       ----------------------------------------
                                       Name:  Arthur L. Blakeslee
                                       Title: Assistant Vice President

<PAGE>

                                                                       EXHIBIT A

          INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT

U.S. Bank Trust National Association
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103

Attention: Corporate Trust Administration

                         Re:   6.50% EQUITY SECURITY UNITS
                               OF XL CAPITAL LTD (THE "COMPANY")

                  We hereby notify you in accordance with Section [4.1] [4.2] of
the Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"), among
the Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, 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 [$________
aggregate principal amount of Treasury Securities (CUSIP No. 912820 BX 4)]
[$________ aggregate principal amount of Notes or $__________ aggregate
principal amount of Treasury Consideration (CUSIP No. ___________)] in exchange
for the related [Pledged Notes or Pledged Treasury Consideration] [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 or the Treasury Consideration] to you, as Collateral Agent.
We hereby instruct you, upon receipt of such [Pledged Treasury Securities]
[Pledged Notes or Pledged Treasury Consideration], to release the [Notes or the
Treasury Consideration] [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.

Date: _____________________

                                         U.S. Bank National Association,
                                         as Purchase Contract Agent

                                         By: ___________________________________
                                             Name:
                                             Title:

                                      A-1
<PAGE>

                  Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Notes or Treasury Consideration] for the
[Pledged Notes or the Pledged Treasury Consideration] [Pledged Treasury
Securities]:

Name:

Social Security or other Taxpayer
Identification Number, if any:

Address:

                                      A-2

<PAGE>

                                                                       EXHIBIT B

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

U.S. Bank National Association,
  as Purchase Contract Agent
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103

Attention: Institutional Trust Services

                         Re:  6.50% EQUITY SECURITY UNITS
                              OF XL CAPITAL LTD (THE "COMPANY")

                  The undersigned Holder hereby notifies you that it has
delivered to U.S. Bank Trust National Association, as Collateral Agent,
[$_________ aggregate principal amount of Treasury Securities (CUSIP No. 912820
BX 4)] [$_________ aggregate principal amount of Notes or $___________ principal
amount of Treasury Consideration (CUSIP No. _________)] in exchange for the
related [Pledged Notes or Pledged Treasury Consideration] [Pledged Treasury
Securities] held by the Collateral Agent, in accordance with Section [4.1][4.2]
of the Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"),
between you, the Company and the Collateral Agent. The undersigned Holder hereby
instructs you to instruct the Collateral Agent to release to you on behalf of
the undersigned Holder the [Pledged Notes or the Pledged Treasury Consideration]
[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

U.S. Bank Trust National Association
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103

Attention: Corporate Trust Administration

                       Re: NOTES OF XL CAPITAL LTD

                  The undersigned hereby notifies you in accordance with Section
4.5(d) of the Pledge Agreement, dated as of March 23, 2004 (the "Pledge
Agreement"), among XL Capital Ltd, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and U.S. Bank National Association, 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 on
the fourth Business Day immediately preceding the Remarketing Date commencing on
____________, 2007 $__________ aggregate principal amount of Notes for delivery
to the Remarketing Agent 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 the Last Failed Remarketing upon receipt of the Notes tendered
herewith from the Remarketing Agent, to deliver such Notes to the person(s) and
the address(es) indicated herein under "B. Delivery Instructions."

                  With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Notes tendered hereby and that the undersigned is the
record owner of any Notes tendered herewith in physical form or a participant in
The Depository 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 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.

                                      C-1
<PAGE>

Date:  _________________

Signature:  _______________________________

Signature Guarantee: ______________________

Name:     __________________________________
          (Please Print)

Address:  __________________________________
          (Please Print)

Zip Code:

Country:

Telecopy (include country code if outside U.S.):

Telephone (include country code if outside U.S.):

(Tax Identification or Social Security Number):

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:

Country:

Telecopy (include country code if outside U.S.):

Telephone (include country code if outside U.S.):

(Special Identification or Social Security Number):

B. DELIVERY INSTRUCTIONS

In the event of the Last 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.

                                      C-2

<PAGE>

Name(s):     __________________________________
             (Please Print)

Address:     __________________________________
             (Please Print)

Zip Code:

Country:

Telecopy (include country code if outside U.S.):

Telephone (include country code if outside U.S.):

(Special Identification or Social Security Number):

In the event of [a/the Last] 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

U.S. Bank Trust National Association
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103

Attention: Corporate Trust Administration

                         Re: NOTES OF XL CAPITAL LTD

                  The undersigned hereby notifies you in accordance with Section
4.5(d) of Pledge Agreement, dated as of March 23, 2004 (the "Pledge Agreement"),
among XL Capital Ltd, yourselves, as Collateral Agent, Securities Intermediary
and Custodial Agent, and U.S. Bank National Association, 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
_________, 2007 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,
undersigned hereby agrees to be bound by the terms and conditions 4.5(d) of the
Pledge Agreement. Capitalized terms used herein but shall have the meaning set
forth in the Pledge Agreement.

Date:  _________________

Signature:  _______________________________

Signature Guarantee: ______________________

Name:     __________________________________
          (Please Print)

Address:  __________________________________
          (Please Print)

Zip Code:

Country:

Telecopy (include country code if outside U.S.):

Telephone (include country code if outside U.S.):

(Tax Identification or Social Security Number):

                                      D-1
<PAGE>

A. DELIVERY INSTRUCTIONS

In the event of [a/the Last] 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:     __________________________________
          (Please Print)

Address:  __________________________________
          (Please Print)

Zip Code:

Country:

Telecopy (include country code if outside U.S.):

Telephone (include country code if outside U.S.):

(Tax Identification or Social Security Number):

In the event of [a/the Last] 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-2XL CAPITAL LTD

                          FORM OF REMARKETING AGREEMENT

         REMARKETING AGREEMENT, dated as of [_________ __], 2007 (the
"Agreement") by and between XL Capital Ltd, a Cayman Islands exempted limited
company (the "Company"), and [________] (the "Remarketing Agent"), and confirmed
and accepted by U.S. Bank National Association, not individually but solely as
Purchase Contract Agent (the "Purchase Contract Agent") and as attorney-in-fact
of the Holders of Purchase Contracts (as defined in the Purchase Contract
Agreement (as defined herein)).

