Document:

EX-4.4

                                 XL CAPITAL LTD,

                     U.S. BANK TRUST NATIONAL ASSOCIATION,

        as Collateral Agent, Custodial Agent and Securities Intermediary

                                       AND

                        U.S. BANK NATIONAL ASSOCIATION,

                           as Purchase Contract Agent

                                PLEDGE AGREEMENT

                           Dated as of March __, 2004

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                                TABLE OF CONTENTS

                                                                            PAGE

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

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

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

    SECTION 2.1   The Pledge...................................................4
    SECTION 2.2   Delivery, Control and Perfection.............................5

ARTICLE III PAYMENTS ON COLLATERAL.............................................7

    SECTION 3.1   Payments.....................................................7
    SECTION 3.2   Application of Payments......................................8

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

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

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

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

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

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

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

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

ARTICLE VIII THE COLLATERAL AGENT.............................................17

    SECTION 8.1   Appointment, Powers and Immunities..........................17

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

ARTICLE IX AMENDMENT..........................................................23

    SECTION 9.1   Amendment Without Consent of Holders........................23
    SECTION 9.2   Amendment with Consent of Holders...........................24
    SECTION 9.3   Execution of Amendments.....................................25
    SECTION 9.4   Effect of Amendments........................................25
    SECTION 9.5   Reference to Amendments.....................................25

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

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

EXHIBIT A  Instruction from Purchase Contract Agent to Collateral Agent
EXHIBIT B  Instruction to Purchase Contract Agent
EXHIBIT C  Instruction to Custodial Agent Regarding Remarketing
EXHIBIT D  Instruction to Custodial Agent Regarding Withdrawal from Remarketing

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                                PLEDGE AGREEMENT

              PLEDGE AGREEMENT, dated as of March __, 2004 (this "Agreement"),
among XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"),
U.S. Bank Trust National Association, a national banking association, not
individually but solely as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent"), as custodial agent (in
such capacity, together with its successors in such capacity, the "Custodial
Agent") and as "securities intermediary" as defined in Section 8-102(a)(14) of
the Code (as defined herein) (in such capacity, together with its successors in
such capacity, the "Securities Intermediary"), and U.S. Bank National
Association, a national banking association, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders from time to time
of the Units (in such capacity, together with its successors in such capacity,
the "Purchase Contract Agent") under the Purchase Contract Agreement (as defined
herein).

                                    RECITALS

              WHEREAS, the Company and the Purchase Contract Agent are parties
to the Purchase Contract Agreement, dated as of the date hereof (as modified,
amended or supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued Units having a Stated Amount
of $25 per Unit, all of which will initially be Normal Units.

              WHEREAS, each Normal Unit will be comprised of (a) a Purchase
Contract and (b) either beneficial ownership of (i) a 1/40, or 2.5%, beneficial
ownership interest in a Note having a $1,000 principal amount or (ii) following
a Special Event Redemption in accordance with the Purchase Contract Agreement
and the terms of the Notes, beneficial ownership of the Treasury Consideration.

              WHEREAS, in accordance with the terms of the Purchase Contract
Agreement, a Holder of Normal Units may separate the Notes or the Treasury
Consideration, as applicable, from the related Purchase Contracts by
substituting for such Notes or the Treasury Consideration, as the case may be,
Treasury Securities that will pay in the aggregate an amount equal to the
aggregate Stated Amount of such Normal Units. Upon such separation, the Normal
Units will become Stripped Units. Each Stripped Unit will be comprised of (a) a
Purchase Contract and (b) a 1/40 undivided beneficial interest in a Treasury
Security.

              WHEREAS, pursuant to the terms of the Purchase Contract Agreement
and the Purchase Contracts, the Holders, from time to time, of the Units have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
such Holders and to grant the pledge provided hereby of the Notes, any Treasury
Consideration and any Treasury Securities delivered in exchange therefor to
secure each Holder's obligations under the related Purchase Contract, as
provided herein and subject to the terms hereof.

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

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                                   ARTICLE I

                                   DEFINITIONS

              SECTION 1.1 DEFINITIONS. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

              "PURCHASE CONTRACT AGREEMENT" has the meaning specified in the
Recitals.

