Document:

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                            SCOTTISH RE GROUP LIMITED

                                       AND

          JPMORGAN CHASE BANK, as Collateral Agent, Custodial Agent and
                            Securities Intermediary

                                       AND

                 JPMORGAN CHASE BANK, as Purchase Contract Agent

                                PLEDGE AGREEMENT

                          Dated as of December 17, 2003

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                                TABLE OF CONTENTS
                                                                            PAGE
                                    ARTICLE 1

                                   DEFINITIONS

Section 1.01.     Definitions................................................1

                                    ARTICLE 2

                                     PLEDGE

Section 2.01.     Pledge.....................................................5
Section 2.02.     Control; Financing Statement...............................6
Section 2.03.     Termination................................................6

                                    ARTICLE 3

                       DISTRIBUTIONS ON PLEDGED COLLATERAL

Section 3.01.     Income and Distributions...................................6
Section 3.02.     Payments Following Termination Event.......................6
Section 3.03.     Payments Prior to or on Purchase Contract Settlement Date..6
Section 3.04.     Payments to Purchase Contract Agent........................7
Section 3.05.     Assets Not Properly Released...............................7

                                    ARTICLE 4

                                     CONTROL

Section 4.01.     Establishment of Collateral Account........................8
Section 4.02.     Treatment as Financial Assets..............................8
Section 4.03.     Sole Control by Collateral Agent...........................8
Section 4.04.     Securities Intermediary's Jurisdiction.....................8
Section 4.05.     No Other Claims............................................9
Section 4.06.     Investment and Release.....................................9
Section 4.07.     Statements and Confirmations...............................9
Section 4.08.     Tax Allocations............................................9
Section 4.09.     No Other Agreements........................................9
Section 4.10.     Powers Coupled with an Interest............................9
Section 4.11.     Waiver of Lien; Waiver of Set-off..........................9

                                       i

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                                    ARTICLE 5

                   INITIAL DEPOSIT; CREATION OF TREASURY UNITS
                     AND RECREATION OF HYBRID CAPITAL UNITS

Section 5.01.     Initial Deposit of Convertible Preferred Shares...........10
Section 5.02.     Creation of Treasury Units................................10
Section 5.03.     Recreation of Hybrid Capital Units........................11
Section 5.04.     Termination Event.........................................12
Section 5.05.     Cash Settlement...........................................13
Section 5.06.     Early Settlement and Specified Merger Early
                  Settlement................................................14
Section 5.07.     Application of Proceeds in Settlement of
                  Purchase Contracts........................................15

                                    ARTICLE 6

              VOTING RIGHTS - Pledged Convertible Preferred Shares

Section 6.01.     Voting Rights.............................................17

                                    ARTICLE 7

                               RIGHTS AND REMEDIES

Section 7.01.     Rights and Remedies of the Collateral Agent...............17
Section 7.02.     Remarketing...............................................18
Section 7.03.     Successful Remarketing....................................18
Section 7.04.     Substitutions.............................................19

                                    ARTICLE 8

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

Section 8.01.     Representations and Warranties............................19
Section 8.02.     Covenants.................................................19

                                    ARTICLE 9

                  THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND
                           THE SECURITIES INTERMEDIARY

Section 9.01.     Appointment, Powers and Immunities........................20
Section 9.02.     Instructions of the Company...............................21
Section 9.03.     Reliance by Collateral Agent and the Securities
                  Intermediary..............................................21
Section 9.04.     Certain Rights............................................21
Section 9.05.     Merger, Conversion, Consolidation or Succession
                  to Business...............................................22
Section 9.06.     Rights in Other Capacities................................22
Section 9.07.     Non-Reliance on the Collateral Agent, the Custodial
                  Agent and the Securities Intermediary.....................22

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Section 9.08.     Compensation and Indemnity................................23
Section 9.09.     Failure to Act............................................23
Section 9.10.     Resignation of the Collateral Agent, the Custodial
                  Agent and the Securities Intermediary.....................24
Section 9.11.     Right to Appoint Agent or Advisor.........................25
Section 9.12.     Survival..................................................26
Section 9.13.     Exculpation...............................................26

                                   ARTICLE 10

                                    AMENDMENT

Section 10.01.    Amendment Without Consent of Holders......................26
Section 10.02.    Amendment With Consent of Holders.........................27
Section 10.03.    Execution of Amendments...................................28
Section 10.04.    Effect of Amendments......................................28
Section 10.05.    Reference of Amendments...................................28

                                   ARTICLE 11

                                  MISCELLANEOUS

Section 11.01.    No Waiver.................................................28
Section 11.02.    Governing Law; Submission to Jurisdiction;
                  Service of Process........................................28
Section 11.03.    Notices...................................................29
Section 11.04.    Successors and Assigns....................................29
Section 11.05.    Counterparts..............................................29
Section 11.06.    Severability..............................................30
Section 11.07.    Expenses, Etc.............................................30
Section 11.08.    Security Interest Absolute................................30
Section 11.09.    Notice of Specified Merger and Termination Event..........31
Section 11.10.    Regarding the Purchase Contract Agent.....................31
Section 11.11.    Book-Entry Interests......................................31
Section 11.12.    Non-Recourse Obligation...................................31

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Exhibit A - Instruction from Purchase Contract Agent to Collateral Agent
            (Creation of Treasury Units)

Exhibit B - Instruction from Purchase Contract Agent to Collateral Agent
            (Recreation of Hybrid Capital Units)

Exhibit C - Notice of Cash Settlement from Collateral Agent to Purchase
            Contract Agent (Cash Settlement Amounts)

Exhibit D - Instruction to Custodial Agent (Regarding Remarketing)

Exhibit E - Instruction to Custodial Agent (Withdrawal from Remarketing)

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                                PLEDGE AGREEMENT

     PLEDGE AGREEMENT dated as of December 17, 2003 by and between SCOTTISH RE
GROUP LIMITED, a Cayman Islands exempted company (the "Company"), JPMORGAN CHASE
BANK, 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"), as
securities intermediary (as defined in Sections 8-102(a)(14) of the UCC) with
respect to the Collateral Account (in such capacity, together with its
successors in such capacity, the "Securities Intermediary") and 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.

     Capitalized terms used herein and not defined herein have the meanings
assigned to them in the Purchase Contract Agreement (as defined therein).

                                    RECITALS

     WHEREAS, the Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which 5,000,000 Hybrid Capital Units (or 5,750,000
Hybrid Capital Units if the over-allotment option granted to the Underwriters
pursuant to the Underwriting Agreement is exercised in full) will be issued;

     WHEREAS, each Hybrid Capital Unit, at issuance, consists of a unit
comprised of (a) a share purchase contract (a "Purchase Contract") pursuant to
which the Holder will purchase from the Company on the Purchase Contract
Settlement Date, for an amount equal to $25 (the "Stated Amount"), a number of
shares of the Company's ordinary shares, par value $0.01 per share (the
"Ordinary Shares"), equal to the Settlement Rate and (b) a convertible preferred
share, par value of $0.01 per share, $25 liquidation preference per share (a
"convertible preferred share"); and

     WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders 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 herein of the Collateral to secure the Obligations.

     NOW, THEREFORE, the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent agree as follows:

                                   ARTICLE 1

                                   DEFINITIONS

     Section 1.01. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:

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     (a) 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, Exhibit or other subdivision;

     (b) the following terms which are defined in the UCC shall have the
meanings set forth therein: "CERTIFICATED SECURITY," "CONTROL," "FINANCIAL
ASSET," "ENTITLEMENT ORDER," "SECURITIES ACCOUNT" and "SECURITY ENTITLEMENT";
and

     (c) the following terms have the meanings given to them in this Section
1.01(c):

     "AGREEMENT" means this Pledge Agreement, as the same may be amended,
modified or supplemented from time to time.

     "CASH" means any coin or currency of the United States of America as at the
time shall be legal tender for payment of public and private debts.

     "CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations duly
adopted by a resolution of the duly authorized Finance and Investment Committee
of the Board of Directors of the Company on December 11, 2003 under which the
Convertible Preferred Shares are issued.

     "COLLATERAL" means the collective reference to:

          (i) the Collateral Account and all investment property and other
     financial assets from time to time credited to the Collateral Account,
     including, without limitation, (A) the Convertible Preferred Shares and
     security entitlements relating thereto that are a component of the Hybrid
     Capital Units from time to time, (B) any Treasury Securities and security
     entitlements relating thereto delivered from time to time upon creation of
     Treasury Units in accordance with Section 5.02 hereof and (C) payments made
     by Holders pursuant to Section 5.05 hereof;

          (ii) all Proceeds (other than Excess Proceeds) of any of the foregoing
     (whether such Proceeds arise before or after the commencement of any
     proceeding under any applicable bankruptcy, insolvency or other similar
     law, by or against the pledgor or with respect to the pledgor); and

          (iii) all powers and rights now owned or hereafter acquired under or
     with respect to the Collateral.

     "COLLATERAL ACCOUNT" means the securities account of the Collateral Agent
designated "JPMorgan Chase Bank, as Collateral Agent of Scottish Re Group
Limited, as pledgee of JPMorgan Chase Bank, as the Purchase Contract Agent on
behalf of and as attorney-in-fact for the Holders".

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

     "CONVERTIBLE PREFERRED SHARES" means the convertible preferred shares to be
issued by the Company under the Certificate of Designations.

     "HYBRID CAPITAL UNIT" means the collective rights and obligations of a
Holder of a Hybrid Capital Unit Certificate in respect of a Convertible
Preferred Share, subject to the Pledge thereof, and the related Purchase
Contract.

     "HYBRID CAPITAL UNITS CERTIFICATE" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Hybrid Capital
Units specified on such certificate.

     "INTRINSIC VALUE" has the meaning specified in the Purchase Contract
Agreement.

     "OBLIGATIONS" means, with respect to each Holder, all obligations and
liabilities of such Holder under such Holder's Purchase Contract, the Purchase
Contract Agreement and this Agreement or any other document made, delivered or
given in connection herewith or therewith, in each case whether on account of
principal, interest (including, without limitation, interest accruing before and
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Holder, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Company or the
Collateral Agent that are required to be paid by the Holder pursuant to the
terms of any of the foregoing agreements).

     "PERMITTED INVESTMENTS" means any one of the following, in each case
maturing on the Business Day following the date of acquisition:

          (1) any evidence of indebtedness with an original maturity of 365 days
     or less issued, or directly and fully guaranteed or insured, by the United
     States of America or any agency or instrumentality thereof (provided that
     the full faith and credit of the United States of America is pledged in
     support of the timely payment thereof or such indebtedness constitutes a
     general obligation of it);

          (2) deposits, certificates of deposit or acceptances with an original
     maturity of 365 days or less of any institution which is a member of the
     Federal Reserve System having combined capital and surplus and undivided
     profits of not less than $50,000,000 as of the date of its latest filed
     report of condition or its audited financial statements (and which may
     include the Collateral Agent);

          (3) investments with an original maturity of 365 days or less of any
     Person that is fully and unconditionally guaranteed by a bank referred to
     in clause (2);

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          (4) repurchase agreements and reverse repurchase agreements relating
     to marketable direct obligations issued or unconditionally guaranteed by
     the United States of America or issued by any agency thereof and backed as
     to timely payment by the full faith and credit of the United States of
     America;

          (5) investments in commercial paper, other than commercial paper
     issued by the Company or its affiliates, of any corporation incorporated
     under the laws of the United States of America or any State thereof, which
     commercial paper has a rating at the time of purchase at least equal to
     "A-1" by Standard & Poor's Ratings Services ("S&P") or at least equal to
     "P-1" by Moody's Investors Service, Inc. ("Moody's"); and

          (6) investments in money market funds (including, but not limited to,
     money market funds managed by the Collateral Agent or an affiliate of the
     Collateral Agent) registered under the Investment Company Act of 1940, as
     amended, rated in the highest applicable rating category by S&P or Moody's.

     "PERSON" means any legal person, including, without limitation, any
individual, corporation, estate, partnership, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

     "PLEDGE" means the lien and security interest created by this Agreement.

     "PLEDGED CONVERTIBLE PREFERRED SHARES" means the Convertible Preferred
Shares and security entitlements relating thereto from time to time credited to
the Collateral Account and not then released from the Pledge.

     "PLEDGED SECURITIES" means the Pledged Convertible Preferred Shares and the
Pledged Treasury Securities, collectively.

     "PLEDGED TREASURY SECURITIES" means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.

     "PROCEEDS" has the meaning ascribed thereto in the UCC and includes,
without limitation, all interest, dividends, cash, instruments, securities,
financial assets and other property received, receivable or otherwise
distributed upon the sale, exchange, collection or disposition of any financial
assets from time to time held in the Collateral Account.

     "PURCHASE CONTRACT AGENT" has the meaning specified in the paragraph
preceding the recitals of this Agreement.

     "SEPARATE CONVERTIBLE PREFERRED SHARES" means Convertible Preferred Shares
which are not components of Hybrid Capital Units.

     "TERMINATION EVENT" has the meaning specified in the Purchase Contract
Agreement.

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                  "TRADES" means the Treasury/Reserve Automated Debt Entry
System maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.

                  "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 (i) in the case of certificated securities in
registered form, delivery as provided in Section 8-301(a) of the UCC, endorsed
to the transferee or in blank by an effective endorsement; (ii) in the case of
Treasury Securities, registration of the transferee as the owner of such
Treasury Securities on TRADES; and (iii) in the case of security entitlements,
including, without limitation, security entitlements with respect to Treasury
Securities, a securities intermediary indicating by book entry that such
security entitlement has been credited to the transferee's securities account.

                  "TREASURY SECURITIES" means zero coupon U.S. treasury
securities that mature on February 15, 2007 (CUSIP No.
912820BW6).

                  "TREASURY UNIT" means, following the substitution of Treasury
Securities for Convertible Preferred Shares as collateral to secure a Holder's
obligations under the Purchase Contract, the collective rights and obligations
of a Holder of a Treasury Units Certificate in respect of such Treasury
Securities, subject to the Pledge thereof, and the related Purchase Contract.

                  "TREASURY UNITS CERTIFICATE" means a certificate evidencing
the rights and obligations of a Holder in respect of the number of Treasury
Units specified on such certificate.

                  "UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time.

                  "UNIT" means a Hybrid Capital Unit or a Treasury Unit, as the
case may be.

                  "VALUE" means, with respect to any item of Collateral on any
date, as to (i) Cash, the face amount thereof, (ii) Treasury Securities, the
aggregate principal amount thereof at maturity and (iii) Convertible Preferred
Shares, the aggregate liquidation preference thereof.

     (d) Terms used and not defined herein shall have the meanings set forth in
the Purchase Contract Agreement.

                                   ARTICLE 2

                                     PLEDGE

     Section 2.01. Pledge. Each Holder, acting through the Purchase Contract
Agent as such Holder's attorney-in-fact, and the Purchase Contract Agent, acting
solely as such attorney-in-fact, hereby pledges and grants to the Collateral
Agent, as agent of and for the benefit

                                       5
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of the Company, a continuing security interest in and to, and a lien upon and
right of set-off against, all of such Person's right, title and interest in and
to the Collateral to secure the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations. The Collateral Agent shall have all of the rights, remedies and
recourses with respect to the Collateral afforded a secured party by the UCC, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.

     Section 2.02. Control; Financing Statement.

     (a) The Collateral Agent shall have control of the Collateral Account
pursuant to the provisions of Article 4 of this Agreement.

     (b) As soon as practicable, subsequent to the date of initial issuance of
the Units, the Company shall deliver to the Collateral Agent a copy of the
financing statement prepared by the Company and filed in the Office of the
Secretary of State of the State of New York and any other jurisdictions which
the Company deems necessary, authorized by the Purchase Contract Agent, as
attorney-in-fact for the Holders, as Debtors, and describing the Collateral,
such filing to be undertaken by the Company.