         WHEREAS, the Company issued $825,000,000 aggregate stated amount of its
Normal Units (the "Normal Units") under the Purchase Contract Agreement, dated
as of March 23, 2004, by and between the Purchase Contract Agent and the Company
(the "Purchase Contract Agreement"); and

         WHEREAS, the 2.53% Senior Notes due 2009 forming a part of the Normal
Units (the "Notes") have been pledged pursuant to the Pledge Agreement (the
"Pledge Agreement"), dated as of March 23, 2004, by and among the Company, U.S.
Bank Trust National Association, as collateral agent (the "Collateral Agent"),
custodial agent and securities intermediary and U.S. Bank National Association,
as Purchase Contract Agent, to secure the obligations of Holders of Normal Units
under the related Purchase Contracts on the Stock Purchase Date; and

         WHEREAS, the Remarketing Agent will attempt on May 2, 2007 (the
"Remarketing Date") to remarket all of (i) the Notes of Holders of Normal Units
and (ii) the Separate Notes of Holders who elect to participate in the
remarketing, pursuant respectively to the procedures set forth in Section 5.4(b)
of the Purchase Contract Agreement, Section 4.5(d) of the Pledge Agreement and
Sections 2.19 and 2.20 of the First Supplemental Indenture, dated as of March
23, 2004, between the Company and U.S. Bank National Association, as trustee
(the "Supplemental Indenture"), to the Indenture, dated as of January 23, 2003
(the "Base Indenture"), between the Company and U.S. Bank National Association,
as trustee (each of which Sections is incorporated herein by reference); and

         WHEREAS, in the event the remarketing on the Remarketing Date is
unsuccessful, the Remarketing Agent will remarket the Notes to be included in
the remarketing on May 3, 2007, and, if necessary, will attempt to remarket such
Notes on May 4, 2007 and, if necessary, will attempt to remarket such Notes on
May 7, 2007 and, if necessary, will attempt to remarket such Notes on May 8,
2007 and, if necessary, will attempt to remarket such Notes on May 9, 2007 and,
if necessary, will attempt to remarket such Notes on May 10, 2007 (any such date
after the Remarketing Date on which a subsequent remarketing is attempted, a
"Subsequent Remarketing Date"); and

<PAGE>

         WHEREAS, in the event of a successful remarketing on the Remarketing
Date or any Subsequent Remarketing Date, as the case may be, the applicable
interest rate on the Remarketed Notes (as defined below) included in such
successful remarketing will be reset on the settlement date of such Remarketing
Date or Subsequent Remarketing Date to the rate determined by the Remarketing
Agent in good faith that will result in the aggregate market value of the
Remarketed Notes to equal 100.25% of the aggregate principal amount of such
Remarketed Notes, as of such Remarketing Date or Subsequent Remarketing Date
(the "Reset Rate"), provided that the Reset Rate shall be limited to the maximum
rate permitted by applicable law; and

         WHEREAS, the Company has requested [________] to act as the Remarketing
Agent, and as such to perform the services described herein; and

         WHEREAS, [________] is willing to act as the Remarketing Agent and as
such to perform such duties on the terms and conditions expressly set forth
herein;

         NOW, THEREFORE, for and in consideration of the covenants herein made,
and subject to the conditions herein set forth, the parties hereto agree as
follows:

Section 1. DEFINITIONS.

         (a) Capitalized terms used and not defined in this Agreement, in the
recitals hereto or in the paragraph preceding such recitals shall have the
meanings assigned to them in the Purchase Contract Agreement or, if not therein
defined, the Pledge Agreement.

         (b) As used in this Agreement, the following terms have the following
meanings:

                  "Preliminary Prospectus" means any preliminary prospectus
         relating to the Remarketed Notes included in the Registration Statement
         (including any preliminary prospectus supplement), including the
         documents incorporated by reference therein as of the date of such
         Preliminary Prospectus; and any reference to any amendment or
         supplement to such Preliminary Prospectus shall be deemed to refer to
         and include any documents filed after the date of such Preliminary
         Prospectus, under the Exchange Act, and incorporated by reference in
         such Preliminary Prospectus.

                  "Prospectus" means the prospectus relating to the Remarketed
         Notes (including any prospectus supplement), in the form in which first
         filed, or transmitted for filing, with the Commission after the
         effective date of the Registration Statement pursuant to Rule 424(b),
         including the documents incorporated by reference therein as of the
         date of such Prospectus; and any reference to any amendment or
         supplement to such Prospectus shall be deemed to refer to and include
         any documents filed after the date of such Prospectus, under the
         Exchange Act, and incorporated by reference in such Prospectus.

                                       2
<PAGE>

                  "Registration Statement" means a registration statement under
         the Securities Act of 1933, as amended (the "Securities Act") filed and
         prepared by the Company covering, inter alia, the Remarketing of the
         Remarketed Notes pursuant to Section 5(a) hereunder, including all
         exhibits thereto and the documents incorporated by reference in the
         prospectus contained in such registration statement, and any
         post-effective amendments thereto.

                  "Remarketed Notes" means the Pledged Notes and the Separate
         Notes, if any, subject to Remarketing as identified to the Remarketing
         Agent by the Purchase Contract Agent and the Custodial Agent,
         respectively, prior to 10:00 a.m., New York City time, on the Business
         Day immediately preceding the Remarketing Date, and shall include: (a)
         the Notes of the Holders of Normal Units who have not notified the
         Purchase Contract Agent prior to 5:00 p.m. on the thirteenth Business
         Day prior to the Stock Purchase Date of their intention to effect a
         Cash Settlement of the related Purchase Contracts pursuant to the terms
         of the Purchase Contract Agreement or who have so notified the Purchase
         Contract Agent but failed to make the required cash payment on the
         thirteenth Business Day prior to the Stock Purchase Date pursuant to
         the terms of the Purchase Contract Agreement, and (b) the Separate
         Notes of the holders of Separate Notes, if any, who have elected to
         have their Separate Notes be remarketed in such Remarketing pursuant to
         the terms of the Purchase Contract Agreement and the Supplemental
         Indenture.