              "SECURITIES INTERMEDIARY" has the meaning specified in the first
paragraph of this Agreement.

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

              "SEPARATE NOTES" means any Notes that are not Pledged Notes.

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

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

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

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

                                   ARTICLE II

                         PLEDGE; CONTROL AND PERFECTION

              SECTION 2.1 THE PLEDGE. (a) The Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact hereby pledge and
grant to the Collateral Agent, for the benefit of the Company, as collateral
security for the performance when due by such Holders of their respective
obligations to the Company under the related Purchase Contracts, a security
interest in all of the right, title and interest of the Purchase Contract Agent
and such Holders in:

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

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

              (iii)  all Proceeds of the foregoing; and

              (iv)   all powers and rights now owned or hereafter acquired under
       or with respect to any of the foregoing (all of the foregoing,
       collectively, the "COLLATERAL").

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

              (c)    The pledge provided in this Section 2.1 is herein referred
to as the "Pledge" and the Notes (including any Notes that are delivered
pursuant to Section 6.2 hereof), Treasury

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Consideration and Treasury Securities subject to the Pledge, excluding any
Notes, Treasury Consideration or Treasury Securities released from the Pledge as
provided in Sections 4.1, 4.2 and 4.3 hereof, respectively, are hereinafter
referred to as "Pledged Notes," "Pledged Treasury Consideration" and "Pledged
Treasury Securities," respectively. Subject to the Pledge and the provisions of
Section 2.2 hereof, the Holders from time to time shall have full beneficial
ownership of the Collateral. For purposes of perfecting the Pledge under
applicable law, including, to the extent applicable, the TRADES Regulations or
the Uniform Commercial Code as adopted and in effect in any applicable
jurisdiction, the Collateral Agent shall be the agent of the Company as provided
herein. Whenever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to reregister in its
name the Notes or any other securities held in physical form.

              (d)    Except as may be required in order to release Notes or
Treasury Consideration, as applicable, in connection with a Special Event
Redemption or with a Holder's election to convert its investment from a Normal
Unit to a Stripped Unit, or except as may be required in order to release
Treasury Securities in connection with a Holder's election to convert its
investment from a Stripped Unit to a Normal Unit, or except as otherwise
required to release Notes, Treasury Consideration or Treasury Securities as
specified herein, neither the Collateral Agent, the Custodial Agent nor the
Securities Intermediary shall relinquish physical possession of any certificate
evidencing Notes, Treasury Securities or Treasury Consideration, as applicable,
prior to the termination of this Agreement, provided, however, that if the Notes
are issued in whole or in part in the form of global Notes, such Notes may be
held in any clearing corporation in an account including only assets of
customers of the Collateral Agent or Securities Intermediary. If it becomes
necessary for the Securities Intermediary to relinquish physical possession of a
certificate in order to release a portion of the Notes evidenced thereby from
the Pledge, the Company shall use its commercially reasonable best efforts to
arrange for the Securities Intermediary to obtain physical possession of a
replacement certificate evidencing any Notes remaining subject to the Pledge
hereunder registered to the Securities Intermediary or endorsed in blank (or
accompanied by a bond power endorsed in blank) within fifteen calendar days of
the date the Securities Intermediary relinquished possession. The Securities
Intermediary shall promptly notify the Company and the Collateral Agent of its
inability to obtain possession of any such replacement certificate as required
hereby.

              (e)    Notwithstanding anything contained herein to the contrary,
for avoidance of doubt, (i) the cash payments at the rate of [___]% per year of
the Stated Amount of the Notes and (ii) after a Special Event Redemption, the
quarterly payments with respect to the Treasury Consideration [(as specified in
clause (B) of the definition of Treasury Consideration)] that are a part of the
Normal Units to Holders of Normal Units shall not be subject to the Pledge and
therefore are not part of the Collateral.