     Section 2.03. Termination. As to each Holder, this Agreement and the Pledge
created hereby shall automatically terminate upon the satisfaction of such
Holder's Obligations or the occurrence of a Termination Event. Upon such
termination, the Collateral Agent shall Transfer such Holder's portion of the
Collateral to the Purchase Contract Agent for distribution to such Holder, free
and clear of the Pledge created hereby.

                                   ARTICLE 3

                       DISTRIBUTIONS ON PLEDGED COLLATERAL

     Section 3.01. Income and Distributions. The Collateral Agent shall transfer
all income and distributions received by the Collateral Agent on account of the
Pledged Convertible Preferred Shares and any Excess Proceeds, or Permitted
Investments from time to time held in the Collateral Account (ABA No. 02100021,
A/C No. 507943635, Re: Scottish Re Group Limited) to the Purchase Contract Agent
for distribution to the applicable Holders as provided in the Purchase Contracts
or Purchase Contract Agreement.

     Section 3.02. Payments Following Termination Event. Following a Termination
Event, the Collateral Agent shall transfer all payments it receives, if any, in
respect of (a) the liquidation preference of the Pledged Convertible Preferred
Shares and (b) the Pledged Treasury Securities, to the Purchase Contract Agent
for the benefit of the applicable Holders for distribution to such Holders in
accordance with their respective interests, free and clear of the Pledge created
hereby.

     Section 3.03. Payments Prior to or on Purchase Contract Settlement Date.

     (a) Subject to the provisions of Sections 5.05 and 5.06, and except as
provided in clause 3.03(b) below, if no Termination Event shall have occurred,
all payments

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received by the Collateral Agent in respect of (1) the liquidation preference of
the Pledged Convertible Preferred Shares from the Proceeds of the Remarketing
and (2) the Pledged Treasury Securities, shall be held and invested in Permitted
Investments until the Purchase Contract Settlement Date, and transferred to the
Company on the Purchase Contract Settlement Date to the extent and otherwise as
provided in Section 5.07 hereof. Any balance remaining in the Collateral Account
shall be released from the Pledge and transferred to the Purchase Contract Agent
for the benefit of the applicable Holders for distribution to such Holders in
accordance with their respective interests, free and clear of the Pledge created
thereby. The Company shall instruct the Collateral Agent in writing as to the
type of Permitted Investments in which any payments made under this Section
shall be invested, provided, however, that if the Company fails to deliver such
instructions by 10:30 a.m. (New York City time) on the day such payments are
received by the Collateral Agent, the Collateral Agent shall invest such
payments in the Permitted Investments described in clause (6) of the definition
of Permitted Investments. In no event shall the Collateral Agent be liable for
the selection of Permitted Investments or for investment losses incurred
thereon. The Collateral Agent shall have no liability in respect of losses
incurred as a result of the failure of the Company to provide timely written
investment direction.

     (b) All payments received by the Collateral Agent in respect of (1) the
liquidation preference of the Pledged Convertible Preferred Shares and (2) the
Treasury Securities or security entitlements thereto, that, in each case, have
been released from the Pledge pursuant hereto shall be transferred to the
Purchase Contract Agent for the benefit of the applicable Holders for
distribution to such Holders in accordance with their respective interests.

     Section 3.04. Payments to Purchase Contract Agent. The Collateral Agent
shall use all commercially reasonable efforts to deliver payments to the
Purchase Contract Agent hereunder to the account designated by the Purchase
Contract Agent for such purpose not later than 12:00 p.m. (New York City time)
on the Business Day such payment is received by the Collateral Agent; provided,
however, that if such payment is received on a day that is not a Business Day or
after 11:00 a.m. (New York City time) on a Business Day, then the Collateral
Agent shall use all commercially reasonable efforts to deliver such payment to
the Purchase Contract Agent no later than 10:30 a.m. (New York City time) on the
next succeeding Business Day.

     Section 3.05. Assets Not Properly Released. If the Purchase Contract Agent
or any Holder shall receive any payments in respect of (1) the liquidation
preference of the Pledged Convertible Preferred Shares and (2) the Treasury
Securities or security entitlements thereto credited to the Collateral Account
and not released therefrom in accordance with this Agreement, the Purchase
Contract Agent or such Holder shall hold the same as trustee of an express trust
for the benefit of the Company and, upon receipt of an Officers' Certificate of
the Company so directing, promptly deliver the same to the Collateral Agent for
credit to the Collateral Account or to the Company for application to the
Obligations of the Holders, and the Purchase Contract Agent and Holders shall
acquire no right, title or interest in any such payments of amounts so received.
The Purchase Contract Agent shall have no liability under this Section 3.05
unless and until it has been notified in writing that such payment was delivered
to it erroneously and shall have no liability for any action taken, suffered or
omitted to be taken prior to its receipt of such notice.

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                                   ARTICLE 4

                                     CONTROL

     Section 4.01. Establishment of Collateral Account. The Collateral Agent
hereby confirms that:

     (a) the Securities Intermediary has established the Collateral Account;

     (b) the Collateral Account is a securities account;

     (c) subject to the terms of this Agreement, the Securities Intermediary
shall identify in its records the Collateral Agent as the entitlement holder
entitled to exercise the rights that comprise any financial asset credited to
the Collateral Account;

     (d) all property delivered to the Securities Intermediary pursuant to this
Agreement or the Purchase Contract Agreement will be credited promptly to the
Collateral Account; and

     (e) all securities or other property underlying any financial assets
credited to the Collateral Account shall be (i) registered in the name of the
Purchase Contract Agent and endorsed to the Collateral Agent or in blank, (ii)
registered in the name of the Collateral Agent or (iii) credited to another
securities account maintained in the name of the Collateral Agent. The
Collateral Agent may, at any time or from time to time, in its sole discretion,
cause any or all securities or other property underlying any financial assets
credited to the Collateral Account not registered in its name to be so
registered in its name. In no case will any financial asset credited to the
Collateral Account be registered in the name of the Purchase Contract Agent or
any Holder or specially endorsed to the Purchase Contract Agent or any Holder.

     Section 4.02. Treatment as Financial Assets. 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.

     Section 4.03. Sole Control by Collateral Agent. Except as provided in
Section 6.01, 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. If at any time the
Securities Intermediary shall receive an entitlement order issued by the
Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Purchase Contract Agent or any Holder or any other Person. Except as
otherwise permitted under this Agreement, until termination of the Pledge, the
Securities Intermediary will not comply with any entitlement orders issued by
the Purchase Contract Agent or any Holder.

     Section 4.04. Securities Intermediary's Location. The Collateral Account,
and the rights and obligations of the Securities Intermediary, the Purchase
Contract Agent and the Holders with respect thereto, shall be governed by the
laws of the State of New York.

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Regardless of any provision in any other agreement, for purposes of the UCC, New
York shall be deemed to be the Securities Intermediary's location.

     Section 4.05. No Other Claims. Except for the claims and interest of the
Collateral Agent, the Securities Intermediary, Purchase Contract Agent and the
Holders in the Collateral Account, the Securities Intermediary (without any duty
to investigate) does not know of any claim to, or interest in, the Collateral
Account or in any financial asset credited thereto. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against the Collateral
Account or in any financial asset carried therein, the Securities Intermediary
will promptly notify the Purchase Contract Agent.

     Section 4.06. Investment and Release. All proceeds of financial assets from
time to time deposited in the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination of
the Pledge, no property shall be released from the Collateral Account except in
accordance with this Agreement or as determined to be appropriate by Collateral
Agent.

     Section 4.07. Statements and Confirmations. The Securities Intermediary
will promptly send copies of all statements, confirmations and other
correspondence concerning the Collateral Account and any financial assets
credited thereto to the Purchase Contract Agent at its address for notices under
this Agreement.

     Section 4.08. Tax Allocations. The Company shall report all items of
income, gain, expense and loss recognized in the Collateral Account, to the
extent such reporting is required by law, to the Internal Revenue Service or
applicable state authorities in the manner required by law. Neither the
Securities Intermediary nor the Collateral Agent shall have any tax reporting
duties hereunder.

     Section 4.09. No Other Agreements. Neither the Securities Intermediary nor
the Collateral Agent has entered into, and prior to the termination of the
Pledge will not enter into, any agreement with any other Person relating to the
Collateral Account or any financial assets credited thereto, including, without
limitation, any agreement to comply with entitlement orders of any Person.

     Section 4.10. Powers Coupled with an Interest. The rights and powers
granted in this Article 4 to the Collateral Agent have been granted in order to
perfect its security interests in the Collateral Account, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Purchase
Contract Agent or any Holder nor by the lapse of time. The obligations of the
Collateral Agent and the Securities Intermediary under this Article 4 shall
continue in effect until the termination of the Pledge.

     Section 4.11. Waiver of Lien; Waiver of Set-off. Each of the Collateral
Agent and the Securities Intermediary waives any security interest, lien or
right to make deductions or setoffs that it may now have or hereafter acquire in
or with respect to the Collateral Account, any financial asset credited thereto
or any security entitlement in respect thereof. Neither the financial assets
credited to the Collateral Account nor the security entitlements in respect
thereof will be subject to deduction, set-off, banker's lien, or any other right
in favor of any Person other than the Company.

                                       9
<PAGE>

                                   ARTICLE 5

                   INITIAL DEPOSIT; CREATION OF TREASURY UNITS
                     AND RECREATION OF HYBRID CAPITAL UNITS

     Section 5.01. Initial Deposit of Convertible Preferred Shares. (a) Prior to
or concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Holders of the Hybrid Capital Units,
shall Transfer to the Collateral Agent, for credit to the Collateral Account,
the Convertible Preferred Shares or security entitlements with respect thereto.

     (b) Unless a Termination Event shall have occurred and be continuing, the
Collateral Agent agrees to hold any Convertible Preferred Shares or security
entitlements relating thereto, constituting a portion of the Collateral
registered in the name of the Purchase Contract Agent, as attorney-in-fact for
the Holders, with appropriate endorsement in the form delivered to it and except
as provided in Section 4.01(e) shall not re-register such Convertible Preferred
Shares or security interests relating thereto unless a Termination Event shall
have occurred and be continuing.

     Section 5.02. Creation of Treasury Units.

     (a) A Holder of Hybrid Capital Units shall have the right, at any time
prior to 5:00 p.m. (New York City time) on the seventh Trading Day immediately
preceding the Purchase Contract Settlement Date, to create Treasury Units by
substitution of Treasury Securities or security entitlements with respect
thereto for the Pledged Convertible Preferred Shares comprising a part of such
Holder's Hybrid Capital Units, in integral multiples of 40 Hybrid Capital Units
by:

          (i) Transferring to the Collateral Agent, for credit to the Collateral
     Account, Treasury Securities or security entitlements with respect thereto
     having a Value equal to the aggregate liquidation preference of the Pledged
     Convertible Preferred Shares to be released, accompanied by a notice,
     substantially in the form of Exhibit C to the Purchase Contract Agreement,
     whereupon the Purchase Contract Agent shall deliver to the Collateral Agent
     a notice, substantially in the form of Exhibit A hereto, (A) stating that
     such Holder has notified the Purchase Contract Agent that such Holder has
     Transferred Treasury Securities or security entitlements with respect
     thereto to the Collateral Agent for credit to the Collateral Account, (B)
     stating the Value of the Treasury Securities or security entitlements with
     respect thereto Transferred by such Holder and (C) requesting that the
     Collateral Agent release from the Pledge the Pledged Convertible Preferred
     Shares that are a component of such Hybrid Capital Units; and

          (ii) delivering the related Hybrid Capital Units to the Purchase
     Contract Agent.

                                       10
<PAGE>

     Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements with respect thereto have been credited to the Collateral
Account as described in such notice, the Collateral Agent shall instruct the
Securities Intermediary by a notice to release such Pledged Convertible
Preferred Shares from the Pledge by Transfer to the Purchase Contract Agent for
distribution to such Holder, free and clear of the Pledge created hereby.

     (b) Upon credit to the Collateral Account of Treasury Securities or
security entitlements with respect thereto delivered by a Holder of Hybrid
Capital Units and receipt of the related instruction from the Purchase Contract
Agent, the Securities Intermediary, the Collateral Agent shall release such
Pledged Convertible Preferred Shares, and shall promptly Transfer the same to
the Purchase Contract Agent for distribution to such Holder, free and clear of
the Pledge created hereby.

     Section 5.03. Recreation of Hybrid Capital Units.

     (a) At any time prior to 5:00 p.m. (New York City time) on the seventh
Trading Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Treasury Units shall have the right to recreate Hybrid Capital Units
by substitution of Convertible Preferred Shares or security entitlements with
respect thereto for Pledged Treasury Securities in integral multiples of 40
Treasury Units by:

          (i) Transferring to the Collateral Agent, for credit to the Collateral
     Account, Convertible Preferred Shares or security entitlements with respect
     thereto having an aggregate liquidation preference equal to the Value of
     the Pledged Treasury Securities to be released, accompanied by a notice,
     substantially in the form of Exhibit C to the Purchase Contract Agreement,
     whereupon the Purchase Contract Agent shall deliver to the Collateral Agent
     a notice, substantially in the form of Exhibit B hereto, stating that such
     Holder has notified the Purchase Contract Agent that such Holder has
     Transferred the Convertible Preferred Shares or security entitlements with
     respect thereto to the Collateral Agent for credit to the Collateral
     Account and requesting that the Collateral Agent release from the Pledge
     the Pledged Treasury Securities related to such Treasury Units; and

          (ii) delivering the related Treasury Units to the Purchase Contract
     Agent.

     Upon receipt of such notice and confirmation that Convertible Preferred
Shares or security entitlements with respect thereto have been credited to the
Collateral Account as described in such notice, the Collateral Agent shall
instruct the Securities Intermediary by a notice to release such Pledged
Treasury Securities from the Pledge by Transfer to the Purchase Contract Agent
for distribution to such Holder, free and clear of the Pledge created hereby.

     (b) Upon credit to the Collateral Account of Convertible Preferred Shares
or security entitlements with respect thereto delivered by a Holder of Treasury
Units and receipt of the related instruction from the Collateral Agent, the
Securities Intermediary shall release such

                                       11
<PAGE>

Pledged Treasury Securities and shall promptly Transfer the same to the Purchase
Contract Agent for distribution to such Holder, free and clear of the Pledge
created hereby.

     Section 5.04. Termination Event.

     (a) Upon receipt by the Collateral Agent of written notice from the Company
or the Purchase Contract Agent that a Termination Event has occurred, the
Collateral Agent shall release all Collateral from the Pledge and instruct the
Securities Intermediary to promptly Transfer:

          (i) any Pledged Convertible Preferred Shares or security entitlements
     with respect thereto,

          (ii) any Pledged Treasury Securities, and

          (iii) any payments by Holders (or the Permitted Investments of such
     payments) pursuant to Section 5.05 hereof,

to the Purchase Contract Agent for the benefit of the Holders for distribution
to such Holders, in accordance with their respective interests, free and clear
of the Pledge created hereby; provided, however, if any Holder shall be entitled
to receive less than $1,000 with respect to his ownership interest in a Treasury
Security, the Purchase Contract Agent shall have the right to dispose of such
interest for cash and deliver to such Holder cash in lieu of delivering the
Treasury Security.