                  "Remarketing" means the remarketing of the Remarketed Notes
         pursuant to this Remarketing Agreement

                  "Remarketing Agent" means [________] appointed as the
         Remarketing Agent by the Company pursuant to Section 2(a) hereof.

                  "Remarketing Materials" means the Preliminary Prospectus and
         the Prospectus furnished by the Company to the Remarketing Agent for
         distribution to investors in connection with the Remarketing.

                  "Transaction Documents" means this Agreement, the Purchase
         Contract Agreement, the Pledge Agreement, the Indenture and the
         Supplemental Indenture, in each case as amended or supplemented from
         time to time.

Section 2. APPOINTMENT AND OBLIGATIONS OF REMARKETING AGENT.

         (a) The Company hereby appoints [________] and [________] hereby
accepts such appointment, (i) as the Remarketing Agent to determine, in
consultation with the Company, in the manner provided for herein, in the
Purchase Contract Agreement and in the Notes, the Reset Rate that, in the
opinion of the Remarketing Agent, will, when applied to the Remarketed

                                       3
<PAGE>

Notes, enable the aggregate market value of the Remarketed Notes equal 100.25%
of the aggregate principal amount of such Remarketed Notes as of the Remarketing
Date or as of any Subsequent Remarketing Date, as the case may be, and (ii) as
the exclusive Remarketing Agent (subject to the right of such Remarketing Agent
to appoint additional remarketing agents hereunder as described below) to
remarket the Remarketed Notes to be included in the remarketing on the
Remarketing Date, and, if necessary, on May 3, 2007, and, if necessary, on May
4, 2007 and, if necessary, on May 7, 2007 and, if necessary, on May 8, 2007 and,
if necessary, on May 9, 2007 and, if necessary, on May 10, 2007, as the case may
be. The Remarketing Agent shall have the right, on 15 Business Days' notice to
the Company, to appoint one or more additional remarketing agents so long as any
such additional remarketing agents shall be reasonably acceptable to the
Company; provided that any such appointment shall not increase the Remarketing
Fee (as defined in Section 4 hereof). Upon any such appointment, the parties
shall enter into an appropriate amendment to this Agreement to reflect the
addition of any such additional remarketing agent.

         (b) Subject to the terms and conditions set forth herein and in the
Purchase Contract Agreement, the Remarketing Agent shall use its reasonable best
efforts to (i) remarket on the Remarketing Date the Remarketed Notes at the
Reset Rate, (ii) in the event the Remarketing Agent cannot establish such a
Reset Rate on the Remarketing Date, attempt to remarket such Notes on May 3,
2007, and, if necessary, on May 4, 2007 and, if necessary, on May 7, 2007 and,
if necessary, on May 8, 2007 and, if necessary, on May 9, 2007 and, if
necessary, on May 10, 2007, in each case at the Reset Rate and (iii) in the
event of a Last Failed Remarketing, promptly return the Pledged Notes, if any,
included in such Last Failed Remarketing to the Collateral Agent to be held by
the Collateral Agent in accordance with Section 4.5(b) of the Pledge Agreement
(which Section is incorporated herein by reference) and return any Separate
Notes included in the remarketing to the Custodial Agent in accordance with
Section 4.5(d) of the Pledge Agreement, Section 5.4(b)(ii) of the Purchase
Contract Agreement and Section 2.19 of the Supplemental Indenture (which
Sections are incorporated herein by reference). After deducting the fee
specified in Section 4 below, the proceeds of any such successful remarketing
shall be delivered to the Purchase Contract Agent or the Custodial Agent, as
applicable, in accordance with Sections 4.5(a) and 4.5(d) of the Pledge
Agreement (which Section is incorporated herein by reference) and Section 5.4(b)
of the Purchase Contract Agreement (which Section is incorporated herein by
reference). The right of each Holder of Normal Units or Separate Notes to have
Notes included in any remarketing shall be subject to the conditions that (i)
the Remarketing Agent conducts a remarketing on such date pursuant to the terms
of this Agreement, (ii) the Notes included in a remarketing have not been called
for redemption upon the occurrence of a Special Event, (iii) the Remarketing
Agent is able to find a purchaser or purchasers for the Remarketed Notes at the
Reset Rate and (iv) such purchaser or purchasers deliver the purchase price
therefor to the Remarketing Agent as and when required.

         (c) It is understood and agreed that the Remarketing Agent shall not
have any obligation whatsoever to purchase any Notes, whether in a remarketing
held on the Remarketing Date or on any Subsequent Remarketing Date or otherwise,
and shall in no

                                       4
<PAGE>

way be obligated to provide funds to make payment upon tender of Notes for
remarketing or to otherwise expend or risk its own funds or incur or be exposed
to financial liability in the performance of its duties under this Agreement,
and, without limitation of the foregoing, the Remarketing Agent shall not be
deemed an underwriter of the Remarketed Notes. The Company shall not be
obligated in any case to provide funds to make payment upon delivery of Notes
for remarketing.

         (d) The Remarketing Agent shall also, if required by the Securities Act
or the rules and regulations promulgated thereunder, deliver to each purchaser a
Prospectus in connection with the Remarketing.

         (e) If, by 4:30 p.m., New York City time, on the Remarketing Date, the
Remarketing Agent is unable to remarket all Remarketed Notes included in the
Remarketing, a failed Remarketing (the "Failed Remarketing") shall be deemed to
have occurred, and the Remarketing Agent shall so advise by telephone the
Depositary and the Company.

         (f) The Remarketing Agent shall advise, by telephone, the Company of
the Reset Rate determined in a Successful Remarketing (as defined in Section 4
hereof) as soon as practicable after such determination.