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

              (b)    In connection with the Pledge granted in Section 2.1, and
subject to the other provisions of this Agreement, the Holders from time to time
acting through the Purchase

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

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

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

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

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

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

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

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

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

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

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

                                  ARTICLE III

                             PAYMENTS ON COLLATERAL

              SECTION 3.1 PAYMENTS. So long as the Purchase Contract Agent is
the registered owner of the Pledged Notes, Pledged Treasury Consideration or
Pledged Treasury Securities, it shall receive all payments thereon. If the
Pledged Notes are reregistered such that the Collateral Agent becomes the
registered holder, all payments of the principal of, or interest or other
amounts on, the Pledged Notes and all payments of the principal of, or cash
distributions

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on, any Pledged Treasury Consideration or Pledged Treasury Securities, that are
received by the Collateral Agent and that are properly payable hereunder shall
be paid by the Collateral Agent by wire transfer in same day funds:

              (i)    in the case of (A) any interest payments with respect to
       the Pledged Notes or Pledged Treasury Consideration (including as
       specified in clause (B) of the definition of Treasury Consideration), as
       the case may be, with respect to Normal Units and (B) any payments with
       respect to any Notes or Treasury Consideration (including as specified in
       clause (A) of the definition of Treasury Consideration), as the case may
       be, that have been released from the Pledge pursuant to Section 4.3
       hereof, to the Purchase Contract Agent, for the benefit of the relevant
       Holders of the Normal Units, to the account designated by the Purchase
       Contract Agent for such purpose no later than 11:00 a.m., New York City
       time, on the Business Day such payment is received by the Collateral
       Agent (provided that in the event such payment or payment instructions
       are received by the Collateral Agent on a day that is not a Business Day
       or after 10:30 a.m., New York City time, on a Business Day, then such
       payment shall be made no later than 9:30 a.m., New York City time, on the
       next succeeding Business Day);

              (ii)   in the case of any payments with respect to any Treasury
       Securities that have been released from the Pledge pursuant to Section
       4.3 hereof to the Holders of the Stripped Units, to the accounts and in
       such amounts designated by the Purchase Contract Agent (subject to the
       Purchase Contract Agent receiving such information from the Holders) in
       writing for such purpose no later than 2:00 p.m., New York City time, on
       the Business Day such payment is received by the Collateral Agent
       (provided that in the event such payment or payment instructions are
       received by the Collateral Agent on a day that is not a Business Day or
       after 12:30 p.m., New York City time, on a Business Day, then such
       payment shall be made no later than 10:30 a.m., New York City time, on
       the next succeeding Business Day); any payment to be made directly to the
       Holders of such Stripped Units shall be subject to applicable federal
       withholding law, including the requirement that a Holder shall have
       provided to the Collateral Agent its certified taxpayer identification
       number by furnishing appropriate Forms W-9 (or such other forms as shall
       be applicable); and

              (iii)  in the case of payments in respect of any Pledged Notes,
       Pledged Treasury Consideration (as specified in clause (A) of the
       definition of Treasury Consideration) or Pledged Treasury Securities, as
       the case may be, to be paid upon settlement of such Holder's obligations
       to purchase Ordinary Shares under the Purchase Contract, to the Company
       on the Stock Purchase Date in accordance with the procedure set forth in
       Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the respective
       obligations of the Holders under the related Purchase Contracts and, to
       the extent such payments exceed the Purchase Price, to the Purchase
       Contract Agent for the benefit of the Holders.

              SECTION 3.2 APPLICATION OF PAYMENTS. All payments received by the
Purchase Contract Agent as provided herein shall be applied by the Purchase
Contract Agent pursuant to the provisions of the Purchase Contract Agreement.
If, notwithstanding the foregoing, the Purchase Contract Agent shall receive any
payments of principal on account of any Notes or Treasury Consideration (which,
shall be as specified in clause (A) of the definition of Treasury

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       Consideration), as applicable, that, at the time of such payment, are
       Pledged Notes or Pledged Treasury Consideration (which, shall be as
       specified in clause (A) of the definition of Treasury Consideration), as
       the case may be (other than payments to which it is entitled pursuant to
       the terms of the Purchase Contract Agreement), or a Holder of a Stripped
       Unit shall receive any payments of principal on account of any Treasury
       Securities that, at the time of such payment, are Pledged Treasury
       Securities (other than payments to which it is entitled pursuant to the
       terms of the Purchase Contract 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 promptly deliver the same over to the
       Company) for application to the obligations of the Holders under the
       related Purchase Contracts, and the Holders shall acquire no right, title
       or interest in any such payments of principal so received.