     (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 for
any reason fail promptly to effectuate the release and Transfer of all Pledged
Convertible Preferred Shares, Pledged Treasury Securities and payments by
Holders (or the Permitted Investments of such payments) pursuant to Section 5.05
hereof and Proceeds of any of the foregoing, as the case may be, as provided by
this Section 5.04, the Purchase Contract Agent shall:

          (i) upon direction in writing by a majority of the Holders, use its
     reasonable best efforts to obtain an opinion of a nationally recognized law
     firm reasonably acceptable to the Collateral Agent to the effect that,
     notwithstanding 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 5.04, and shall
     deliver or cause to be delivered such opinion to the Collateral Agent
     within 10 days after the occurrence of such Termination Event, and if (A)
     the Purchase Contract Agent shall be unable to obtain such opinion within
     10 days after the occurrence of such Termination Event or (B) the
     Collateral Agent shall continue, after delivery of such opinion, to refuse
     to effectuate the release and Transfer of all Pledged Convertible Preferred
     Shares, Pledged Treasury Securities and the payments by Holders (or the
     Permitted Investments of such payments) pursuant to Section 5.05 hereof and
     Proceeds of any of the foregoing, as the case may be, as provided in this

                                       12
<PAGE>

     Section 5.04, then the Purchase Contract Agent shall within 15 days after
     the occurrence of such Termination Event commence an action or proceeding
     in the court having jurisdiction of the Company's case under the applicable
     Bankruptcy Law seeking an order requiring the Collateral Agent (or such
     other persons as may be appropriate) to effectuate the release and transfer
     of all Pledged Convertible Preferred Shares, Pledged Treasury Securities
     and the payments by Holders (or the Permitted Investments of such payments)
     pursuant to Section 5.05 hereof and Proceeds of any of the foregoing, or as
     the case may be, as provided by this Section 5.04; or

          (ii) commence an action or proceeding like that described in clause
     5.04(b)(i) hereof within 10 days after the occurrence of such Termination
     Event;

provided that the Purchase Contract Agent shall have the right to refuse to act
under these Sections 5.04(b)(i) and (ii) unless it shall be indemnified to its
satisfaction as provided herein.

     Section 5.05. Cash Settlement.

     (a) Upon receipt by the Collateral Agent of (1) a notice from the Purchase
Contract Agent promptly after the receipt by the Purchase Contract Agent of a
notice from a Holder of Hybrid Capital Units that such Holder has elected, in
accordance with the procedures specified in Section 5.02(c)(i) of the Purchase
Contract Agreement to effect a Cash Settlement and (2) payment by such Holder by
deposit in the Collateral Account prior to 11:00 a.m. (New York City time) on or
before the fifth Trading Day immediately preceding the Purchase Contract
Settlement Date, or on the Trading Day immediately preceding the Purchase
Contract Settlement Date in the case of a Failed Remarketing, of the Purchase
Price in lawful money of the United States of America by certified or cashier's
check or wire transfer, in each case in immediately available funds payable to
or upon the order of the Securities Intermediary, then the Collateral Agent
shall instruct the Securities Intermediary to:

          (i) promptly invest any such Cash in Permitted Investments;

          (ii) release from the Pledge such Holder's related Pledged Convertible
     Preferred Shares as to which such Holder has effected a Cash Settlement
     pursuant to this Section 5.05(a); and

          (iii) Transfer all such Pledged Convertible Preferred Shares to the
     Purchase Contract Agent for distribution to such Holder, in each case free
     and clear of the Pledge created hereby.

     The Company shall instruct the Collateral Agent in writing as to the type
of Permitted Investments in which any such Cash shall be invested; provided,
however, that if the Company fails to deliver such written instructions by 10:30
a.m. (New York City time) on the day such Cash is received by the Collateral
Agent or to be reinvested by the Securities Intermediary, the Collateral Agent
shall instruct the Securities Intermediary to invest such Cash in the Permitted
Investments described in clause (6) of the definition of Permitted Investments.
In no event shall the Collateral Agent be liable for the selection of Permitted
Investments or for

                                       13
<PAGE>

investment losses incurred thereon. The Collateral Agent shall have no liability
in respect of losses incurred as a result of the failure of the Company to
provide timely written investment direction.

     Upon receipt of the proceeds upon the maturity of the Permitted Investments
on the Purchase Contract Settlement Date, the Collateral Agent shall (A)
instruct the Securities Intermediary to pay the portion of such proceeds and
deliver any certified or cashier's checks received, in an aggregate amount equal
to the Purchase Price, to the Company on the Purchase Contract Settlement Date,
and (B) release any amounts in excess of the Purchase Price earned from such
Permitted Investments to the Purchase Contract Agent for distribution to the
Company.

     (b) If a Holder of Hybrid Capital Units (i) fails to notify the Purchase
Contract Agent of its intention to make a Cash Settlement as provided in
paragraph 5.02(c)(i) of the Purchase Contract Agreement or (ii) does notify the
Purchase Contract Agent of its intention to pay the Purchase Price in cash, but
fails to make such payment as required by paragraph 5.02(c)(ii) of the Purchase
Contract Agreement, such Holder shall be deemed to have consented to the
disposition of such Holder's Pledged Convertible Preferred Shares in accordance
with paragraph 5.02(c)(iii) of the Purchase Contract Agreement.

     (c) As soon as practicable after 5:00 p.m. (New York City time) on the
fifth Trading Day immediately preceding the Purchase Contract Settlement Date,
the Collateral Agent shall deliver to the Purchase Contract Agent a notice,
substantially in the form of Exhibit C hereto, stating (i) the amount of Cash
that it has received with respect to the Cash Settlement of Hybrid Capital Units
and (ii) the amount of Pledged Convertible Preferred Shares to be remarketed in
the Remarketing pursuant to Section 5.02(c)(iv) of the Purchase Contract
Agreement.

     Section 5.06. Early Settlement and Specified Merger Early Settlement. Upon
receipt by the Collateral Agent of a notice from the Purchase Contract Agent
that a Holder of Units has elected to effect either (a) Early Settlement of its
obligations under the Purchase Contracts forming a part of such Units in
accordance with the terms of the Purchase Contracts and Section 5.07 of the
Purchase Contract Agreement or (b) Specified Merger Early Settlement of its
obligations under the Purchase Contracts forming a part of such Units in
accordance with the terms of the Purchase Contracts and Section 5.04(b)(2) of
the Purchase Contract Agreement (which notice shall set forth the number of such
Purchase Contracts as to which such Holder has elected to effect Early
Settlement or Specified Merger Early Settlement), and that the Purchase Contract
Agent has received from such Holder, and paid to the Company as confirmed in
writing by the Company, the related Purchase Price pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement or Specified Merger Early Settlement, as the case may
be, have been satisfied, then the Collateral Agent shall release from the
Pledge, (i) Pledged Convertible Preferred Shares in the case of a Holder of
Hybrid Capital Units or (ii) Pledged Treasury Securities, in the case of a
Holder of Treasury Units, in each case with a Value equal to the product of (x)
the Stated Amount times (y) the number of Purchase Contracts as to which such
Holder has elected to effect Early Settlement or Specified Merger Early
Settlement, and shall instruct the Securities Intermediary to Transfer all such
Pledged Convertible Preferred Shares or Pledged Treasury Securities, as the case
may be, to

                                       14
<PAGE>

the Purchase Contract Agent for distribution to such Holder, in each case free
and clear of the Pledge created hereby. A holder of Treasury Units may settle
early only in integral multiples of 40 Treasury Units.

     Section 5.07. Application of Proceeds in Settlement of Purchase Contracts.

     (a) If a Holder of Hybrid Capital Units has not elected to make an
effective Cash Settlement by notifying the Purchase Contract Agent in the manner
provided for in Section 5.02(c)(i) of the Purchase Contract Agreement or does
notify the Purchase Contract Agent as provided in paragraph 5.02(c)(i) of the
Purchase Contract Agreement of its intention to pay the Purchase Price in cash,
but fails to make such payment as required by paragraph 5.02(c)(ii) of the
Purchase Contract Agreement, such Holder shall be deemed to have elected to pay
for the Ordinary Shares to be issued under such Purchase Contracts from the
Proceeds of the Remarketing of the related Pledged Convertible Preferred Shares.
In such event, upon written direction from the Purchase Contract Agent, the
Collateral Agent shall instruct the Securities Intermediary to Transfer the
related Pledged Convertible Preferred Shares to the Remarketing Agent for
Remarketing. Upon receiving such Pledged Convertible Preferred Shares, the
Remarketing Agent, pursuant to the terms of the Remarketing Agreement, will use
its commercially reasonable efforts to remarket such Pledged Convertible
Preferred Shares. The Remarketing Agent will deposit the Proceeds of such
Remarketing, after deducting the Remarketing Fee, in the Collateral Account, and
the Collateral Agent shall invest the Proceeds of the Remarketing in Permitted
Investments set forth in clause (6) of the definition of Permitted Investments.
On the Purchase Contract Settlement Date, the Purchase Contract Agent shall
consult with the Collateral Agent regarding the instruction the Collateral Agent
shall give to the Securities Intermediary in order to apply a portion of the
Proceeds from such Remarketing equal to the aggregate liquidation preference of
such Pledged Convertible Preferred Shares, less the amount of any Deferred
Contract Adjustment Payments payable to such Holder on the Purchase Contract
Settlement Date, to satisfy in full such Holder's obligations to pay the
Purchase Price to purchase the shares of Ordinary Shares under the related
Purchase Contracts. The balance of the Proceeds from the Remarketing, if any,
that shall be transferred to the Purchase Contract Agent for distribution to
such Holder.

     If the Remarketing Agent advises the Collateral Agent in writing that there
has been a Failed Remarketing and an event of default shall have occurred with
respect to any Purchase Contracts as provided in Section 5.02(e)(iv) of the
Purchase Contract Agreement, the Collateral Agent, for the benefit of the
Company shall, on the Purchase Contract Settlement Date, at the written
direction of the Company, exercise the Company's rights as a secured party with
respect to the related Pledged Convertible Preferred Shares in accordance with
applicable law or deliver such Pledged Convertible Preferred Shares to such
person or persons as the Company may direct to retain to the extent permitted by
applicable law. Following such action, the obligations of the Holder of such
Pledged Convertible Preferred Shares to pay the Purchase Price for the shares of
Ordinary Shares under its Purchase Contract will be deemed to be satisfied in
full, and the Purchase Contract Agent shall provide to the Collateral Agent, on
behalf of such Holders, consents to the extent required under Section 9-620 of
the UCC in order to give effect to the provisions of this paragraph. If the
Collateral Agent exercises such rights with respect to such Pledged Convertible
Preferred Shares, any accumulated and unpaid dividends on such Pledged
Convertible Preferred Shares, including any accrued and unpaid dividends as of
the

                                       15
<PAGE>

Purchase Contract Settlement Date, and the Intrinsic Value (or such greater
amount as required under the UCC), if any, shall become payable by the Company
(and the Company shall pay such amounts) to the Purchase Contract Agent for
payment to the Holder of the Hybrid Capital Units to which such Pledged
Convertible Preferred Shares relate.

     (b) In the case of a Treasury Unit, promptly, after 11:00 a.m. (New York
City time) on the Purchase Contract Settlement Date, the Collateral Agent shall
apply the Cash Proceeds of the maturing Pledged Treasury Securities as follows.
Without receiving any instruction from any such Holder, the Collateral Agent
shall apply the Proceeds of the related Pledged Treasury Securities to the
settlement of such Purchase Contracts on the Purchase Contract Settlement Date.
In the event the Proceeds from the related Pledged Treasury Securities exceed
the aggregate Purchase Price of the Purchase Contracts being settled thereby,
less the amount of any Deferred Contract Adjustment Payments payable to such
Holder on the Purchase Contract Settlement Date, the Collateral Agent shall
instruct the Securities Intermediary to transfer such excess, when received, to
the Purchase Contract Agent for distribution to such Holder.

     (c) Prior to 11:00 a.m. (New York City time) on the Trading Day immediately
preceding the applicable Remarketing Date, but no earlier than the Payment Date
immediately preceding such date, Holders of Separate Convertible Preferred
Shares may elect to have their Separate Convertible Preferred Shares remarketed
under the Remarketing Agreement, by delivering their Separate Convertible
Preferred Shares along with a notice of such election, substantially in the form
of Exhibit D hereto, to the Custodial Agent. After such time, such election
shall become an irrevocable election to have such Separate Convertible Preferred
Shares remarketed in such Remarketing. The Custodial Agent shall hold Separate
Convertible Preferred Shares in an account separate from the Collateral Account
in which the Pledged Securities shall be held. Holders of Separate Convertible
Preferred Shares electing to have their Separate Convertible Preferred Shares
remarketed will also have the right to withdraw that election by written notice
to the Custodial Agent, substantially in the form of Exhibit E hereto, prior to
11:00 a.m. (New York City time) on the fifth Trading Day immediately preceding
the applicable Remarketing Date, upon which notice the Custodial Agent shall
return such Separate Convertible Preferred Shares to such Holder.

     By 11:00 a.m. (New York City time) on the Trading Day immediately preceding
the applicable Remarketing Date, the Custodial Agent shall notify the
Remarketing Agent of the aggregate liquidation preference of the Separate
Convertible Preferred Shares to be remarketed and deliver to the Remarketing
Agent for remarketing all Separate Convertible Preferred Shares delivered to the
Custodial Agent pursuant to this Section 5.07(c) and not validly withdrawn prior
to such date. In the event of a Successful Remarketing, after deducting the
Remarketing Fee (to the extent permitted under the terms of the Remarketing
Agreement), the Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds of such Remarketing for payment to the Holders
of the remarketed Separate Convertible Preferred Shares, in accordance with
their respective interests. In the event of a Failed Remarketing, the
Remarketing Agent will promptly return such Separate Convertible Preferred
Shares to the Custodial Agent, and, in the event of a Failed Remarketing, the
Custodial Agent shall deliver such Separate Convertible Preferred Shares to the
appropriate Holders.

                                       16
<PAGE>

     (d) The Purchase Contract Agent, on behalf of itself and the Holders,
acknowledges and irrevocably agrees that any Remarketing of the Convertible
Preferred Shares shall not constitute a foreclosure of the Pledge of or other
exercise of default remedies with respect to the Convertible Preferred Shares
within the meaning of the Code, but rather shall constitute a voluntary sale of
the Convertible Preferred Shares by and on behalf of the Holders and the
Purchase Contract Agent.

                                   ARTICLE 6

              VOTING RIGHTS - PLEDGED CONVERTIBLE PREFERRED SHARES

     Section 6.01. Voting Rights. Subject to the terms of Section 4.02 of the
Purchase Contract Agreement, the Purchase Contract Agent may exercise, or
refrain from exercising, any and all voting and other consensual rights
pertaining to the Pledged Convertible Preferred Shares 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 shall not refrain from exercising such
right, as the case may be, 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 Convertible Preferred Shares; and provided, further, that the
Purchase Contract Agent shall give the Company and the Collateral 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
Convertible Preferred Shares, including notice of any meeting at which holders
of the Convertible Preferred Shares are entitled to vote or solicitation of
consents, waivers or proxies of holders of the Convertible Preferred Shares, 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 Convertible Preferred Shares
(in form and substance satisfactory to the Collateral Agent) as are prepared by
the Company and delivered to the Purchase Contract Agent with respect to the
Pledged Convertible Preferred Shares.

                                   ARTICLE 7

                               RIGHTS AND REMEDIES

     Section 7.01. Rights and Remedies of the Collateral Agent.

     (a) In addition to the rights and remedies specified in Section 5.07 hereof
or otherwise available at law or in equity, after an event of default hereunder,
the Collateral Agent shall have all of the rights and remedies with respect to
the Collateral of a secured party under the UCC (whether or not the UCC 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. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable law,
(1) retention of the Pledged

                                       17
<PAGE>

Convertible Preferred Shares or the Pledged Treasury Securities or (2) sale of
the Pledged Convertible Preferred Shares or the Pledged Treasury Securities in
one or more public or private sales, and in each instance, the Holders'
obligations under the Purchase Contracts and the Purchase Contract Agreement
shall be deemed to have been satisfied in full.

     (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 principal payments of any Pledged
Treasury Securities as provided in Article 3 hereof, in satisfaction of the
Obligations of the Holder of the Units of which such Pledged Treasury Securities
are a part under the related Purchase Contracts, the inability to make such
payments shall constitute an event of default hereunder and the Collateral Agent
shall have and may exercise, with reference to such Pledged Treasury Securities
any and all of the rights and remedies available to a secured party under the
UCC and the TRADES Regulations after default by a debtor, and as otherwise
granted herein or under any other law.