         (g) By approximately 4:30 p.m., New York City time, on the Trading Day
following the Remarketing Date, PROVIDED that there has not been a Failed
Remarketing, the Remarketing Agent shall advise, by telephone, (i) the
Depositary of the Reset Rate determined in the Remarketing and the number of
Remarketed Notes sold in the Remarketing, (ii) each purchaser (or the Depositary
Participant thereof) of the Reset Rate and the number of Remarketed Notes such
purchaser is to purchase and (iii) each purchaser to give instructions to its
Depositary Participant to pay the purchase price on the Settlement Date in same
day funds against delivery of the Remarketed Notes purchased through the
facilities of the Depositary.

Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Remarketing Agent (i) on and
as of the date any Remarketing Materials are first distributed in connection
with the Remarketing (the "Commencement Date"), (ii) on and as of the
Remarketing Date or any Subsequent Remarketing Date and (iii) on and as of the
settlement date relating to such Remarketing Date or Subsequent Remarketing Date
(the "Settlement Date"), that:

         (a) Each of the representations and warranties of the Company as set
forth in Sections 2(a) through 2(aa) of the Underwriting Agreement dated March
17, 2004 (the "Underwriting Agreement") among the Company and the Underwriters
identified in Schedule II thereto, was true and correct when made on March 17,
2004; [Note: representations and warranties similar to those contained in the
Underwriting Agreement to be included and agreed upon; provided that for
purposes of such representations and warranties, any reference in such sections
of the Underwriting Agreement to (i) the "Registration Statement", the
"Prospectus" or the "Preliminary Prospectus" shall be deemed to refer to such
terms as defined herein and (ii) the "Closing Date" shall be

                                       5
<PAGE>

deemed to refer to the applicable Remarketing Date or Subsequent Remarketing
Date.]

         (b) The Registration Statement, if any, in the form heretofore
delivered or to be delivered to the Remarketing Agent, has been declared
effective by the Commission in such form; and no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission.

         (c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

         (d) The Registration Statement, if any, conforms (and the Prospectus,
if any, and any further amendments or supplements to the Registration Statement
or the Prospectus, when they become effective or are filed with the Commission,
as the case may be, will conform) in all material respects to the requirements
of the Securities Act, the Trust Indenture Act of 1939, as amended, and the
rules and regulations promulgated thereunder, and the Registration Statement and
the Remarketing Materials (and any amendment or supplement thereto) as of their
respective effective or filing dates and as of the Commencement Date, applicable
Remarketing Date or Subsequent Remarketing Date and Settlement Date do not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided that no representation and warranty is made as
to any statement of eligibility on Form T-1 filed or incorporated by reference
as part of the Registration Statement or the Remarketing Materials, or as to
information relating to the Remarketing Agent or the Holders of the Remarketed
Notes contained in or omitted from the Registration Statement or the Remarketing
Materials in reliance upon and in conformity with written information furnished
to the Company by the Remarketing Agent expressly for use therein.

         (e) This Agreement has been duly authorized, executed and delivered by
the Company.

                                       6
<PAGE>

         (f) The Remarketed Notes will conform to the descriptions thereof
contained in the Prospectus and in any other Remarketing Materials.

         (g) No Event of Default (as defined in the Indenture, as supplemented
by the Supplemental Indenture) has occurred and is continuing.

Section 4. FEES.

         In the event of a successful remarketing in which the Remarketed Notes
are sold for an aggregate amount that is equal to 100.25% of the aggregate
principal amount of the Remarketed Notes (a "Successful Remarketing"), the
Remarketing Agent shall retain as a remarketing fee (the "Remarketing Fee") an
amount not exceeding 25 basis points (0.25%) of the Remarketing Value of the
Remarketed Notes in accordance with Section 5.4(b) of the Purchase Contract
Agreement and Section 2.19 of the Supplemental Indenture.

Section 5. COVENANTS OF THE COMPANY.

         (a) The Company covenants and agrees as follows:

                  1. If and to the extent the Remarketed Notes are required (in
                  the view of counsel, which need not be in the form of a
                  written opinion, for either the Remarketing Agent or the
                  Company) to be registered under the Securities Act as in
                  effect at the time of the Remarketing,

                       i.   to prepare the Registration Statement and the
                            Prospectus to file any such Prospectus pursuant to
                            the Securities Act within the period required by the
                            Securities Act and the rules and regulations
                            thereunder and to use commercially reasonable
                            efforts to cause the Registration Statement to be
                            declared effective by the Commission prior to the
                            second Business Day immediately preceding the
                            Remarketing Date;

                       ii.  to file promptly with the Commission any amendment
                            to the Registration Statement or the Prospectus or
                            any supplement to the Prospectus that may, in the
                            reasonable judgment of the Company, be required by
                            the Securities Act or requested by the Commission;

                       iii. to advise the Remarketing Agent, promptly after it
                            receives notice thereof, of the time when any
                            amendment to the Registration Statement has been
                            filed or becomes effective or any supplement to the
                            Prospectus or any amended Prospectus has been filed
                            and to furnish the Remarketing Agent with copies
                            thereof;

                       iv.  to advise the Remarketing Agent, promptly after it
                            receives notice thereof, of the issuance by the
                            Commission of any stop order or of any order
                            preventing or suspending the use of the Prospectus,
                            of