                                   ARTICLE IV

             SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES

              SECTION 4.1 COLLATERAL SUBSTITUTION AND THE CREATION OF STRIPPED
UNITS. At any time on or prior to the thirteenth Business Day immediately
preceding the Stock Purchase Date, a Holder of Normal Units shall have the right
to substitute Treasury Securities for the Pledged Notes or Pledged Treasury
Consideration, as the case may be, securing such Holder's obligations under the
Purchase Contracts comprising a part of such Normal Units, in integral multiples
of 40 Normal Units, or after a Special Event Redemption, in integral multiples
of Normal Units so that Treasury Securities to be deposited and the Treasury
Consideration, as the case may be, to be released are in integral multiples of
$1,000, by (a) Transferring to the Collateral Agent Treasury Securities having
an aggregate principal amount equal to the aggregate Stated Amount of such
Normal Units and (b) delivering such Normal Units to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of EXHIBIT B hereto,
to the Purchase Contract Agent stating that such Holder has Transferred Treasury
Securities to the Collateral Agent pursuant to clause (a) above (stating the
principal amount, the maturities and the CUSIP numbers of the Treasury
Securities Transferred by such Holder) and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release from the Pledge the Pledged Notes
or Pledged Treasury Consideration related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction to the Collateral
Agent in the form provided in EXHIBIT A. Upon receipt of Treasury Securities
from a Holder of Normal Units and the related instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Pledged Notes or Pledged
Treasury Consideration and shall promptly Transfer such Pledged Notes or Pledged
Treasury Consideration free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent. All items Transferred and/or
substituted by any Holder pursuant to this Section 4.1, Section 4.2 or any other
Section of this Agreement shall be Transferred and/or substituted free and clear
of all liens, claims and encumbrances.

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

              (a)    At any time on or prior to the thirteenth Business Day
immediately preceding the Stock Purchase Date, a Holder of Stripped Units shall
have the right to reestablish Normal Units (a) consisting of the Purchase
Contracts and Notes in integral multiples of 40 Normal

                                       9
<PAGE>

Units, or (b) after a Special Event Redemption, consisting of the Purchase
Contracts and the Treasury Consideration (identified and calculated by reference
to the Treasury Consideration then comprising Normal Units) or the appropriate
portion of the Treasury Portfolio in integral multiples of Stripped Units so
that the Treasury Consideration to be deposited and the Treasury Securities to
be released are in integral multiples of $1,000, by (x) Transferring to the
Collateral Agent Notes or the Treasury Consideration, as the case may be, then
comprising such number of Normal Units as is equal to such Stripped Units and
(y) delivering such Stripped Units to the Purchase Contract Agent, accompanied
by a notice, substantially in the form of EXHIBIT B hereto, to the Purchase
Contract Agent stating that such Holder has transferred Notes or Treasury
Consideration to the Collateral Agent pursuant to clause (a) above and
requesting that the Purchase Contract Agent instruct the Collateral Agent to
release from the Pledge the Pledged Treasury Securities related to such Stripped
Units, whereupon the Purchase Contract Agent shall give such instruction to the
Collateral Agent in the form provided in EXHIBIT A. Upon receipt of the Notes or
the Treasury Consideration, as the case may be, from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Pledged Treasury Securities and shall promptly Transfer such Treasury
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.

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

              SECTION 4.3 TERMINATION EVENT. (a) Upon receipt by the Collateral
Agent of written notice from the Company or the Purchase Contract Agent that
there has occurred a Termination Event and identifying the nature of the
Termination Event, the Collateral Agent shall release all Collateral from the
Pledge and shall promptly Transfer any Pledged Notes or Pledged Treasury
Consideration, as the case may be, and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Normal Units and
the Stripped Units, respectively, free and clear of any lien, pledge or security
interest or other interest created in favor of the Collateral Agent hereby.