     (c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the liquidation preference
of the Pledged Convertible Preferred Shares and (ii) the principal amount of the
Pledged Treasury Securities subject, in each case, to the provisions of Article
3 hereof, and as otherwise granted herein.

     (d) The Purchase Contract Agent and each Holder of Units agrees that, from
time to time, upon the written request of the Collateral Agent or the Purchase
Contract Agent, such Holder shall execute and deliver such further documents and
do such other acts and things as the Collateral Agent 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 Collateral Agent hereunder, except for
liability for its own grossly negligent acts, its own grossly negligent failure
to act or its own willful misconduct.

     Section 7.02. Remarketing. The Collateral Agent shall, by 11:00 a.m., New
York City time, on the Business Day immediately preceding the Remarketing Date,
without any instruction from any Holder of Hybrid Capital Units, present the
related Pledged Convertible Preferred Shares to be included in the Remarketing
pursuant to the terms hereof and the Purchase Contract Agreement to the
Remarketing Agent for Remarketing. In the event of a Failed Remarketing, the
Convertible Preferred Shares presented to the Remarketing Agent pursuant to this
Section 7.02 for Remarketing shall be redeposited into the Collateral Account.

     Section 7.03. Successful Remarketing. In the event the Collateral Agent
receives Proceeds of the Pledged Convertible Preferred Shares from any
Successful Remarketing prior to the Remarketing Date (after deducting any
Remarketing Fee to the extent permitted under the terms of the Remarketing
Agreement), the Collateral Agent will promptly remit the Proceeds to the
Purchase Contract Agent for payment to the Holders of Hybrid Capital Units, in
accordance with their respective interests. With respect to Separate Convertible
Preferred Shares, any Proceeds of such Remarketing (after deducting any
Remarketing Fee to the extent permitted under the terms of the Remarketing
Agreement) attributable to the Separate

                                       18
<PAGE>

Convertible Preferred Shares will be remitted to the Custodial Agent for payment
to the holders of Separate Convertible Preferred Shares.

     Section 7.04. Substitutions. Whenever a Holder has the right to substitute
Treasury Securities, Convertible Preferred Shares or security entitlements for
any of them, as the case may be, for financial assets held in the Collateral
Account, such substitution shall not constitute a novation of the security
interest created hereby.

                                   ARTICLE 8

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

     Section 8.01. Representations and Warranties. Each Holder from time to
time, acting through the Purchase Contract Agent as 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 represents
and warrants to the Collateral Agent (with respect to such Holder's interest in
the Collateral), which representations and warranties shall be deemed repeated
on each day a Holder Transfers Collateral, 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 for credit to the Collateral
Account, 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 Article 2 hereof;

     (c) upon the Transfer of the Collateral to the Collateral Agent for credit
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 securities 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
Article 4 hereof); and

     (d) the execution and performance by the Holder of its obligations under
this Agreement will not result in the creation of any security interest, lien or
other encumbrance on the Collateral other than the security interest and lien
granted under Article 2 hereof or violate any provision of any existing law or
regulation applicable to it or of any mortgage, charge, pledge, indenture,
contract or undertaking to which it is a party or which is binding on it or any
of its assets.

     Section 8.02. 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:

                                       19
<PAGE>

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

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

                                    ARTICLE 9

    THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES INTERMEDIARY

     It is hereby agreed as follows:

     Section 9.01. Appointment, Powers and Immunities. 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. The Collateral Agent, the Custodial Agent and
the Securities Intermediary shall:

     (a) 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 the Collateral Agent, the Custodial Agent or the
Securities Intermediary, nor shall the Collateral Agent, the Custodial Agent and
the Securities Intermediary be bound by the provisions of any agreement by any
party hereto beyond the specific terms hereof;

     (b) 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, any
Collateral or the Purchase Contract Agreement or any other document referred to
or provided for herein or therein or for any failure by the Company or any other
Person (except the Collateral Agent, the Custodial Agent or the Securities
Intermediary as the case may be) to perform any of its obligations hereunder or
thereunder or for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;

     (c) not be required to initiate or conduct any litigation or collection
proceedings hereunder (except, in the case of the Collateral Agent, pursuant to
directions furnished under Section 9.02 hereof, subject to Section 9.08 hereof);

     (d) 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; and

                                       20
<PAGE>

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

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

     No provision of this Agreement shall require the Collateral Agent,
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, Custodial Agent or the
Securities Intermediary be liable for any amount in excess of the Value of the
Collateral.

     Section 9.02. Instructions of the Company. The Company shall have the
right, by one or more written instruments executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (a) such direction shall not conflict
with the provisions of any law or of this Agreement or involve the Collateral
Agent in personal liability and (b) the Collateral Agent shall be indemnified to
its satisfaction as provided herein. Nothing contained in this Section 9.02
shall impair the right of the Collateral Agent in its discretion to take any
action or omit to take any action which it deems proper and which is not
inconsistent with such direction.

     Section 9.03. Reliance by Collateral Agent and the Securities Intermediary.
The Custodial Agent, the Collateral Agent and the Securities Intermediary shall
be entitled to rely conclusively upon any certification, order, judgment,
opinion, notice or other written communication (including, without limitation,
any thereof by e-mail or similar electronic means or facsimile) reasonably
believed by it to be genuine 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 consult with and conclusively rely
upon advice, opinions and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be. As to any matters not expressly provided for by this Agreement,
the Collateral Agent, the Custodial Agent or the Securities Intermediary shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company.

     Section 9.04. Certain Rights. (a) Whenever in the administration of the
provisions of this Agreement the Collateral Agent, the Custodial Agent or the
Securities Intermediary shall deem it necessary or desirable that a matter be
proved or established prior to taking, or omitting to take, any action
hereunder, or suffering to exist any state of events, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of bad faith on the part of the Collateral Agent, the Custodial Agent or
the Securities Intermediary be deemed to be conclusively proved and established
by a certificate signed by one of the Company's officers, and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary and such
certificate shall be full warrant to the Collateral Agent, the

                                       21
<PAGE>

Custodial Agent or the Securities Intermediary for any action taken, suffered or
omitted by it under the provisions of this Agreement upon reliance thereon.

     (b) None of the Collateral Agent, the Custodial Agent or the Securities
Intermediary shall be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, entitlement order, approval or other paper or
document.

     Section 9.05. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Collateral Agent, the Custodial Agent or the
Securities Intermediary may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Collateral Agent, the Custodial Agent or the
Securities Intermediary shall be a party, or any Person succeeding to the
business of the Collateral Agent, the Custodial Agent or the Securities
Intermediary shall be the successor of the Collateral Agent, the Custodial Agent
or the Securities Intermediary hereunder without the execution or filing of any
paper with any party hereto or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law
to effect such succession, anything herein to the contrary notwithstanding.

     Section 9.06. 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 Company, the Purchase Contract Agent, any other
Person interested herein and any Holder of Units (and any of their respective
subsidiaries or affiliates) as if they 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 or the Securities Intermediary and their
affiliates may accept fees and other consideration from the Company, the
Purchase Contract Agent and any Holder of Units without having to account for
the same to the Company; provided that each of the Custodial Agent, the
Collateral Agent and the Securities Intermediary covenants and agrees with the
Company that it shall not accept, receive or permit there to be created in favor
of itself 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 other than the lien created by the Pledge or
statutory lien in favor of the Securities Intermediary.

     Section 9.07. Non-Reliance on the Collateral Agent, the Custodial Agent and
the Securities Intermediary. None of the Custodial Agent, the Collateral Agent
or the Securities Intermediary 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. None
of the Collateral Agent, the Custodial Agent or the Securities Intermediary
shall have any duty or responsibility to provide the Company with any credit or
other information concerning the affairs, financial condition or business of the
Purchase Contract Agent or any Holder of Units (or any of their respective
affiliates) that may come into the possession of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or any of their respective
affiliates.

                                       22
<PAGE>

     Section 9.08. Compensation and Indemnity.

     The Company agrees to:

     (a) pay 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, the Custodial Agent or the
Securities Intermediary, as the case may be, for all services rendered by them
hereunder;

     (b) indemnify, defend and hold harmless the Collateral Agent, the Custodial
Agent, the Securities Intermediary and each of their respective directors,
officers, agents and employees (collectively, with the Collateral Agent, the
Custodial Agent and the Securities Intermediary, the "INDEMNITEES"), harmless
from and against any and all claims, liabilities, losses, damages, fines,
penalties and expenses (including reasonable fees and expenses of counsel)
(collectively, "LOSSES" and individually, a "LOSS") that may be imposed on,
reasonably incurred by, or asserted against, the Indemnitees or any of them for
following any instructions or other directions upon which any of the Indemnitees
is entitled to rely pursuant to the terms of this Agreement, provided that such
Indemnitee has not acted with gross negligence or bad faith or engaged in
willful misconduct with respect to the specific Loss against which
indemnification is sought; and

     (c) in addition to and not in limitation of paragraph (b) immediately
above, indemnify and hold the Indemnitees and each of them harmless from and
against any and all Losses that may be imposed on, incurred by or asserted
against, the Indemnitees or any of them in connection with or arising out of the
Collateral Agent's, the Custodial Agent's or the Securities Intermediary's
acceptance, performance or exercise of its rights, powers and duties under this
Agreement, provided the Collateral Agent, the Custodial Agent or the Securities
Intermediary has not acted with gross negligence or bad faith or engaged in
willful misconduct with respect to the specific Loss against which
indemnification is sought, including the Indemnitees' reasonable costs and
expenses of defending themselves against any claim (whether asserted by the
Company, a Holder or any other Person) or liability in connection with the
exercise or performance of any of the Collateral Agent's, Custodial Agent's or
the Securities Intermediary's powers or duties hereunder or thereunder or of
enforcing the provisions of this Section and Section 11.07.

     The provisions of this Section and Section 9.08 shall survive the
resignation or removal of the Collateral Agent, Custodial Agent or the
Securities Intermediary and the termination of this Agreement.

     Section 9.09. 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, then at its sole option, each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall be entitled,
after prompt notice to the Company and the Purchase Contract Agent, 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 the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall not
be or become liable in any way to any of the parties

                                       23
<PAGE>

hereto for its failure or refusal to comply with such conflicting claims,
demands or instructions. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act until either:

     (a) 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 satisfactory to the Collateral
Agent, the Custodial Agent or the Securities Intermediary; or

     (b) the Collateral Agent, the Custodial Agent or the Securities
Intermediary shall have received security or an indemnity satisfactory to it
sufficient to save it harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which it may incur by reason of its acting at
the expense of the Company.

     The Collateral Agent, the Custodial Agent and the Securities Intermediary
may in addition elect to commence an interpleader action or seek other judicial
relief or orders as the Collateral Agent or the Custodial Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, none of
the Collateral Agent, the Custodial Agent or the Securities Intermediary shall
be required to take any action that is in its opinion contrary to law or to the
terms of this Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.

     Section 9.10. Resignation of the Collateral Agent, the Custodial Agent and
the Securities Intermediary.

     (a) Subject to the appointment and acceptance of a successor Collateral
Agent, Custodial Agent or the Securities Intermediary as provided below:

          (i) the Collateral Agent, the Custodial Agent and the Securities
     Intermediary may resign at any time by giving notice thereof to the Company
     and the Purchase Contract Agent as attorney-in-fact for the Holders of
     Units;

          (ii) the Collateral Agent, the Custodial Agent and the Securities
     Intermediary may be removed at any time by the Company; and

          (iii) if the Collateral Agent, the 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, the Custodial Agent or
     the Securities Intermediary may be removed by the Purchase Contract Agent,
     acting at the direction of the Holders of a majority of the Units.

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 (iii) of this Section 9.10(a). Upon any such resignation or
removal, the Company shall have the right to appoint a successor Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, which
shall not be an Affiliate of the Purchase Contract Agent. If no successor

                                       24
<PAGE>

Collateral Agent, Custodial Agent or the Securities Intermediary shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Collateral Agent's, Custodial Agent's or the Securities Intermediary's
giving of notice of resignation or the Company's or the Purchase Contract
Agent's giving notice of such removal, then the retiring or removed Collateral
Agent, Custodial Agent or the Securities Intermediary may petition any court of
competent jurisdiction, at the expense of the Company, for the appointment of a
successor Collateral Agent, Custodial Agent or the Securities Intermediary. The
Collateral Agent, the Custodial Agent and the Securities Intermediary shall each
be a bank or a national banking association which has an office (or an agency
office) in New York City with a combined capital and surplus of at least
$2,000,000,000. Upon the acceptance of any appointment as Collateral Agent,
Custodial Agent or the Securities Intermediary hereunder by a successor
Collateral Agent, Custodial Agent or the Securities Intermediary, as the case
may be, such successor Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, and
the retiring Collateral Agent, Custodial Agent or the Securities Intermediary,
as the case may be, shall take all appropriate action, subject to payment of any
amounts then due and payable to it hereunder, to transfer any money and property
held by it hereunder (including the Collateral) to such successor. The retiring
Collateral Agent, Custodial Agent or the Securities Intermediary shall, upon
such succession, be discharged from its duties and obligations as Collateral
Agent, Custodial Agent or the Securities Intermediary hereunder. After any
retiring Collateral Agent's, Custodial Agent's or the Securities Intermediary's
resignation hereunder as Collateral Agent, Custodial Agent or the Securities
Intermediary, the provisions of this Article 9 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 the Securities
Intermediary. Any resignation or removal of the Collateral Agent, Custodial
Agent or the Securities Intermediary hereunder, at a time when such Person is
acting as the Collateral Agent, Custodial Agent or the Securities Intermediary,
shall be deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be.

     (b) Since JPMorgan Chase Bank is serving as the Collateral Agent hereunder
and the Purchase Contract Agent under the Purchase Contract Agreement, if an
event of default (other than an event of default occurring as a result of a
Failed Remarketing) occurs hereunder or under the Purchase Contract Agreement,
JPMorgan Chase Bank will resign as the Collateral Agent, but continue to act as
the Purchase Contract Agent. A successor Collateral Agent will be appointed in
accordance with the terms hereof.

     Section 9.11. 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
selected in good faith. The appointment of agents pursuant to this Section 9.11
shall be subject to prior written consent of the Company, which consent shall
not be unreasonably withheld.

                                       25
<PAGE>

     Section 9.12. Survival. The provisions of this Article 9 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent, the Custodial Agent or the Securities Intermediary.

     Section 9.13. Exculpation. Anything contained in this Agreement to the
contrary notwithstanding, in no event shall the Collateral Agent, the Custodial
Agent or the Securities Intermediary or their officers, directors, employees or
agents be liable under this Agreement to the Company or any third party for (i)
indirect, special, punitive, or consequential loss or damage of any kind
whatsoever, including, but not limited to, lost profits, whether or not the
likelihood of such loss or damage was known to the Collateral Agent, the
Custodial Agent or the Securities Intermediary or any of them and regardless of
the form of action or (ii) any failure or delay in the performance of the
obligations of the Purchase Contract Agent under this Agreement or the Pledge
Agreement arising out of, or caused directly or indirectly by, circumstances
beyond its reasonable control, including, without limitation, acts of God,
earthquakes, fires, floods, wars, terrorist acts, sabotage, civil or military
disturbances, riots, epidemics, interruptions, loss or malfunctions of
utilities, computer (hardware or software) or communications service, or labor
disputes.