                                       7
<PAGE>

                            the suspension of the qualification of any of the
                            Remarketed Notes for offering or sale in any
                            jurisdiction, of the initiation or threatening of
                            any proceeding for any such purpose, or of any
                            request by the Commission for the amending or
                            supplementing of the Registration Statement or the
                            Prospectus or for additional information, and, in
                            the event of the issuance of any stop order or of
                            any order preventing or suspending the use of any
                            Prospectus or suspending any such qualification, to
                            use promptly its best efforts to obtain its
                            withdrawal;

                       v.   to furnish promptly to the Remarketing Agent such
                            copies of the following documents as the Remarketing
                            Agent shall reasonably request: (A) conformed copies
                            of the Registration Statement as originally filed
                            with the Commission and each amendment thereto (in
                            each case excluding exhibits); (B) the Preliminary
                            Prospectus and any amended or supplemented
                            Preliminary Prospectus, (C) the Prospectus and any
                            amended or supplemented Prospectus; and (D) any
                            document incorporated by reference in the Prospectus
                            (excluding exhibits thereto); and, if at any time
                            when delivery of a Prospectus is required in
                            connection with the Remarketing, any event shall
                            have occurred as a result of which the Prospectus as
                            then amended or supplemented would include any
                            untrue statement of a material fact or omit to state
                            any material fact necessary in order to make the
                            statements therein, in the light of the
                            circumstances under which they were made when such
                            Prospectus is delivered, not misleading, or if for
                            any other reason it shall be necessary during such
                            same period to amend or supplement the Prospectus or
                            to file under the Exchange Act any document
                            incorporated by reference in the Prospectus in order
                            to comply with the Securities Act or the Exchange
                            Act, to notify the Remarketing Agent and, upon its
                            request, to file such document and to prepare and
                            furnish without charge to the Remarketing Agent and
                            to any dealer in securities as many copies as the
                            Remarketing Agent may from time to time reasonably
                            request of an amended or supplemented Prospectus
                            that will correct such statement or omission or
                            effect such compliance;

                       vi.  prior to filing with the Commission (A) any
                            amendment to the Registration Statement or
                            supplement to the Prospectus or (B) any Prospectus
                            pursuant to Rule 424 under the Securities Act, to
                            furnish a copy thereof to the Remarketing Agent and
                            counsel to the Remarketing Agent;

                       vii. as soon as practicable, but in any event not later
                            than eighteen months, after the effective date of
                            the Registration Statement, to make "generally
                            available to its security holders" an "earnings

                                       8
<PAGE>

                            statement" of the Company and its subsidiaries
                            complying with (which need not be audited) Section
                            11(a) of the Securities Act and the rules and
                            regulations thereunder (including, at the option of
                            the Company, Rule 158 under the Securities Act). The
                            terms "Generally Available to its Security Holders"
                            and "Earnings Statement" shall have the meanings set
                            forth in Rule 158 under the Securities Act; and

                       viii. to take such action as the Remarketing Agent may
                            reasonably request in order to qualify the
                            Remarketed Notes for offer and sale under the
                            securities or "blue sky" laws of such jurisdictions
                            as the Remarketing Agent may reasonably request;
                            provided that in no event shall the Company be
                            required to qualify as a foreign corporation or to
                            file a general consent to service of process in any
                            jurisdiction.

                  2. To pay: (1) the costs incident to the preparation and
                  printing of the Registration Statement, if any, any Prospectus
                  and any other Remarketing Materials and any amendments or
                  supplements thereto; (2) the costs of distributing the
                  Registration Statement, if any, any Prospectus and any other
                  Remarketing Materials and any amendments or supplements
                  thereto; (3) any fees and expenses of qualifying the
                  Remarketed Notes under the securities laws of the several
                  jurisdictions as provided in Section 5(a)(9) and of preparing,
                  printing and distributing a Blue Sky Memorandum, if any
                  (including any related fees and expenses of counsel to the
                  Remarketing Agent); (4) all other costs and expenses incident
                  to the performance of the obligations of the Company hereunder
                  and the Remarketing Agent hereunder; and (5) the reasonable
                  fees and expenses of one counsel to the Remarketing Agent in
                  connection with their duties hereunder.

                  3. To furnish the Remarketing Agent with such information and
                  documents as the Remarketing Agent may reasonably request in
                  connection with the transactions contemplated hereby, and to
                  make reasonably available to the Remarketing Agent and any
                  accountant, attorney or other advisor retained by the
                  Remarketing Agent such information that parties would
                  customarily require in connection with a due diligence
                  investigation conducted in accordance with applicable
                  securities laws.

         (b) The Remarketing Agent covenants and agrees as follows:

                  1. that it will not disseminate any written material for or in
                  connection with the Remarketing other than the Remarketing
                  Materials and agrees that it will not make any written
                  statements in connection with the

                                       9
<PAGE>

                  Remarketing, other than statements that are set forth in the
                  Remarketing Materials unless authorized in advance by the
                  Company;

                  2. that it will not distribute the Remarketing Materials if it
                  has been notified by the Company in writing of (i) the
                  occurrence of any event, or the discovery of any fact, that
                  could reasonably be expected to cause any representation or
                  warranty contained in this Agreement to be untrue or
                  inaccurate in any material respect, (ii) the issuance of any
                  comment or stop order or the taking of any other action by the
                  Commission or any other governmental or regulatory agency with
                  respect to the Remarketing Materials, (iii) the occurrence of
                  any event, or the discovery of any fact, that could reasonably
                  be expected to cause the Company to amend or supplement the
                  Remarketing Materials and (iv) the occurrence of any event, or
                  the discovery of any fact, that would cause the Remarketing
                  Materials to contain any untrue statement of a material fact
                  or omit to state therein a material fact necessary to make the
                  statements therein, in light of the circumstances under which
                  they were made, not misleading;

                  3. that if, and for so long as the Notes are in the possession
                  of the Remarketing Agent prior to the settlement of the
                  Purchase Contracts, (i) the Remarketing Agent will hold such
                  Notes for the sole benefit of the Company, (ii) such Notes
                  will continue to constitute Collateral (as defined in the
                  Pledge Agreement and (iii) the Company will retain all of the
                  rights, privileges and benefits with respect thereto as
                  described in the Pledge Agreement.

Section 6. REPLACEMENT AND RESIGNATION OF REMARKETING AGENT.

         (a) The Company may replace [_______] as the Remarketing Agent by
giving notice prior to 3:00 p.m., New York City time on the [eleventh] Business
Day immediately prior to the Remarketing Date. Upon providing such notice, the
Company shall use all reasonable best efforts to appoint such a successor and to
enter into a remarketing agreement with such successor as soon as reasonably
practicable.