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

              (i)    use its best efforts to obtain, at the expense of the
       Company, an opinion of a nationally recognized law firm reasonably
       acceptable to the Collateral Agent to the effect that, as a result of the
       Company's being the debtor in such a bankruptcy case or becoming subject
       to a petition under clause (ii) of the definition of Bankruptcy Law, the
       Collateral Agent will not be prohibited from releasing or Transferring
       the Collateral as provided in this Section 4.3, and shall deliver such
       opinion to the Collateral Agent within ten days after the occurrence of
       such Termination Event, and if (y) the Purchase Contract Agent shall be
       unable to obtain such opinion within ten days after the occurrence of
       such

                                       10
<PAGE>

       Termination Event or (z) the Collateral Agent shall continue, after
       delivery of such opinion, to refuse to effectuate the release and
       Transfer of all Pledged Notes, Pledged Treasury Consideration or Pledged
       Treasury Securities, as the case may be, as provided in this Section 4.3,
       then the Purchase Contract Agent shall within fifteen days after the
       occurrence of such Termination Event commence an action or proceeding in
       the court with jurisdiction of the Company's case under the applicable
       Bankruptcy Law seeking an order requiring the Collateral Agent to
       effectuate the release and transfer of all Pledged Notes, Pledged
       Treasury Consideration or Pledged Treasury Securities, as the case may
       be, as provided by this Section 4.3 or

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

              SECTION 4.4 EARLY SETTLEMENT; MERGER EARLY SETTLEMENT; CASH
SETTLEMENT. Upon written notice to the Collateral Agent by the Purchase Contract
Agent that one or more Holders of Units have elected to effect Early Settlement,
Merger Early Settlement or Cash Settlement of their respective obligations under
the Purchase Contracts forming a part of such Units in accordance with the terms
of the Purchase Contracts and the Purchase Contract Agreement (setting forth the
number of such Purchase Contracts as to which such Holders have elected to
effect Early Settlement, Merger Early Settlement or Cash Settlement), and that
the Purchase Contract Agent has received from such Holders, and paid to the
Company as confirmed by written notice to the Collateral Agent by the Company,
the related Early Settlement Amounts, Merger Early Settlement Amounts or Cash
Settlement Amounts, as the case may be, pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement, Merger Early Settlement or Cash Settlement, as the case may
be, have been satisfied, then the Collateral Agent shall release from the Pledge
(a) Pledged Notes or Pledged Treasury Consideration, as the case may be, in the
case of a Holder of Normal Units or (b) Pledged Treasury Securities, in the case
of a Holder of Stripped Units, identified by the Purchase Contract Agent as
relating to such Purchase Contracts as to which such Holders have paid such
Early Settlement Amounts, Merger Early Settlement Amounts or Cash Settlement
Amounts, and shall Transfer all such Pledged Notes, Pledged Treasury
Consideration or Pledged Treasury Securities, as the case may be, free and clear
of the Pledge created hereby, to the Purchase Contract Agent for the benefit of
the Holders.

              SECTION 4.5 REMARKETING; APPLICATION OF PROCEEDS; SETTLEMENT. (a)
Pursuant to the Purchase Contract Agreement, the Purchase Contract Agent shall
notify, by 10:00 a.m., New York City time, on the second Business Day preceding
the Remarketing Date, the Remarketing Agent and the Collateral Agent of the
aggregate principal amount of Notes comprising part of Normal Units to be
remarketed. The Collateral Agent shall, by 10:00 a.m., New York City time, on
the Business Day immediately preceding the Remarketing Date, without any
instruction from Holders of Normal Units, deliver (i) the Pledged Notes to be
remarketed to the Remarketing Agent for remarketing and (ii) the remaining
Pledged Notes to the Purchase Contract Agent for distribution to the Holders
that have elected not to participate in the remarketing in accordance with the
Purchase Contract Agreement. Upon completion of a successful remarketing, after
deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%)
of the total proceeds of such remarketing of Pledged Notes, the Remarketing
Agent will deliver the proceeds of such remarketing to the Purchase Contract
Agent, which shall