                                   ARTICLE 10

                                    AMENDMENT

     Section 10.01. Amendment Without Consent of Holders. Without the consent of
any Holders, the Company, when authorized by a Board Resolution, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, at any time and from time to time, may amend this Agreement, in
form satisfactory to the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, to:

     (a) evidence the succession of another Person to the obligations of the
Company in connection with any succession pursuant to the terms of the Purchase
Contract Agreement;

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

     (c) add to the covenants of the Company for the benefit of the Holders, or
surrender any right or power herein conferred upon the Company, provided that
such covenants or such surrender do not adversely affect the validity,
perfection or priority of the Pledge created hereunder;

     (d) make provision with respect to the rights of Holders of Units pursuant
to adjustments in the Settlement Rate pursuant to Section 5.04 of the Purchase
Contract Agreement;

     (e) cure any ambiguity (of formal defect), correct or supplement any
provisions herein which may be inconsistent with any other such provisions
herein, provided that such action shall not adversely affect the interests of
the Holders in any material respect; and

                                       26
<PAGE>

     (f) make any other provisions with respect to such matters or questions
arising under this Agreement, which the Company, the Collateral Agent, the
Securities Intermediary and the Custodial Agent may deem necessary or advisable,
provided that such action will not adversely affect the interests of the
Holders.

     Section 10.02. 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, including without limitation the consent of the Holders obtained in
connection with a tender or an exchange offer or by Act of such Holders
delivered to the Company, the Purchase Contract Agent, the Custodial Agent, the
Securities Intermediary and the Collateral Agent, as the case may be, and the
Company, when duly authorized by a Board Resolution, may amend this Agreement
for the purpose of modifying in any manner the provisions of this Agreement;
provided, however, that no such modification shall, without the unanimous
consent of the Holders of each outstanding Purchase Contract affected by such
modification:

     (a) change any payment date;

     (b) change the amount or type of Pledged Securities related to the Purchase
Contracts, impair the right of the holder of any Pledged Securities to receive
distributions on the Pledged Securities or otherwise adversely affect Holders'
rights in or to the Pledged Securities;

     (c) change the place or currency of payment or reduce any Contract
Adjustment Payments;

     (d) impair the right to institute suit for the enforcement of the Purchase
Contracts or payment of any contract adjustment payments;

     (e) reduce the number of Ordinary Shares purchasable under the Purchase
Contracts other than pursuant to Settlement Rate adjustments, increase the price
to purchase Ordinary Shares upon settlement of the Purchase Contract, change the
Purchase Contract Settlement Date, the right to Early Settlement or the Holders'
Specified Early Merger Settlement Right or otherwise adversely affect the
Holders' rights under the Purchase Contracts; or

     (f) reduce the above stated percentage of outstanding Purchase Contracts
the consent of the holders of which is required for the modification or
amendment of the provisions of this Agreement;

provided that if any amendment or proposal referred to above would adversely
affect only the Hybrid Capital Units or only the Treasury 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 such amendment or proposal, and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than a majority of such class; provided, further, that the consent
of each of the holders of each outstanding Purchase Contract of such class
affected thereby shall be required to approve any amendment or proposal
specified in clauses (a) through (f) above.

     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.

                                       27
<PAGE>

     Section 10.03. Execution of Amendments. In executing any amendment
permitted by this Article, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 7.01 of the Purchase Contract Agreement with
respect to the Purchase Contract Agent) shall be fully authorized and 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. The Collateral Agent, Custodial Agent, the Securities Intermediary
and Purchase Contract Agent may, but shall not be obligated to, enter into any
such amendment which affects their own respective rights, duties or immunities
under this Agreement or otherwise.

     Section 10.04. Effect of Amendments. Upon the execution of any amendment
under this Article, 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 10.05. Reference of Amendments. Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the Collateral
Agent or the Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and the Collateral Agent as to any matter provided for
in such amendment. If the Company shall so determine, new Certificates so
modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders and
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Certificates representing Outstanding Units.

                                   ARTICLE 11

                                  MISCELLANEOUS

     Section 11.01. No Waiver. No failure on the part of the Company, the
Collateral Agent, the Custodial Agent or the Securities Intermediary or any of
their respective agents to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the Company,
the Collateral Agent, the Custodial Agent, the Securities Intermediary, or any
of their respective 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 11.02. Governing Law; Submission to Jurisdiction; Service of
Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

     (b) The Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Holders from time to time of the Units, acting through the
Purchase

                                       28
<PAGE>

Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary 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 agrees that service of all writs, process and summonses in
any suit, action or proceeding brought in connection with this Agreement against
the Company in any court of the State of New York or any United States federal
court, in each case, sitting in the Borough of Manhattan, City and State of New
York, may be made upon CT Corporation System at 111 Eighth Avenue, New York, New
York 10011, whom the Company irrevocably appoints as its authorized agent for
service of process. The Company represents and warrants that CT Corporation
System has agreed to act as the Company's agent for service of process. The
Company agrees that such appointment shall be irrevocable until the irrevocable
appointment by the Company of a successor in The City of New York as its
authorized agent for such purpose and the acceptance of such appointment by such
successor. The Company further 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. If CT
Corporation System shall cease to act as the agent for service of process for
the Company, the Company shall appoint without delay, another such agent and
provide prompt written notice to the Purchase Contract Agent of such
appointment.

     Section 11.03. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy if promptly
confirmed by telephone) delivered to the intended recipient at the "Address For
Notices" specified below its name on the signature pages hereof or, as to any
party, at such other address as shall be designated by such party in a notice to
the other parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.

     Section 11.04. 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 11.05. 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.

                                       29
<PAGE>

     Section 11.06. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.

     Section 11.07. Expenses, Etc. The Company agrees to reimburse the
Collateral Agent, the Custodial Agent and the Securities Intermediary for:

     (a) all reasonable costs and expenses of the Collateral Agent, the
Custodial Agent and the Securities Intermediary (including, without limitation,
the reasonable fees and expenses of counsel to the Collateral Agent, the
Custodial Agent and the Securities Intermediary), reasonably incurred 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 counsel) reasonably incurred 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
11.07;

     (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 reasonably incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated hereby;

     (d) all reasonable fees and expenses of any agent or advisor appointed by
the Collateral Agent and consented to by the Company under Section 9.11 of this
Agreement;

     (e) any out-of-pocket costs and expenses reasonably incurred by the
Collateral Agent, the Custodial Agent and the Securities Intermediary in
connection with the exercise of their rights or performance of their obligations
and duties under Section 9.10 hereof; and

     (f) any other reasonable out-of-pocket costs and expenses reasonably
incurred by the Collateral Agent, the Custodial Agent and the Securities
Intermediary in connection with the performance of their duties hereunder.

     Section 11.08. 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;

                                       30
<PAGE>

     (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 the 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 11.09. Notice of Specified Merger and Termination Event. Upon the
occurrence of a Specified Merger or a Termination Event, the Company shall
deliver written notice to the Purchase Contract Agent, the Collateral Agent and
the Securities Intermediary. Upon the written request of the Collateral Agent or
the Securities Intermediary, the Company shall inform such party whether or not
a Specified Merger or a Termination Event has occurred.

     Section 11.10. Regarding the Purchase Contract Agent. All of the rights,
privileges, protections, indemnities and immunities afforded the Purchase
Contract Agent pursuant to the Purchase Contract Agreement are hereby
incorporated herein as if set forth herein in full.

     Section 11.11. Book-Entry Interests. Unless and until definitive, fully
registered Certificates have been issued to Beneficial Owners pursuant to
Section 3.09 of the Purchase Contract Agreement, the Collateral Agent and
Custodial Agent shall be entitled to deal with the Depositary for all purposes
of this Agreement (including the receipt or transfer of any funds hereunder) as
the Holder of the Units, shall have no obligation to the Beneficial Owners and
the rights of the Beneficial Owners shall be exercised only through the
Depositary and shall be limited to those established by law and agreement
between such Beneficial Owners and the Depositary or the Depositary
Participants. The provisions of Sections 3.06 and 3.07 of the Purchase Contract
Agreement are hereby made applicable to the Collateral Agent and Custodial
Agent, mutatis mutandis, as if they were the Purchase Contract Agent as referred
to therein.

     Section 11.12. Non-Recourse Obligation. The obligations of the Holders to
pay the Purchase Price are non-recourse obligations and, except to the extent
satisfied by Early Settlement, Specified Merger Early Settlement or Cash
Settlement, are payable solely out of the proceeds of the Collateral (and any
proceeds therefrom) pledged to secure the obligations of the Holders, and in no
event will Holders be liable for any deficiency between the proceeds of any
disposition of Collateral in accordance herewith and the Purchase Price.

                                       31
<PAGE>

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

SCOTTISH RE GROUP LIMITED             JPMORGAN CHASE BANK,
                                        as Purchase Contract Agent and as
                                        attorney-in-fact of the Holders from
                                        time to time of the Units

By:                                   By:
   -----------------------------          -----------------------------------
   Name:                                  Name:
   Title:                                 Title:

Address for Notices:                  Address for Notices:

Scottish Re Group Limited             JPMorgan Chase Bank,
P.O. Box 2939                         4 New York Plaza, 15th Floor
Crown House, Third Floor              New York, New York 10004
4 Par-la-Ville Road                   Telephone:  (212) 623-6783
Hamilton HMMX, Bermuda                Fax:  (212) 623-6167
Telephone:  (441) 295-4451            Attention:  Institutional Trust Services
Attention:  General Counsel

JPMORGAN CHASE BANK,
     as Collateral Agent, Custodial Agent and
Securities Intermediary

By:
   -----------------------------
   Name:
   Title:

Address for Notices:

JPMorgan Chase Bank,
4 New York Plaza, 15th Floor
New York, New York 10004
Telephone:  (212) 623-6783
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

                                       32
<PAGE>

                                                                       EXHIBIT A

                                   INSTRUCTION
                          FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT
                          (Creation of Treasury Units)

JPMorgan Chase Bank,
  as Collateral Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

Re:      _____ Hybrid Capital Units of Scottish Re Group Limited (the "Company")

                The securities account of JPMorgan Chase Bank, as
                Collateral Agent, maintained by the Securities
                Intermediary and designated "JPMorgan Chase Bank, as
                Collateral Agent of Scottish Re Group Limited, as
                pledgee of JPMorgan Chase Bank, as the Purchase
                Contract Agent on behalf of and as attorney-in-fact
                for the Holders" (the "Collateral Account")

     Please refer to the Pledge Agreement, dated as of December 17, 2003 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent and the undersigned, as Purchase Contract
Agent and as attorney-in-fact for the holders of Hybrid Capital Units from time
to time. Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

     We hereby notify you in accordance with Section 5.02 of the Pledge
Agreement that the holder of securities named below (the "Holder") has elected
to substitute $_____ Value of Treasury Securities or security entitlements with
respect thereto in exchange for an equal Value of Pledged Convertible Preferred
Shares relating to _____ Hybrid Capital Units and has delivered to the
undersigned a notice stating that the Holder has Transferred such Treasury
Securities or security entitlements with respect thereto to the Securities
Intermediary, for credit to the Collateral Account.

<PAGE>

     We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto have
been credited to the Collateral Account, to release to the undersigned an equal
Value of Pledged Convertible Preferred Shares in accordance with Section 5.02 of
the Pledge Agreement.

Date:                               JPMORGAN CHASE BANK,
                                        as Purchase Contract Agent and as
                                        attorney-in-fact of the Holders from
                                        time to time of the Units

                                    By:
                                        ------------------------------------
                                        Name:
                                        Title:

<PAGE>

Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements with respect thereto for the Pledged
Convertible Preferred Shares:

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

-----------------------------------
            Address

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

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

<PAGE>

                                                                       EXHIBIT B

                                   INSTRUCTION
                          FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT
                      (Recreation of Hybrid Capital Units)

JPMorgan Chase Bank,
  as Collateral Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

     Re: _____ Treasury Units of Scottish Re Group Limited (the "Company")

     Please refer to the Pledge Agreement dated as of December 17, 2003 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent, and the undersigned, as Purchase Contract
Agent and as attorney-in-fact for the holders of Treasury Units from time to
time. Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.

     We hereby notify you in accordance with Section 5.03(a) of the Pledge
Agreement that the holder of securities named below (the "Holder") has elected
to substitute $____ Value of Convertible Preferred Shares in exchange for $_____
Value of Pledged Treasury Securities and has delivered to the undersigned a
notice stating that the holder has Transferred such Convertible Preferred Shares
to the Collateral Agent, for credit to the Collateral Account.

     We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Convertible Preferred Shares have been credited to the
Collateral Account, to release to the undersigned $_____ Value of Treasury
Securities or security entitlements with respect thereto related to _____
Treasury Units of such Holder in accordance with Section 5.03(a) of the Pledge
Agreement.

                                            JPMORGAN CHASE BANK,
                                              as Purchase Contract Agent

Dated:                                      By:
      --------------------------                -----------------------------
                                                Name:
                                                Title:

<PAGE>

Please print name and address of Holder electing to substitute Convertible
Preferred Shares or security entitlements with respect thereto for Pledged
Treasury Securities:

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

------------------------------------
            Address

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

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

<PAGE>

                                                                       EXHIBIT C

                    NOTICE OF CASH SETTLEMENT FROM COLLATERAL
                        AGENT TO PURCHASE CONTRACT AGENT
                            (Cash Settlement Amounts)

JPMorgan Chase Bank,
  as Purchase Contract Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

Re:   ______ Hybrid Capital Units of Scottish Re Group Limited (the "Company")
      ______ Treasury Units of the Company

     Please refer to the Pledge Agreement dated as of December 17, 2003 (the
"Pledge Agreement"), by and among you, the Company, and JPMorgan Chase Bank, as
Collateral Agent, Custodial Agent and Securities Intermediary. Unless otherwise
defined herein, terms defined in the Pledge Agreement are used herein as defined
therein.

     In accordance with Section 5.05(c) of the Pledge Agreement, we hereby
notify you that as of 5:00 p.m. (New York City time) on the fifth Trading Day
immediately preceding _____ (the "Purchase Contract Settlement Date"), we have
received (i) $_____ in immediately available funds paid in an aggregate amount
equal to the Purchase Price due to the Company on the Purchase Contract
Settlement Date with respect to ____ Hybrid Capital Units and (ii) based on the
funds received set forth in clause (i) above, an aggregate liquidation
preference of $_____ of Pledged Convertible Preferred Shares are to be tendered
for purchase in the Remarketing.

                                        JPMORGAN CHASE BANK,
                                          as Collateral Agent

Dated:                                      By:
      --------------------------                -----------------------------
                                                Name:
                                                Title:

<PAGE>

                                                                       EXHIBIT D

              INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING

JPMorgan Chase Bank,
  as Custodial Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

Re: Convertible Preferred Shares of Scottish Re Group Limited (the "Company")

     The undersigned hereby notifies you in accordance with Section 5.07(c) of
the Pledge Agreement, dated as of December 17, 2003 (the "Pledge Agreement"),
among the Company, you, as Collateral Agent, Custodial Agent and Securities
Intermediary, and JPMorgan Chase Bank, as the Purchase Contract Agent and as
attorney-in-fact for the holders of Hybrid Capital Units from time to time, that
the undersigned elects to deliver $____ aggregate liquidation preference of
Separate Convertible Preferred Shares for delivery to the Remarketing Agent
prior to 10:00 a.m. (New York City time) on the fifth Trading Day immediately
preceding the ____ Remarketing Date for remarketing pursuant to Section 5.07(c)
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 Separate Convertible Preferred Shares tendered
hereby. Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.

     The undersigned hereby instructs you, upon receipt of the Proceeds of such
remarketing from the Remarketing Agent, to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions." The undersigned hereby instructs you, in the event of a
Failed Remarketing, upon receipt of the Separate Convertible Preferred Shares
tendered herewith from the Remarketing Agent, to deliver such Separate
Convertible Preferred Shares 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 Separate Convertible Preferred Shares tendered hereby and that the
undersigned is the record owner of any Convertible Preferred Shares tendered
herewith in physical form or a participant in The Depositary Trust Company
("DTC") and the beneficial owner of any Convertible Preferred Shares tendered
herewith by book-entry transfer to your account at DTC, (ii) agrees to be bound
by the terms and conditions of Section 5.07(c) of the Pledge Agreement and (iii)
acknowledges and agrees that after 11:00 a.m. (New York City time) on the fifth
Trading Day immediately preceding the Remarketing Date, such election shall
become an irrevocable election to have such

<PAGE>

Separate Convertible Preferred Shares remarketed in the Remarketing and that the
Separate Convertible Preferred Shares tendered herewith will only be returned in
the event of a Failed Remarketing.