         (b) [________] may resign at any time and be discharged from its duties
and obligations hereunder as the Remarketing Agent by giving notice prior to
3:00 p.m., New York City time on the [eleventh] Business Day immediately prior
to the Remarketing Date. Upon receiving notice from the Remarketing Agent that
it wishes to resign hereunder, the Company shall use all reasonable best efforts
to appoint such a successor and enter into a remarketing agreement with it as
soon as reasonably practicable.

         (c) The Company shall give the Purchase Contract Agent, the Collateral
Agent, the Custodial Agent and the Trustee prompt written notice of any
replacement of the Remarketing Agent pursuant to this section.

                                       10
<PAGE>

         (d) The Remarketing Agent shall give the Purchase Contract Agent, the
Collateral Agent, the Custodial Agent and the Trustee prompt written notice of
its resignation pursuant to this section.

         (e) Notwithstanding the above, no such resignation nor any such removal
shall become effective until the Company shall have appointed (with notice to
the Purchase Contract Agent, the Custodial Agent, the Collateral Agent and the
Trustee) at least one nationally recognized broker-dealer as successor
Remarketing Agent and such successor Remarketing Agent shall have entered into a
remarketing agreement with the Company, in which it shall have agreed to conduct
the remarketing in accordance with this Agreement in all material respects.

Section 7. DEALING IN THE SECURITIES.

         The Remarketing Agent, when acting hereunder or when acting in its
individual or any other capacity, may, to the extent permitted by law, buy,
sell, hold or deal in any of the Notes, Normal Units, Stripped Units or any
other securities of the Company; provided, however, that in buying, selling,
holding, or dealing in any of the Notes, Normal Units, Stripped Units or any
other securities of the Company, the Remarketing Agent may not violate any of
its duties under this Agreement. With respect to any Notes, Normal Units,
Stripped Units or any other securities of the Company owned by it, the
Remarketing Agent may exercise any vote or join in any action with like effect
as if it did not act in any capacity hereunder. The Remarketing Agent, in its
individual capacity, either as principal or agent, may also engage in or have an
interest in any financial or other transaction with the Company as freely as if
it did not act in any capacity hereunder.

         The Company or its affiliates may, to the extent permitted by law,
purchase any Notes that are remarketed by the Remarketing Agent.

Section 8. CONDITIONS TO THE REMARKETING AGENT'S OBLIGATIONS.

         The obligations of the Remarketing Agent hereunder shall be subject to
the following conditions:

         (a) The Prospectus, if any, shall have been timely filed with the
Commission; no stop order suspending the effectiveness of the Registration
Statement, if any, or any part thereof shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the Commission.

         (b) (1) Trading generally shall not have been suspended or materially
limited on the New York Stock Exchange, (2) trading of any securities of the
Company shall not have been materially suspended or limited on the New York
Stock Exchange, (3) a general moratorium on commercial banking activities in New
York, the Cayman Islands or Bermuda shall not have been declared by the relevant
authorities and there shall not have occurred a material disruption in
commercial banking or securities settlement or clearance services in the United
States or other relevant jurisdiction, or (4) there shall not

                                       11
<PAGE>

have occurred a material adverse change in the financial markets, any outbreak
or escalation of hostilities involving the United States, the Cayman Islands or
Bermuda or the declaration by the United States, the Cayman Islands or Bermuda
of a national emergency or war or other calamity or crisis, if the effect of any
such event specified in this clause (4) in the judgment of the Remarketing Agent
makes it impracticable or inadvisable to proceed with the Remarketing or the
delivery of the Remarketed Notes on the terms and in the manner contemplated in
the Transaction Documents.

         (c) The representations and warranties of the Company contained herein
shall be true and correct in all material respects on and as of the Remarketing
Date, and the Company, the Purchase Contract Agent and the Collateral Agent
shall have performed in all material respects all covenants and agreements
contained herein or in the Purchase Contract Agreement or Pledge Agreement to be
performed on their part at or prior to the Remarketing Date.

         (d) The Company shall have furnished to the Remarketing Agent a
certificate, dated the Remarketing Date, of the Chief Executive Officer and the
Treasurer satisfactory to the Remarketing Agent stating that: (1) no order
suspending the effectiveness of the Registration Statement, if any, or
prohibiting the sale of the Remarketed Notes is in effect, and no proceedings
for such purpose are pending before or, to the knowledge of such officers,
threatened by the Commission and (2) the representations and warranties of the
Company in Section 3 of this Agreement are true and correct on and as of the
Remarketing Date and the Company has performed in all material respects all
covenants and agreements contained herein to be performed on its part at or
prior to such Remarketing Date.

         (e) On the Remarketing Date, the Remarketing Agent shall have received
a letter addressed to the Remarketing Agent and dated such date, in form and
substance satisfactory to the Remarketing Agent, of PricewaterhouseCoopers LLP,
the independent accountants of the Company, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
with respect to certain financial information contained in the Remarketing
Materials, if any.

         (f) Each of (1) the General Counsel to the Company, (2) Cahill Gordon &
Reindel LLP, counsel to the Company, (3) Hunter & Hunter, Cayman Islands counsel
to the Company and (4) White & Case, counsel to the Purchase Contract Agent and
Collateral Agent, shall have furnished to the Remarketing Agent its opinion,
addressed to the Remarketing Agent and dated the Remarketing Date, in form and
substance reasonably satisfactory to the Remarketing Agent addressing such
matters as are set forth in such counsel's opinion furnished pursuant to
Sections 7(c), 7(d), 7(e) and 7(f) of the Underwriting Agreement except that
such opinions (i) shall appropriately address the Remarketing Agreement and, as
to the enforceability of the securities, such opinions shall be limited to the
Remarketed Notes and (ii) may be adapted as necessary to relate to the
Remarketing Materials, if any, or to any changed circumstances or events
occurring subsequent to the date of this Agreement, such adaptations being
reasonably acceptable to counsel to the Remarketing Agent.