                                       11
<PAGE>

thereupon deliver such proceeds to the Collateral Agent for the benefit of the
Company to be held in Trust for the Company. Upon receipt of the proceeds from
the Purchase Contract Agent following a successful remarketing, (i) the
Collateral Agent, for the benefit of the Company, shall thereupon apply such
proceeds in an amount equal to the aggregate Stated Amount of the related Normal
Units in direct settlement and satisfaction in full of such Normal Units
Holders' obligations to pay the Purchase Price under the Purchase Contracts on
the Stock Purchase Date and (ii) the remaining portion, if any, of the proceeds
of such successful remarketing shall be distributed by the Remarketing Agent
and/or the Collateral Agent to the Purchase Contract Agent for payment on a pro
rata basis to such Normal Units Holders participating in such remarketing.

              (b)    The Remarketing Agent shall agree to make one or more
attempts to remarket the Notes in accordance with the procedures set forth in
the Purchase Contract Agreement and the Remarketing Agreement between the
Remarketing Date and the last Subsequent Remarketing Date. If by 4:00 p.m., New
York City time, on the third Business Day immediately preceding the Stock
Purchase Date the Remarketing Agent has failed to remarket the Notes at a price
equal to 100.25% of the aggregate principal amount of the Notes participating in
the remarketing, the "Last Failed Remarketing" shall be deemed to have occurred.
In this case, the Remarketing Agent will agree to advise the Collateral Agent in
writing that it cannot remarket the related Pledged Notes of such Holders of
Normal Units and the Remarketing Agent will agree pursuant to the Remarketing
Agreement to promptly return to the Collateral Agent the Notes delivered to it
pursuant to Section 4.5(a). The Collateral Agent, for the benefit of the Company
will, at the written direction of the Company, deliver or dispose of the Pledged
Notes in accordance with the Company's written instructions to satisfy in full,
from any such disposition or retention, such Holders' obligations to pay the
Purchase Price for the Ordinary Shares; provided that if upon the Last Failed
Remarketing, the Collateral Agent delivers or disposes of the Pledged Notes in
accordance with the written instructions of the Company, any accrued and unpaid
interest on such Notes will become payable by the Company to the Purchase
Contract Agent for payment to the Holder of the Normal Units to which such Notes
relate in accordance with the Purchase Contract Agreement.

              (c)    In the event a Holder of Stripped Units has not made an
Early Settlement, Merger Early Settlement or Cash Settlement of the Purchase
Contracts underlying its Stripped Units, such Holder shall be deemed to have
elected to pay for the Ordinary Shares to be issued under such Purchase
Contracts from the payments received in respect of the related Pledged Treasury
Securities. Without receiving any instruction from any such Holder of Stripped
Units, the Collateral Agent shall apply such payments to the Company in
settlement of such Purchase Contracts on the Stock Purchase Date pursuant to
written instructions from the Purchase Contract Agent. In the event the payments
received in respect of the related Pledged Treasury Securities are in excess of
the aggregate Purchase Price of the Purchase Contracts being settled thereby,
the Collateral Agent shall distribute such excess, when received, to the
Purchase Contract Agent for payment to such Holders of Stripped Units.

              (d)    Pursuant to the Remarketing Agreement and Purchase Contract
Agreement, on or prior to the thirteenth Business Day preceding the Stock
Purchase Date, but no earlier than the sixteenth Business Day immediately
preceding the Stock Purchase Date, holders of Separate Notes may elect to have
their Separate Notes remarketed by delivering their Separate Notes,