Dated:
      --------------------------------
                                          -------------------------------------

                                          By:
                                             ----------------------------------
                                             Name:
                                             Title:
                                             Signature Guarantee:
                                                                  -------------

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

-------------------------------------
              Address

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

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

<PAGE>

A. PAYMENT INSTRUCTIONS

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

Name(s)

(Please Print)
Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

B. DELIVERY INSTRUCTIONS

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

(Please Print) Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

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

-----------------------------------------
DTC Account Number

Name of Account Party:
                       ------------------------------

<PAGE>

                                                                       EXHIBIT E

                    INSTRUCTION TO CUSTODIAL AGENT REGARDING
                           WITHDRAWAL FROM REMARKETING

JPMorgan Chase Bank,
  as Custodial Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Fax:  (212) 623-6167
Attention:  Institutional Trust Services

Re: Convertible Preferred Shares of Scottish Re Group Limited (the "Company")

     The undersigned hereby notifies you in accordance with Section 5.07(c) of
the Pledge Agreement, dated as of December 17, 2003 (the "Pledge Agreement"),
among the Company and you, as Collateral Agent, Custodial Agent and Securities
Intermediary, and JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the holders of Hybrid Capital Units from time to time, that
the undersigned elects to withdraw the $____ aggregate liquidation preference of
Separate Convertible Preferred Shares delivered to the Collateral Agent on ___,
200__ for remarketing pursuant to Section 5.07(c) of the Pledge Agreement. The
undersigned hereby instructs you to return such Convertible Preferred Shares to
the undersigned in accordance with the undersigned's instructions. With this
notice, the Undersigned hereby agrees to be bound by the terms and conditions of
Section 5.07(c) of the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.

<PAGE>

Dated:
      --------------------------------
                                          -------------------------------------

                                          By:
                                             ----------------------------------
                                             Name:
                                             Title:
                                             Signature Guarantee:
                                                                 --------------

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

-------------------------------------
              Address

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

-------------------------------------<PAGE>

                            SCOTTISH RE GROUP LIMITED

                          CONVERTIBLE PREFERRED SHARES

                              REMARKETING AGREEMENT

                                                               December 17, 2003

BEAR, STEARNS & CO. INC.
383 Madison Avenue
New York, New York 10179

Ladies and Gentlemen:

                  Scottish Re Group Limited, a Cayman Islands exempted company
(the "Company"), is issuing today 5,000,000 shares of its Convertible Preferred
Shares, $25 liquidation preference per share(and may issue up to an additional
750,000 shares to the extent that the over-allotment option is exercised
pursuant to the Underwriting Agreement (as defined below)) (the "Convertible
Preferred Shares"), pursuant to a Certificate of Designations (the "Certificate
of Designations") duly adopted by a resolution of the duly authorized committee
of the Board of Directors of the Company on December 11, 2003, and a Purchase
Contract Agreement, dated as of December 17, 2003 (the "Purchase Contract
Agreement"), between the Company and JPMorgan Chase Bank, as purchase contract
agent. Capitalized terms used but not defined in this Remarketing Agreement
(this "Agreement") shall have the meanings set forth in the Certificate of
Designations or the Purchase Agreement, as the case may be.

                  The Remarketing (as defined below) of the Convertible
Preferred Shares is provided for in the Certificate of Designations and the
Purchase Contract Agreement. As used in this Agreement, the term "Remarketed
Convertible Preferred Shares" means the Convertible Preferred Shares subject to
the Remarketing on the fourth Trading Day prior to the Purchase Contract
Settlement Date; the term "Remarketing Procedures" means the procedures in
connection with the Remarketing of the Convertible Preferred Shares described in
the Certificate of Designations, the Purchase Contract Agreement and this
Agreement; and the term "Remarketing" means the remarketing of the Remarketed
Convertible Preferred Shares pursuant to the Remarketing Procedures.

                  It is understood and agreed between the parties hereto that
the Remarketing shall be conducted for the benefit of the holders of the
Convertible Preferred Shares.

                  Section 1. Appointment and Obligations of the Remarketing
Agent. (a) The Company hereby appoints Bear, Stearns & Co. Inc., and Bear,
Stearns & Co. Inc. hereby accepts appointment, as exclusive remarketing agent
(the "Remarketing Agent") for the purpose of (i) Remarketing the Remarketed
Convertible Preferred Shares on behalf of the holders thereof and

<PAGE>

                                                                               2

(ii) performing such other duties as are assigned to the Remarketing Agent in
the Remarketing Procedures, all in accordance with and pursuant to the
Remarketing Procedures.

                  (b) The Remarketing Agent agrees (i) to use commercially
reasonable efforts to remarket the Remarketed Convertible Preferred Shares
included in the Remarketing, (ii) to notify the Company promptly of the Reset
Rate and (iii) to carry out such other duties as are assigned to the Remarketing
Agent in the Remarketing Procedures, all in accordance with the provisions of
the Remarketing Procedures.

                  (c) On the fourth Trading Day immediately preceding the
Purchase Contract Settlement Date (the "Remarketing Date"), the Remarketing
Agent shall use commercially reasonable efforts to remarket, at a minimum price
of 100.25% of the aggregate liquidation preference thereof the Remarketed
Convertible Preferred Shares included in the Remarketing.

                  (d) If, as a result of the efforts described in Section 1(b),
the Remarketing Agent determines that it will be able to remarket all Remarketed
Convertible Preferred Shares included in the Remarketing for purchase at a
minimum price of 100.25% of the aggregate liquidation preference of such
Remarketed Convertible Preferred Shares prior to 4:00 p.m., New York City time,
on the Remarketing Date, the Remarketing Agent shall determine the Reset Rate,
which shall be the rate per annum (rounded to the nearest one-thousandth (0.001)
of one percent) that the Remarketing Agent determines, in its sole judgment, to
be the lowest rate per annum, but not less than the original Dividend Rate on
the Convertible Preferred Shares, that will enable it to remarket, at such
price, all of the Remarketed Convertible Preferred Shares tendered or deemed
tendered for Remarketing.

                  (e) If none of the holders of Remarketed Convertible Preferred
Shares or the holders of Hybrid Capital Units elects to have Remarketed
Convertible Preferred Shares remarketed in the Remarketing, the Remarketing
Agent shall, in its sole discretion, determine the rate that would have been
established had a Remarketing of all the Convertible Preferred Shares been held
on the Remarketing Date, and such rate shall be the Reset Rate.

                  (f) If, by 4:30 p.m., New York City time, on the Remarketing
Date, the Remarketing Agent is unable to remarket all Remarketed Convertible
Preferred Shares 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. If a Failed Remarketing
occurs, the Reset Rate will be equal to (i) 3-month LIBOR, plus (ii) a spread as
set forth in the Certificate of Designations.

                  (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 and the Company of the Reset Rate determined in the Remarketing and
the number of Remarketed Convertible Preferred Shares sold in the Remarketing,
(ii) each purchaser (or the Depositary Participant thereof) of the Reset Rate
and the number of Remarketed Convertible Preferred Shares such purchaser is to
purchase and (iii) each purchaser to give instructions to its Depositary
Participant to pay the purchase price on the Purchase Contract Settlement Date
in same day funds against delivery of the Remarketed Convertible Preferred
Shares purchased through the facilities of the Depositary.

<PAGE>

                                                                               3

The purchase price shall include any accrued and unpaid dividends as of the
Remarketing Settlement Date.

                  (h) The Remarketing Agent shall remit (i) to the collateral
agent for the Hybrid Capital Units (the "Collateral Agent") proceeds of the
Remarketed Convertible Preferred Shares subject to the Pledge Agreement, dated
as of December 17, 2003, made by JPMorgan Chase Bank, on behalf of the holders
of Hybrid Capital Units, in favor of the Company (the "Pledge Agreement"), in an
amount equal to the proceeds from the Remarketing (net of the Remarketing Fee)
of such Remarketed Convertible Preferred Shares and (ii) to the Custodial Agent
proceeds from the Remarketing (net of the Remarketing Fee) of such Remarketed
Convertible Preferred Shares.

                  Section 2. Representations, Warranties and Agreements of the
Company. The Company hereby represents and warrants to the Remarketing Agent (i)
on and as of the date hereof, (ii) on and as of the date the Prospectus or other
Remarketing Materials (each, as defined in Section 2(a) below) which are first
distributed in connection with the Remarketing (the "Commencement Date"), (iii)
on and as of the Remarketing Date and (iv) on and as of the Remarketing
Settlement Date that:

                  (a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-104545), and amendments thereto, and related preliminary prospectuses for
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of certain securities (the "Shelf
Securities") of the Company to be sold from time to time by the Company. Such
registration statement, as so amended (including post-effective amendments, if
any), has (i) been prepared by the Company in conformity with the requirements
of the Securities Act, and the rules and regulations (the "Rules and
Regulations") of the Commission thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the Securities Act;
and a registration statement or registration statements on Form S-3, if required
to be filed in connection with the Remarketing, will also be prepared by the
Company in conformity with the requirements of the Securities Act and the Rules
and Regulations and filed with the Commission under the Securities Act. Copies
of such registration statements that have become effective and the amendment or
amendments to such registration statements have been delivered or made available
by the Company to Bear, Stearns & Co. Inc. As used in this Agreement, "Effective
Time" means the date and time as of which the last of such registration
statements that have become effective or may be filed, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time of such last
registration statement; "Preliminary Prospectus" means each prospectus included
in such last registration statement, or amendment thereto, before it became
effective under the Securities Act and any prospectus filed by the Company with
your consent pursuant to Rule 424(a) of the Rules and Regulations; "Registration
Statement" means such last registration statement, as amended at its Effective
Time, including documents incorporated by reference therein at such time and, if
applicable, all information contained in the final prospectus and any prospectus
supplement thereto relating to the Convertible Preferred Shares filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, including any
information deemed to be part of such Registration Statement as of the Effective
Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means the last of such final prospectus relating to the Convertible
Preferred Shares, as first filed pursuant to Rule 424(b) of the Rules and
Regulations and any prospectus supplement thereto relating to the Convertible
Preferred Shares. Reference made herein to any Preliminary Prospectus, the
Prospectus or any other information furnished in writing by the Company to the
Remarketing Agent for distribution to investors in connection with the
Remarketing (the

<PAGE>

                                                                               4

"Remarketing Materials") shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act as of the date of such Preliminary Prospectus or the Prospectus,
as the case may be, or, in the case of Remarketing Materials, referred to as
incorporated by reference therein, and any reference to any amendment or
supplement to any Preliminary Prospectus, the Prospectus or the Remarketing
Materials shall be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date
of such Preliminary Prospectus or the Prospectus incorporated by reference
therein pursuant to Item 12 of Form S-3 or, if so incorporated, the Remarketing
Materials, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the
Company filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement.

                  (b) The Registration Statement conforms (and the Prospectus,
any further amendments or supplements to the Registration Statement or the
Prospectus and any new registration statement, 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 and the Rules and
Regulations, and the Registration Statement, the Prospectus and the Remarketing
Materials do not and will not, as of the Effective Date (as to the Registration
Statement and any amendment thereto), as of the applicable filing date (as to
the Prospectus and any amendment or supplement thereto) and as of the
Commencement Date, Remarketing Date and Purchase Contract Settlement Date (as to
any Remarketing Materials) 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 (i) in the case of the Registration Statement, not
misleading, and (ii) in the case of the Prospectus or any related Preliminary
Prospectus in light of the circumstances under which they were made, not
misleading; provided that no representation and warranty is made as to
information contained in or omitted from the Registration Statement, the
Prospectus or the Remarketing Materials in reliance upon and in conformity with
written information furnished to the Company by the Remarketing Agent
specifically for inclusion therein; and the Commission has not issued an order
preventing or suspending the use of the Registration Statement, any Preliminary
Prospectus, the Prospectus or the Remarketing Materials.

                  (c) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the Securities Act, the Exchange Act, the Rules and Regulations
and the rules and regulations of the Commission under the Exchange Act, and,
when read together with the other information in the Prospectus, at the time the
Registration Statement became effective, did not 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 the light of the
circumstances under which they were made, not misleading.

                  (d) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation or a company limited by
shares in good standing under the laws of its jurisdiction of incorporation.
Each of the Company and its subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect (as hereinafter

<PAGE>

                                                                               5

defined) on the condition (financial or otherwise), results of operations,
business, properties or prospects of the Company and its subsidiaries taken as a
whole. Each of the Company and its subsidiaries has all requisite power and
authority, and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits (collectively, the
"Consents") of and from all public, regulatory or governmental agencies and
bodies, to own, lease and operate its properties and conduct its business as now
being conducted and as described in the Registration Statement, the Prospectus
and any Remarketing Materials, with such exceptions as would not have,
individually or in the aggregate a Material Adverse Effect. No Consent contains
a materially burdensome restriction not adequately disclosed in the Registration
Statement, the Prospectus and any Remarketing Materials.

                  (e) The Company has an authorized capitalization as set forth
in the Prospectus and in any Remarketing Materials; all of the issued shares of
capital stock of the Company has been duly and validly authorized and issued and
is fully paid and non-assessable; and all of the issued shares of capital stock
of each subsidiary of the Company, except as set forth in the Prospectus, are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.

                  (f) The Hybrid Capital Units have been duly authorized by the
Company, and when duly executed by the Company (assuming due execution by the
Purchase Contract Agent as attorney-in-fact for the holders thereof and due
authentication by the Purchase Contract Agent) and delivered by the Company and,
upon payment therefor as set forth herein, will be duly and validly issued and
outstanding, and will constitute valid and binding obligations of the Company
entitled to the benefits of the Purchase Contract Agreement and enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally or by
general equitable principles, regardless of whether enforcement is considered in
a proceeding in equity or at law (the "Bankruptcy Exceptions"), and an implied
covenant of good faith and fair dealing.

                  (g) The Convertible Preferred Shares and Remarketed
Convertible Preferred Shares have been duly authorized by the Company and, when
issued and delivered against payment therefor as provided by the Underwriting
Agreement, dated December 11, 2003 (the "Underwriting Agreement"), between the
Company and Bear, Stearns & Co. Inc., UBS Securities LLC, and J.P. Morgan
Securities Inc. will be duly and validly issued, fully paid as to their stated
price of $25 per share and non-assessable and will not be subject to the
preemptive rights of any person.

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

                  (i) The Purchase Contract Agreement has been duly authorized
by the Company and, when duly executed by the proper officers of the Company
(assuming due execution and delivery by the Purchase Contract Agent) and
delivered by the Company, will constitute a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by the Bankruptcy Exceptions and an
implied covenant of good faith and fair dealing.

<PAGE>

                                                                               6

                  (j) The Pledge Agreement has been duly authorized by the
Company and, when duly executed by the proper officers of the Company (assuming
due execution and delivery by the Purchase Contract Agent and the Collateral
Agent) and delivered by the Company, will constitute a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by the Bankruptcy
Exceptions and an implied covenant of good faith and fair dealing.

                  (k) The Remarketed Convertible Preferred Shares, the
Certificate of Designations and the Remarketing Agreement, will conform to the
descriptions thereof contained in the Prospectus and in any Remarketing
Materials.