                                       12
<PAGE>

         (g) [________], counsel for the Remarketing Agent, shall have furnished
to the Remarketing Agent its opinion, addressed to the Remarketing Agent and
dated the applicable Remarketing Date, in form and substance satisfactory to the
Remarketing Agent.

         (h) There shall not have been, since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition (financial or otherwise), business, properties or results of
operations of the Company and its subsidiaries taken as a whole.

Section 9. TERMINATION OF REMARKETING AGREEMENT.

         This Agreement shall automatically terminate (i) as to the Remarketing
Agent on the effective date of the resignation or removal of the Remarketing
Agent pursuant to Section 6 and (ii) on the earlier of (x) any Special Event
Redemption Date and (y) the Stock Purchase Date. If this Agreement is terminated
pursuant to any of the other provisions hereof, except as otherwise provided
herein, the Company shall not be under any liability to the Remarketing Agent
and the Remarketing Agent shall not be under any liability to the Company,
except that if this Agreement is terminated by the Remarketing Agent because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Remarketing Agent for all of its out-of-pocket expenses (including the
reasonable fees and disbursements of its counsel) reasonably incurred by it.
Section 10, Section 11, Section 12 and Section 14 hereof shall survive the
termination of this Agreement or the resignation or removal of the Remarketing
Agent.

Section 10. REMARKETING AGENT'S PERFORMANCE; DUTY OF CARE.

         The duties and obligations of the Remarketing Agent shall be determined
solely by the express provisions of this Agreement and the Transaction
Documents. No implied covenants or obligations of or against the Remarketing
Agent shall be read into this Agreement or any of the Transactions Documents. In
the absence of willful misconduct, bad faith or gross negligence on the part of
the Remarketing Agent, the Remarketing Agent may conclusively rely upon any
document furnished to it which purports to conform to the requirements hereunder
as to the truth of the statements expressed therein. The Remarketing Agent shall
be protected in acting upon any document or communication reasonably believed by
it to be signed, presented or made by the proper party or parties. The
Remarketing Agent shall not have any obligation to determine whether there is
any limitation under applicable law on the Reset Rate on the Remarketed Notes
or, if there is any such limitation, the maximum permissible Reset Rate on the
Remarketed Notes, and it shall rely solely upon timely written notice from the
Company pursuant to Section 2(a) hereof as to whether or not there is any such
limitation and, if so, the maximum permissible Reset Rate. The Remarketing Agent
shall not incur any liability under this Agreement to any beneficial owner or
holder of Remarketed Notes, or other securities, either in its individual
capacity or as Remarketing Agent, as the case may be, for any action or failure
to act in connection with the remarketing of the Remarketed

                                       13
<PAGE>

Notes or otherwise in connection with the transactions contemplated by this
Agreement, except to the extent that such liability has, by final judicial
determination, resulted from the willful misconduct, bad faith or gross
negligence of the Remarketing Agent or from its failure to fulfill its express
obligations hereunder. The provisions of this Section 10 shall survive any
termination of this Agreement and shall also continue to apply to every
Remarketing Agent notwithstanding its resignation or removal. The Remarketing
Agent will act as the agent of the Holders.

Section 11. INDEMNIFICATION.

         (a) The Company will indemnify and hold harmless the Remarketing Agent,
against any losses, claims, damages or liabilities to which the Remarketing
Agent may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus, or any
amendments or supplement thereto, or any related Preliminary Prospectus or
preliminary prospectus supplement or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Remarketing Agent for any legal expenses of one counsel (in
addition to any local counsel) engaged reasonably incurred by the Remarketing
Agent in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission from any of such documents in reliance
upon and in conformity with written information furnished to the Company by the
Remarketing Agent specifically for use therein.

         (b) The Remarketing Agent will indemnify and hold harmless the Company,
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
or any related Preliminary Prospectus or Preliminary Prospectus supplement, or
any other Remarketing Materials, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by the
Remarketing Agent specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided that in no case will the Remarketing Agent
be liable or

                                       14
<PAGE>

responsible for any amount in excess of the fee paid to the Remarketing Agent
pursuant to Section 4.

         (c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In the case of parties
indemnified pursuant to subsection (a) above, counsel to the indemnified parties
shall be selected by the Remarketing Agent. In case any such action shall be
brought against the indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation (as set forth below). Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or the indemnified party which are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 11 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each

                                       15
<PAGE>

indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

Section 12. CONTRIBUTION.

         (a) If the indemnification provided for in Section 11 is unavailable to
or insufficient to hold harmless an indemnified party under Sections 11(a) or
11(b), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Remarketing Agent on the other
from the offering of the Remarketed Notes or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportions as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Remarketing Agent on the other in connection with the statements of omissions
which resulted in such losses, claims, damages or liabilities as well as any
relevant equitable considerations. The relative benefits received by the Company
on one hand and the Remarketing Agent on the other hand in connection with the
Remarketing shall be deemed to be in the same proportions as the total net
proceeds of the Remarketed Notes less the fee paid to the Remarketing Agent on
the one hand and the fee paid to the Remarketing Agent on the other hand bear to
the total net proceeds of the Remarketed Notes. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Remarketing Agent on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Remarketing Agent agree that it would
not be just and equitable if contribution pursuant to this subsection (a) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
subsection (a). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (a) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (a), the Remarketing Agent shall not be required
to contribute any amount in excess of the amount by which the fees received by
it under Section 4 exceeds the amount of any damages which the Remarketing Agent
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

         (b) The obligations of the Company under Section 11 and this Section 12
shall be in addition to any liability which the Company may otherwise have and
shall extend,

                                       16
<PAGE>

upon the same terms and conditions, to each officer and director of the
Remarketing Agent and to each person, if any, who controls the Remarketing Agent
within the meaning of the Securities Act; and the obligations of the Remarketing
Agent under Section 11 and this Section 12 shall be in addition to any liability
which the Remarketing Agent may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Securities Act.