                  (l) The execution, delivery and performance of this Agreement,
the Purchase Contract Agreement, the Pledge Agreement and the Remarketing
Agreement and the consummation of the transactions contemplated by this
Agreement, the Purchase Contract Agreement, the Pledge Agreement, the
Remarketing Agreement, the Registration Statement and the Prospectus do not and
will not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to any indenture, mortgage, deed
of trust, loan agreement or other agreement, instrument, franchise, license or
permit to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective properties or assets
may be bound or (ii) violate or conflict with any provision of the memorandum of
association, articles of association, certificate or articles of incorporation,
charter, by-laws or other organizational documents of the Company or any of its
subsidiaries or any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties, operations or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective properties or assets is required to be made or obtained by the
Company for the execution, delivery and performance of this Agreement, the
Purchase Contract Agreement, the Pledge Agreement and the Remarketing Agreement
or the consummation of the transactions contemplated hereby or thereby, by the
Registration Statement and by the Prospectus, including the issuance, sale and
delivery of the Units to be issued, sold and delivered by the Company hereunder,
except (A) the registration under the Securities Act of the Units, the Preferred
Shares and the Ordinary Shares, which has become effective, and (B) such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities,
Blue Sky or insurance securities laws or the rules of the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution of the Units by the Underwriters.

                  (m) Except as disclosed in the Registration Statement and
Prospectus, no holder of securities of the Company has any rights to the
registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Units
contemplated hereby, and any such rights so disclosed have been effectively
waived by the holders thereof.

<PAGE>

                                                                               7

                  (n) Subsequent to the respective dates as of which information
is given in the Registration Statement, the Prospectus and any Remarketing
Materials, except as set forth in the Registration Statement, the Prospectus and
any Remarketing Materials, the Company has not paid any dividends on any class
of its share capital and there has been no material adverse change or any
development involving a prospective material adverse change on (i) the business,
prospects, properties, operations, condition (financial or other), stockholders'
equity or results of operations of the Company and each subsidiary of the
Company, taken as a whole; (ii) the share capital or long-term debt of the
Company; (iii) the Offering; or (iv) the consummation of the transactions
contemplated by this Agreement, the Purchase Contract Agreement, the Pledge
Agreement and the Remarketing Agreement or the Company's performance of its
obligations hereunder (a "Material Adverse Change" or "Material Adverse
Effect"), whether or not arising from transactions in the ordinary course of
business, and since the date of the latest balance sheet presented in the
Registration Statement, the Prospectus and any Remarketing Materials, neither
the Company nor any of its subsidiaries has incurred or undertaken any
liabilities or obligations, direct or contingent, or entered into any
transactions which are material to the Company and its subsidiaries taken as a
whole, except for liabilities or obligations which are reflected in the
Registration Statement, the Prospectus and any Remarketing Materials.

                  (o) The financial statements of the Company, including the
notes thereto, and supporting schedules included or incorporated by reference in
the Registration Statement, the Prospectus and any Remarketing Materials present
fairly in all material respects the financial position of the Company and its
consolidated subsidiaries and the other entities for which financial statements
are included in the Registration Statement, the Prospectus and any Remarketing
Materials as of the dates indicated and condition and results of operations for
the periods specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with U.S. generally
accepted accounting principles ("GAAP") in all material respects applied on a
consistent basis throughout the periods involved; and the supporting schedules
included in the Registration Statement present fairly in all material respects
the information required to be stated therein. No other financial statements or
supporting schedules are required to be included in the Registration Statement,
the Prospectus or any Remarketing Materials. The other financial and statistical
information and data relating to the Company and its consolidated subsidiaries
included in the Registration Statement, the Prospectus and any Remarketing
Materials present fairly in all material respects the information included
therein and have been prepared on a basis consistent with that of the financial
statements included or incorporated by reference in the Registration Statement
and the Prospectus and the books and records of the respective entities
presented therein.

                  (p) Ernst & Young LLP, who have certified the financial
statements and supporting schedules of the Company included or incorporated in
the Registration Statement, are independent public accountants as required by
the Securities Act, the Exchange Act and the Rules and Regulations.

                  (q) Any real property and buildings held under lease or
sublease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries. Neither the Company nor any of
its subsidiaries has received any notice of any claim adverse to their ownership
of any real or

<PAGE>

                                                                               8

personal property or of any claim against the continued possession of any real
property, whether owned or held under lease or sublease by the Company or any of
its subsidiaries.

                  (r) Except as described in the Registration Statement, the
Prospectus and any Remarketing Materials, there is no judicial, regulatory,
arbitral or other legal or governmental proceeding or other litigation, or
arbitration, including routine litigation, to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, individually or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, is reasonably
likely to have a Material Adverse Effect, and to the best of the Company's
knowledge, no such proceeding is threatened or contemplated by governmental
authorities or threatened or contemplated by others.

                  (s) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.

                  (t) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted by the
Rules and Regulations.

                  (u) Neither the Company nor any of its subsidiaries (i) is in
violation of its memorandum of association, articles of association, certificate
or articles of incorporation, charter or by-laws, (ii) is in default (and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) is in violation in
any respect of any statute or any judgment, decree, order, rule or regulation of
any court or governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets,
except in the case of (iii), any violation or default that would not have a
Material Adverse Effect on the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and its
subsidiaries taken as a whole.

                  (v) The Company is not, and upon consummation of the
transactions contemplated hereby, and at all times up to and including the
application of net proceeds as described in the Prospectus or any Remarketing
Materials, will not be, subject to registration as an "investment company" under
the Investment Company Act of 1940.

                  (w) Each of the Company and its subsidiaries which is engaged
in the business of insurance or reinsurance (each, an "Insurance Subsidiary" and
together, the "Insurance Subsidiaries") holds such insurance license,
certificates and permits from governmental authorities (including, without
limitation, from the insurance regulatory agencies of the various jurisdictions
where it conducts business) (the "Insurance Licenses") as are necessary to the
conduct of its business as described in the Prospectus or any Remarketing
Materials; the Company and each Insurance Subsidiary have fulfilled and
performed all obligations necessary to maintain the Insurance Licenses; there is
no pending or, to the knowledge of the Company

<PAGE>

                                                                               9

after due inquiry, threatened action, suit, proceeding or investigation that
could reasonably be expected to result in the revocation, termination or
suspension of any Insurance License; and no insurance regulatory agency or body
has issued, or to our knowledge, commenced any proceeding for the issuance of,
any order or decree impairing, restricting or prohibiting the payment of
dividends or the making of any loan by any Subsidiary to its parent, which would
have, individually or in the aggregate, a Material Adverse Effect.

                  (x) All reinsurance treaties and arrangements to which the
Company or any of its subsidiaries is a party as a cedant are in full force and
effect; neither the Company nor any of its subsidiaries is in material violation
of or in material default in the performance, observance or fulfillment of any
obligation, agreement, covenant or condition contained therein; neither the
Company nor any of its subsidiaries has received any notice from any of the
other parties to such treaties or arrangements that such other party intends not
to perform such treaty; and, to the best knowledge of the Company and its
subsidiaries, the Company and its subsidiaries have no reason to believe that
any of the other parties to such treaties or arrangements will be unable to
perform such treaty or arrangement except to the extent adequately and properly
reserved for in the consolidated financial statements of the Company included in
the Prospectus.

                  (y) The Company is not aware of any threatened or pending
downgrading of any Insurance Subsidiary's financial strength rating from A.M.
Best Company, Inc., Standard & Poor's Rating Services, Inc., Moody's Investor
Services or Fitch Ratings (collectively, the "Rating Agencies").

                  (z) The Company and its subsidiaries expect to engage
predominantly in traditional insurance and reinsurance activities that involve
substantial transfer of insurance or annuity risks, and intend to operate in a
manner that they will not (1) engage in certain nontraditional insurance or
reinsurance activities that do not involve a sufficient amount of risk transfer
or (2) maintain financial reserves in excess of the reasonable needs of the
insurance business of the Company and its subsidiaries, either of which would
cause the insurance company exception to the passive foreign investment company
rules described in Section 1297 of the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), not to apply to the Company or its subsidiaries.

                  Section 3. Fees and Expenses. (a) For the performance of its
services as Remarketing Agent hereunder, the Remarketing Agent shall retain on
the Purchase Contract Settlement Date 0.25% of the amount of the proceeds (other
than in respect of accrued and unpaid dividends on the Remarketed Convertible
Preferred Shares) received in the Remarketing (the "Remarketing Fee").

                  (b) The Company agrees to pay (i) the costs incident to the
preparation and printing of the Registration Statement, Prospectus and any
Remarketing Materials and any amendments or supplements thereto; (ii) the costs
of distributing the Registration Statement, Prospectus and any Remarketing
Materials and any amendments or supplements thereto; (iii) the fees and expenses
of qualifying the Remarketed Convertible Preferred Securities under the
securities laws of the several jurisdictions as provided in Section 4(h) and of
preparing, printing and distributing a Blue Sky memorandum (including related
fees and expenses of counsel to the Remarketing Agent); and (iv) all other costs
and expenses incident to the performance of the obligations of the Company
hereunder.

<PAGE>

                                                                              10

                  Section 4. Further Agreements of the Company. The Company
agrees to use its commercially reasonable efforts:

                  (a) To prepare any registration statement or prospectus, if
and to the extent required by applicable law, in connection with the
Remarketing, in a form reasonably acceptable to the Remarketing Agent, and to
file any such prospectus pursuant to the Securities Act within the period
required by the Rules and Regulations; 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; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Remarketed Convertible Preferred Shares; 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 the suspension of the qualification of any shares of the
Remarketed Convertible Preferred Shares 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.

                  (b) To furnish or make available promptly to the Remarketing
Agent and to counsel for the Remarketing Agent a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed therewith.

                  (c) To deliver or make available promptly to the Remarketing
Agent in New York City a reasonable number of the following documents: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto, (ii) the Prospectus and any amended or
supplemented Prospectus, (iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto) and (iv) any Remarketing Materials; and,
if the delivery of a prospectus is required at any time in connection with the
Remarketing and if at such time 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 a reasonable number of
copies of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance.

                  (d) 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

<PAGE>

                                                                              11

Company or the Remarketing Agent, be required by the Securities Act or requested
by the Commission.

                  (e) Prior to filing with the Commission (i) any amendment to
the Registration Statement or supplement to the Prospectus or any document
incorporated by reference in the Prospectus or (ii) any Prospectus pursuant to
Rule 424 of the Rules and Regulations, to furnish or make available a copy
thereof to the Remarketing Agent and counsel for the Remarketing Agent; and not
to file any such amendment or supplement which shall be disapproved by the
Remarketing Agent promptly after reasonable notice (approval thereof not to be
unreasonably withheld).

                  (f) As soon as practicable after the Effective Date of the
Registration Statement, to make generally available to the Company's security
holders and to deliver to the Remarketing Agent an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158).

                  (g) During a period of five years following the Effective Date
of the Registration Statement (or until no Convertible Preferred Shares are
outstanding, if earlier), to deliver or make available to the Remarketing Agent
copies of all reports or other communications (financial or other) furnished to
shareholders of the Company (except to the extent available through the
Commission's EDGAR System) , and deliver to the Remarketing Agent, (i) as soon
as they are available, copies of any reports and financial statements furnished
to or filed by the Company with the Commission or any national securities
exchange on which any of the Remarketed Convertible Preferred Shares or any
class of securities of the Company may be listed (except to the extent available
through the Commission's EDGAR System); and (ii) such additional information
concerning the business and financial condition of the Company as the
Remarketing Agent may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to the
Company's shareholders generally or to the Commission).

                  (h) Promptly from time to time to take such action as the
Remarketing Agent may reasonably request to qualify any shares of the Remarketed
Convertible Preferred Shares for offering and sale under the securities laws of
such jurisdictions as the Remarketing Agent may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Remarketed Convertible Preferred Shares; provided that in connection
therewith, the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction.

                  Section 5. Conditions to the Remarketing Agent's Obligations.
The obligations of the Remarketing Agent hereunder are subject to the accuracy,
on and as of the date when made, of the representations and warranties of the
Company contained herein, to the performance by the Company of its obligations
hereunder and to each of the following additional terms and conditions:

<PAGE>

                                                                              12

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

                  (b) The Remarketing Agent shall not have discovered and
disclosed to the Company on or prior to the Remarketing Date that the
Prospectus, the Registration Statement or the Remarketing Materials or any
amendment or supplement thereto contains any untrue statement of a fact which,
in the opinion of counsel for the Remarketing Agent, is material or omits to
state any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.

                  (c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Purchase Contract
Agreement, the Convertible Preferred Shares, the Hybrid Capital Units, the
Remarketed Convertible Preferred Shares, the Prospectus, each Registration
Statement, the Remarketing Materials and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Remarketing Agent, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.

                  (d) U.S. counsel to the Company shall have furnished to the
Remarketing Agent its written opinion, as U.S. counsel to the Company, addressed
to the Remarketing Agent and dated the Remarketing Settlement Date, in form and
substance satisfactory to the Remarketing Agent, substantially to the effect of
Annex I(A) to the Underwriting Agreement, appropriately modified to include all
the Transactions and the Remarketed Convertible Preferred Shares.

                  (e) The Company's general counsel shall have furnished to the
Remarketing Agent a written opinion, addressed to the Remarketing Agent and
dated the Remarketing Date, in form and substance satisfactory to the
Remarketing Agent, substantially to the effect of Annex I(B) to the Underwriting
Agreement, appropriately modified to include all the Transactions and the
Remarketed Convertible Preferred Shares.

                  (f) Cayman Islands counsel to the Company shall have furnished
to the Remarketing Agent its written opinion, as Cayman Islands counsel to the
Company, addressed to the Remarketing Agent and dated the Remarketing Date, in
form and substance satisfactory to the Remarketing Agent, substantially to the
effect of Annex II to the Underwriting Agreement, appropriately modified to
include all the Transactions and the Remarketed Convertible Preferred Shares.

                  (g) Counsel to the Purchase Contract Agent shall have
furnished to the Remarketing Agent its written opinion, as counsel to the
Purchase Contract Agent, addressed to the Remarketing Agent and dated the
Remarketing Settlement Date, in form and substance satisfactory to the
Remarketing Agent, to the effect that:

                       (i) The Purchase Contract Agent is duly incorporated
                  and is validly existing as a banking corporation in good
                  standing under the laws of the

<PAGE>

                                                                              13

                  jurisdiction of its incorporation with all necessary
                  corporate power and authority to execute, deliver and
                  perform its obligations under the Purchase Contract
                  Agreement and the Pledge Agreement.

                       (ii) The execution, delivery and performance by the
                  Purchase Contract Agent of the Purchase Contract Agreement
                  and the Pledge Agreement and the authentication and delivery
                  of the Hybrid Capital Units have been duly authorized by all
                  necessary corporate action on the part of the Purchase
                  Contract Agent. The Purchase Contract Agreement and the
                  Pledge Agreement have been duly executed and delivered by
                  the Purchase Contract Agent and constitute the valid and
                  binding agreements of the Purchase Contract Agent,
                  enforceable against the Purchase Contract Agent in
                  accordance with their respective terms, except as the
                  enforcement thereof may be limited by the Bankruptcy
                  Exceptions and an implied covenant of good faith and fair
                  dealing.

                       (iii) The execution, delivery and performance of the
                  Purchase Contract Agreement and the Pledge Agreement by the
                  Purchase Contract Agent do not conflict with or constitute a
                  breach of the charter or by-laws of the Purchase Contract
                  Agent.

                       (iv) No consent, approval or authorization of, or
                  registration with or notice to, any New York State or
                  federal governmental authority or agency is required, in
                  each case having jurisdiction over the trust activities of
                  the Purchase Contract Agent, for the execution, delivery or
                  performance by the Purchase Contract Agent of the Purchase
                  Contract Agreement and the Pledge Agreement.