         (c) The indemnity and contribution provisions contained in Section 11
and this Section 12 and the representations, warranties and other statements of
the Company contained in this Agreement shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of the Remarketing Agent or any person controlling the
Remarketing Agent, or the Company, its officers or director or any controlling
person of the Company, and the completion of the Remarketing.

Section 13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT.

         This Agreement shall inure to the benefit of and be binding upon each
party hereto and its respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(x) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
Remarketing Agent and the person or persons, if any, who control the Remarketing
Agent within the meaning of Section 15 of the Securities Act and (y) the
indemnity agreement of the Remarketing Agent contained in Section 11(b) of this
Agreement shall be deemed to be for the benefit of the Company's directors and
officers who sign the Registration Statement, if any, and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing
contained in this Agreement is intended or shall be construed to give any
person, other than the persons referred to herein, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained
herein.

Section 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; JUDGMENT CURRENCY.

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

         The Company irrevocably (i) agrees that any legal suit, action or
proceeding against the Company brought by the Remarketing Agent or by any person
who controls the Remarketing Agent arising out of or based upon this Agreement
or the transactions contemplated hereby or thereby may be instituted in the
federal district court for the Southern District of New York and the New York
County Court, (ii) waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
proceeding and (iii) submits to the exclusive jurisdiction of such courts in any
such suit, action or proceeding. The Company has appointed CT

                                       17
<PAGE>

Corporation System, New York, New York, as its authorized agent (the "Authorized
Agent") upon whom process may be served in any such action arising out of or
based on this Agreement or the transactions contemplated hereby or thereby which
may be instituted in the federal district court for the Southern District of New
York and the New York County Court by the Remarketing Agent or by any person who
controls the Remarketing Agent, expressly consents to the jurisdiction of any
such court in respect of any such action, and waives any other requirements of
or objections to personal jurisdiction with respect thereto. Such appointment
shall be irrevocable. The Company represents and warrants that the Authorized
Agent has agreed to act as such agent for service of process and agrees to take
any and all action, including the filing of any and all documents and
instruments, that may be necessary to continue such appointment in full force
and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in every respect,
effective service of process upon the Company.

         In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company will indemnify the Remarketing
Agent against any loss incurred by the Remarketing Agent as a result of any
variation between (i) the rate of exchange at which the United States dollar
amount is converted into the judgment currency for the purpose of such judgment
or order and (ii) the rate of exchange at which the Remarketing Agent is able to
purchase United States dollars with the amount of judgment currency actually
received by the Remarketing Agent. The foregoing indemnity shall constitute a
separate and independent obligation of the Company and shall continue in full
force and effect notwithstanding any such judgment or order aforesaid. The term
"rate of exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of or conversion into United States dollars.

Section 15. SURVIVAL.

         The respective indemnities, representations, warranties and agreements
of the Company and the Remarketing Agent contained in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement, shall survive
any Remarketing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.

Section 16. SUCCESSORS AND ASSIGNS.

         The rights and obligations of the Company hereunder may not be assigned
or delegated to any other Person without the prior written consent of the
Remarketing Agent. The rights and obligations of the Remarketing Agent hereunder
may not be assigned or delegated to any other Person (other than an affiliate of
the Remarketing Agent) without the prior written consent of the Company.

                                       18
<PAGE>

Section 17. HEADINGS.

         Section headings have been inserted in this Agreement as a matter of
convenience of reference only, and such section headings are not a part of this
Agreement and will not be used in the interpretation of any provision of this
Agreement.

Section 18. SEVERABILITY.

         If any provision of this Agreement is invalid, inoperative or
unenforceable as applied in any particular case in any or all jurisdictions
because it conflicts with any provisions of any constitution, statute, rule or
public policy or for any other reason, then, to the extent permitted by law,
such circumstances shall not have the effect of rendering the provision in
question invalid, inoperative or unenforceable in any other case, circumstances
or jurisdiction, or of rendering any other provision or provisions of this
Agreement, as the case may be, invalid, inoperative or unenforceable to any
extent whatsoever.

Section 19. COUNTERPARTS.

         This Agreement may be executed in counterparts, each of which shall be
regarded as an original and all of which shall constitute one and the same
document.

Section 20. AMENDMENTS.

         This Agreement may be amended only by an instrument in writing signed
by the Company and the Remarketing Agent.

Section 21. NOTICES.

         Unless otherwise specified, any notices, requests, consents or other
communications given or made hereunder shall be made in writing or transmitted
by any standard form of telecommunication, including telephone or telecopy, and
confirmed in writing. All written notices and confirmations of notices by
telecommunication shall be deemed to have been validly given or made when
delivered or mailed, registered or certified mail, return receipt requested and
postage prepaid. All such notices, requests, consents or other communications
shall be addressed as follows: if to the Company, to XL Capital Ltd, XL House,
One Bermudiana Road, Hamilton HM11, Bermuda, fax number: (441) 292-5280,
Attention: General Counsel; if to the Remarketing Agent, to [________],
[________], [________], fax number [________], Attention: General Counsel; if to
the Collateral Agent, to U.S. Bank Trust National Association, [________],
[________], fax number [________], Attention: [________]; and if to the Purchase
Contract Agent, to U.S. Bank National Association, [________], [________], fax
number [________], Attention: [________], or to such other address as any of the
above shall specify to the others in writing.

                                       19
<PAGE>

         IN WITNESS WHEREOF, each of the Company, the Purchase Contract Agent
and the Remarketing Agent has caused this Agreement to be executed in its name
and on its behalf by one of its duly authorized signatories as of the date first
above written.

                                          XL CAPITAL LTD

                                          By: ___________________________
                                              Name:
                                              Title:

                                          [________], as Remarketing Agent

                                          By: _______________________________
                                              Name:
                                              Title:

CONFIRMED AND ACCEPTED:

U.S. BANK NATIONAL ASSOCIATION

not individually but solely as Purchase Contract Agent
and as attorney-in-fact for the Holders of the Purchase Contracts

By:__________________________
   Name:
   Title:

                                       20

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