                  (h) Counsel to the Collateral Agent shall have furnished to
the Remarketing Agent its written opinion, as counsel to the Collateral Agent,
and addressed to the Remarketing Agent and dated the Remarketing Settlement
Date, in form and substance satisfactory to the Remarketing Agent, to the effect
that:

                       (i) The Collateral Agent is duly incorporated and is
                  validly existing as a banking corporation in good standing
                  under the laws of the jurisdiction of incorporation with all
                  necessary corporate power and authority to execute, deliver
                  and perform its obligations under the Pledge Agreement.

                       (ii) The execution, delivery and performance by the
                  Collateral Agent of the Pledge Agreement in its capacity as
                  Collateral Agent have been duly authorized by all necessary
                  corporate action on the part of the Collateral Agent. The
                  Pledge Agreement has been duly executed and delivered by the
                  Collateral Agent and constitutes the valid and binding
                  agreement of the Collateral Agent, enforceable against the
                  Collateral Agent in accordance with its terms, except as the
                  enforcement thereof may be limited by the Bankruptcy
                  Exception and an implied covenant of good faith and fair
                  dealing.

                       (iii) The execution, delivery and performance of the
                  Pledge Agreement by the Collateral Agent in its capacity as
                  Collateral do not conflict with or constitute a breach of
                  the charter or by-laws of the Collateral Agent.

<PAGE>

                                                                              14

                       (iv) No consent, approval or authorization of, or
                  registration with or notice to, any New York State or
                  Federal governmental authority or agency, in each case
                  having jurisdiction over the trust activities of the
                  Collateral Agent, is required for the execution, delivery or
                  performance by the Collateral Agent of the Pledge Agreement.

                  (i) On the Remarketing Date, the Company shall have furnished
to the Remarketing Agent a letter addressed to the Remarketing Agent and dated
such date, in form and substance satisfactory to the Remarketing Agent, of Ernst
& Young LLP, or such other firm of nationally recognized independent public
accountants satisfactory to the Remarketing Agent, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
with respect to certain financial information contained in the Prospectus and in
the Remarketing Materials.

                  (j) The Company shall have furnished to the Remarketing Agent
a certificate, dated the Remarketing Date, of (A) the Company's Chief Executive
Officer, President or Executive Vice President and (B) its Chief Financial
Officer, stating that:

                       (i) The representations, warranties and agreements of
                  the Company in Section 2 are true and correct as of the
                  Remarketing Date; the Company has complied with all its
                  agreements contained herein; and the conditions contained in
                  Section 5(a) have been fulfilled;

                       (ii) (A) Except as disclosed in the Prospectus or in
                  the Remarketing Materials and for any such losses or
                  interferences as would not result, individually or in the
                  aggregate, in a Material Adverse Effect, the Company and the
                  subsidiaries have not sustained since the date of the latest
                  audited financial statements included or incorporated by
                  reference in the Prospectus or in the Remarketing Materials
                  any material loss or interference with their respective
                  businesses or properties from fire, flood, hurricane,
                  accident or other calamity, whether or not covered by
                  insurance, or from any labor dispute or any legal or
                  governmental proceeding and (B) since the respective dates
                  as of which information is given in the Prospectus or in the
                  Remarketing Materials, there has not been any material
                  adverse change in the capital stock or ordinary shares of
                  the Company or any of the Subsidiaries or any change, or any
                  development involving a prospective change, in the business,
                  prospects properties, operations, condition (financial or
                  otherwise) or results of operations of the Company and its
                  subsidiaries taken as a whole, except in each case as
                  described or contemplated in the Prospectus or the
                  Remarketing Materials; and

                       (iii) They have carefully examined the Registration
                  Statement, the Prospectus and the Remarketing Materials and,
                  in their opinion (A) the Registration Statement, as of its
                  Effective Date, and the Prospectus and the Remarketing
                  Materials, as of their respective dates, did not include any
                  untrue statement of a material fact and did not omit to
                  state any material fact required to be stated therein or
                  necessary to make the statements therein not misleading, and
                  (B) since such dates, no event has occurred which should
                  have been set forth in a

<PAGE>

                                                                              15

                  supplement or amendment to the Registration Statement, the
                  Prospectus or the Remarketing Materials.

                  (k) There shall not have been, since the respective dates as
of which information is given in the final Prospectus, any material adverse
change in the condition, financial or otherwise, or in the consolidated
financial position, shareholders' equity, results of operations, business or
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business.

                  (l) Without the prior written consent of the Remarketing
Agent, the Certificate of Designations or the Purchase Contract Agreement shall
not have been amended in any manner, or otherwise contain any provision not
contained therein as of the date hereof that, in the opinion of the Remarketing
Agent, materially changes the nature of the Remarketed Convertible Preferred
Shares or the Remarketing Procedures.

                  (m) Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded the
Convertible Preferred Shares and (ii) none of the Company's Insurance
Subsidiaries shall have been downgraded by any of the Rating Agencies nor have
been put on credit watch with negative implications (or similar action) by any
of the Rating Agencies.

                  (n) At the time of or subsequent to the Commencement Date,
there shall not have occurred any of the following: (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
Remarketing Agent's opinion will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; (ii) if trading on
the New York Stock Exchange (the "NYSE"), the Nasdaq National Market (the
"Nasdaq") or the American Stock Exchange shall have been suspended or been made
subject to material limitation, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required, on the NYSE, the Nasdaq or the American Stock Exchange by the NYSE,
the Nasdaq or the American Stock Exchange or by order of the Commission or any
other governmental authority having jurisdiction; (iii) if a banking moratorium
has been declared by any state or federal authority or if any material
disruption in commercial banking or securities settlement or clearance services
shall have occurred; (iv) any downgrading shall have occurred in the Company's
corporate credit rating or the rating accorded the Company's debt securities or
preferred shares by any "nationally recognized statistical rating organization"
as that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act or if any such organization shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities or preferred shares; or (v)
(A) if there shall have occurred any outbreak or escalation of hostilities or
acts of terrorism involving the United States or there is a declaration of a
national emergency or war by the United States or (B) if there shall have been
any other calamity or crisis or any change in political, financial or economic
conditions if the effect of any such event in (i) or (v) in the Remarketing
Agent's judgment makes it impracticable or inadvisable to proceed with the
Remarketing on the terms and in the manner contemplated in the Prospectus or in
the Remarketing Materials.

<PAGE>

                                                                              16

                  All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Remarketing Agent.

                  Section 6. Indemnification and Contribution. (a) The Company
shall indemnify and hold harmless the Remarketing Agent and each person, if any,
who controls the Remarketing Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, or any related Preliminary Prospectus or any
Prospectus, or in any supplement thereto or amendment thereof, 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
(i) in the case of the Registration Statement, not misleading, and (ii) in the
case of the Prospectus or any related Preliminary Prospectus in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent but only to
the extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Remarketing Agent expressly for use therein. The parties agree that such
information provided by or on behalf of the Remarketing Agent consists solely of
paragraphs 3, 12 and 13 under the caption "Underwriting" in the prospectus filed
with the Commission by the Company pursuant to Rule 424(b) on December 10, 2003,
or the analogous paragraphs in any later prospectus or prospectus supplement
relating to the Convertible Preferred Shares; provided, further, that the
foregoing indemnity agreement with respect to any Preliminary Prospectus shall
not inure to the benefit of the Remarketing Agent or any person controlling the
Remarketing Agent who failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the Remarketing Agent in the requisite
quantity and on a timely basis in compliance with Section 4(c)) to the person
asserting any losses, claims, damages and liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, if such material misstatement or omission or alleged
material misstatement or omission was cured, as determined by a court of
competent jurisdiction in a decision not subject to further appeal, in such
Prospectus and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person. This indemnity agreement
will be in addition to any liability which the Company may otherwise have,
including but not limited to other liability under this Agreement.

                  (b) The Remarketing Agent shall indemnify and hold harmless
the Company, each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement, and each other person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any

<PAGE>

                                                                              17

losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to reasonable attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, or any related Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
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 (i) in the case of the Registration Statement, not
misleading, and (ii) in the case of the Prospectus or any related Preliminary
Prospectus in light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Remarketing Agent
specifically for use therein; provided, however, that in no case shall the
Remarketing Agent be liable or responsible for any amount in excess of the fee
paid to the Remarketing Agent pursuant to Section 3(a). The parties agree that
such information provided by or on behalf of the Remarketing Agent consists
solely of the material described in a letter from the Remarketing Agent to the
Company. This indemnity will be in addition to any liability which the
Remarketing Agent may otherwise have, including but not limited to other
liability under this Agreement.

                  (c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 5
to the extent that it is not materially prejudiced as a result thereof and in
any event shall not relieve it from any liability that such indemnifying party
may have otherwise than on account of the indemnity agreement hereunder). In
case any such claim or action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate, at its own expense in the defense of such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action

<PAGE>

                                                                              18

after assumption of the defense, or (iv) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 6 (whether or not the indemnified party is an actual or potential party
thereto), unless (x) such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such claim, investigation, action or proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or any failure to act, by
or on behalf of the indemnified party, and (y) the indemnifying party confirms
in writing its indemnification obligations hereunder with respect to such
settlement, compromise or judgment.

                  (d) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6(a) or (b) is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Remarketing Agent
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Remarketing Agent, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
officers of the Company who signed the Registration Statement and directors of
the Company) as incurred to which the Company and the Remarketing Agent may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company and the Remarketing Agent from the Remarketing or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Remarketing Agent in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Remarketing Agent shall be
deemed to be in the same proportion as (x) the total liquidation preference of
the Remarketed Convertible Preferred Shares less the fee paid to the Remarketing
Agent pursuant to Section 3(a) of this Agreement bears to (y) the fee paid to
the Remarketing Agent pursuant to such Section 3(a). The relative fault of each
of the Company and of the Remarketing Agent 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 or the Remarketing Agent 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 Section
6(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable

<PAGE>

                                                                              19

considerations referred to above in this Section 6(d). The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 6(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 6(d), (i) no
Remarketing Agent shall be required to contribute any amount in excess of the
amount by which the fees received by it under Section 3 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 and (ii) 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. For purposes of this Section 6(d), each person, if any, who
controls the Remarketing Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Remarketing Agent, and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of the immediately preceding sentence. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 6(d) or otherwise.

                  Section 7. Resignation and Removal of the Remarketing Agent.
The Remarketing Agent may resign and be discharged from its duties and
obligations hereunder, and the Company may remove the Remarketing Agent, by
giving 60 days' prior written notice, in the case of a resignation, to the
Company and the Depositary and, in the case of a removal, the removed
Remarketing Agent and the Depositary; provided, however, that (i) the Company
may not remove the Remarketing Agent unless (A) the Remarketing Agent becomes
involved as a debtor in a bankruptcy, insolvency or similar proceeding, (B) the
Remarketing Agent shall not be among the 15 underwriters with the largest volume
underwritten in dollars, on a lead or co-managed basis, of U.S. domestic debt
securities during the twelve-month period ended as of the last calendar quarter
preceding the Remarketing Date or (C) the Remarketing Agent shall be subject to
one or more legal restrictions preventing the performance of its obligations
hereunder and (ii) no such resignation nor any such removal shall become
effective until the Company shall have appointed 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 the Remarketing Procedures. In any such case, the Company will use its
reasonable efforts to appoint a successor Remarketing Agent and enter into such
a remarketing agreement with such person as soon as reasonably practicable. The
provisions of Sections 3 and 6 shall survive the resignation or removal of any
Remarketing Agent pursuant to this Agreement.

<PAGE>

                                                                              20

                  Section 8. Dealing in the Remarketed Convertible Preferred
Shares. The Remarketing Agent, when acting as a Remarketing Agent or in its
individual or any other capacity, may, to the extent permitted by law, buy,
sell, hold and deal in any shares of the Remarketed Convertible Preferred
Shares. The Remarketing Agent may exercise any vote or join in any action which
any beneficial owner of shares of Remarketed Convertible Preferred Shares may be
entitled to exercise or take pursuant to the Certificate of Designations 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.

                  Section 9. 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, the Certificate of Designations and
the Purchase Contract Agreement. No implied covenants or obligations of or
against the Remarketing Agent shall be read into this Agreement, the Certificate
of Designations or the Purchase Contract Agreement. In the absence of bad faith
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 of this Agreement, the Certificate of Designations or the Purchase
Contract Agreement as to the truth of the statements expressed in any of such
documents. The Remarketing Agent shall be protected in acting upon any document
or communication reasonably believed by it to have been signed, presented or
made by the proper party or parties. The Remarketing Agent, acting under this
Agreement, shall incur no liability to the Company or to any holder of
Remarketed Convertible Preferred Shares in its individual capacity or as
Remarketing Agent for any action or failure to act, on its part in connection
with a Remarketing or otherwise, except if such liability is judicially
determined to have resulted from the gross negligence or willful misconduct on
its part.

                  Section 10. Termination. This Agreement shall terminate as to
the Remarketing Agent on the effective date of the resignation or removal of the
Remarketing Agent pursuant to Section 7. In addition, the obligations of the
Remarketing Agent hereunder may be terminated by it by notice given to the
Company prior to 10:00 a.m., New York City time, on the Remarketing Date if,
after the Commencement Date and prior to that time, any of the events described
in Sections 5(k), (l), (m) or (n) shall have occurred. The provisions of
Sections 3 and 6 shall survive any such termination.

                  Section 11. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:

                  (a) if to the Remarketing Agent, shall be mailed, delivered,
or faxed and confirmed in writing, to such Underwriter c/o Bear, Stearns & Co.
Inc., 383 Madison Avenue, New York, New York 10179, Attention: Jay Bullock,
Senior Managing Director, with a copy to Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, New York, New York, 10017

                  (b) if to the Company, shall be mailed, delivered, or faxed
and confirmed in writing to the Company at P.O. Box HM 2939, Crown House, Third
Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda, Attention: Paul Goldean,
Esq., with a copy to LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th
Street, New York, New York, 10019, Attention: Stephen G. Rooney, Esq.

<PAGE>

                                                                              21

Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.

                  Section 12. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Remarketing
Agent, the Company and its 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
officers and employees 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 6(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing 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 13. Submission to Jurisdiction and Service of Process.
(a) The Company irrevocably (i) submits to the jurisdiction of any court of the
State of New York in New York County or the United States District Court for the
Southern District of the State of New York for the purpose of any suit, action,
or other proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (ii) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (iii) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (iv) agrees not to commence any
Proceeding other than in such courts, and (v) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum.

                  (b) The Company agrees that service of all writs, process and
summonses in any suit, action or proceeding brought in connection with this
Agreement against the Company in any court of the State of New York or any
United States federal court, in each case, sitting in the Borough of Manhattan,
City and State of New York, may be made upon CT Corporation System at 111 Eighth
Avenue, New York, New York 10011, whom the Company irrevocably appoints as its
authorized agent for service of process. The Company represents and warrants
that CT Corporation System has agreed to act as the Company's agent for service
of process. The Company agrees that such appointment shall be irrevocable until
the irrevocable appointment by the Company of a successor in The City of New
York as its authorized agent for such purpose and the acceptance of such
appointment by such successor. The Company further 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.
If CT Corporation System shall cease to act as the agent for service of process
for the Company, the Company shall appoint without delay, another such agent and
provide prompt written notice to Bear, Stearns & Co. Inc. of such appointment.

                  Section 14. 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 the Remarketing

<PAGE>

                                                                              22

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 15. Definition of the Terms "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange, Inc. is open for trading and (b)
"subsidiary" has the meaning set forth in Rule 405 under the Securities Act.

                  Section 16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  Section 17. Counterparts. This Agreement may be executed in
one or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.

                  Section 18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

<PAGE>

                  If the foregoing correctly sets forth the agreement between
the Company and the Remarketing Agent, please indicate your acceptance in the
space provided for that purpose below.

                                       Very truly yours,

                                       SCOTTISH RE GROUP LIMITED, a Cayman
                                       Islands exempted company

                                       By:
                                           ----------------------------------
                                           Name:
                                           Title:

Accepted:

BEAR, STEARNS & CO. INC.

By:
    ----------------------------
    Authorized Representative

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