                                       12
<PAGE>

together with a notice of such election, substantially in the form of EXHIBIT C
hereto, to the Custodial Agent. On the second Business Day prior to the
Remarketing Date, by 10:00 a.m., New York City time, the Custodial Agent shall
notify the Remarketing Agent of the principal amount of such Separate Notes to
be remarketed. The Custodial Agent will hold such Separate Notes in an account
separate from the Collateral Account. A holder of Separate Notes electing to
have its Separate Notes remarketed will also have the right to withdraw such
election by written notice to the Custodial Agent, substantially in the form of
EXHIBIT D hereto, on or prior to the thirteenth Business Day immediately
preceding the Stock Purchase Date, upon which notice the Custodial Agent will
return such Separate Notes to such holder. On the Business Day immediately
preceding the Remarketing Date, the Custodial Agent at the written direction of
the Remarketing Agent will deliver to the Remarketing Agent for remarketing all
Separate Notes delivered to the Custodial Agent pursuant to this Section 4.5(d)
and not withdrawn pursuant to the terms hereof prior to such date. In the event
of a successful remarketing, after deducting as the remarketing fee an amount
not exceeding 25 basis points (0.25%) of the total proceeds of such remarketing
of such Separate Notes, the Remarketing Agent will remit to the Custodial Agent,
for the benefit of the holders of such Separate Notes, the portion of the
proceeds from such remarketing equal to the amount calculated in respect of such
Separate Notes as set forth in Section 5.4(b) of the Purchase Contract
Agreement. If, despite using reasonable best efforts, the Remarketing Agent
advises the Custodial Agent in writing that there has been a Last Failed
Remarketing, the Remarketing Agent will promptly return such Notes to the
Custodial Agent for redelivery to the holders of such Separate Notes. For
purposes of this Section 4.5(d), a "holder" of Separate Notes shall mean the
Person in whose name such Separate Notes are registered on the books of the
registrar for the Notes.

                                   ARTICLE V

                             VOTING RIGHTS -- NOTES

              SECTION 5.1 EXERCISE BY PURCHASE CONTRACT AGENT. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Notes or any part thereof for
any purpose not inconsistent with the terms of this Agreement and in accordance
with the terms of the Purchase Contract Agreement; provided that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain from
exercising such right if, in the judgment of the Company, such action would
impair or otherwise have a material adverse effect on the value of all or any of
the Pledged Notes; and provided, further, that the Purchase Contract Agent shall
give the Company and the Collateral Agent at least five Business Days' prior
written notice of the manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any notices and
other communications in respect of any Pledged Notes, including notice of any
meeting at which holders of Notes are entitled to vote or solicitation of
consents, waivers or proxies of holders of Notes, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent such notice
or communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged

                                       13
<PAGE>

Notes (in form and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the Pledged Notes.

                                   ARTICLE VI

                  RIGHTS AND REMEDIES; SPECIAL EVENT REDEMPTION

              SECTION 6.1 RIGHTS AND REMEDIES OF THE COLLATERAL AGENT. (a) In
addition to the rights and remedies available at law or in equity, after an
event of default under the Purchase Contracts, the Collateral Agent shall have
all of the rights and remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code (or any successor thereto) as in effect in the
State of New York from time to time (the "Code") (whether or not the Code is in
effect in the jurisdiction where the rights and remedies are asserted) and the
TRADES Regulations and such additional rights and remedies to which a secured
party is entitled under the laws in effect in any jurisdiction where any rights
and remedies hereunder may be asserted. Wherever reference is made in this
Agreement to any section of the Code, such reference shall be deemed to include
a reference to any provision of the Code which is a successor to, or amendment
of, such section. Without limiting the generality of the foregoing, such
remedies may include, to the extent permitted by applicable law, at the
direction of the Company (i) retention of the Pledged Notes or other Collateral
in full satisfaction of the Holders' obligations under the Purchase Contracts or
(ii) sale of the Pledged Notes or other Collateral in one or more public or
private sales or otherwise at the written direction of the Company.

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

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

              (d)    The Purchase Contract Agent, individually and as
attorney-in-fact for each Holder of Units, agrees that, from time to time, upon
the written request of the Company or the Collateral Agent (acting upon the

                                       14
<PAGE>

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

              SECTION 6.2 SUBSTITUTIONS. Whenever a Holder has the right to
substitute Treasury Securities, Notes, or Treasury Consideration, as the case
may be, for Collateral held by the Collateral Agent, such substitution shall not
constitute a novation of the security interest created hereby.

              SECTION 6.3 SPECIAL EVENT REDEMPTION. Upon the occurrence of a
Special Event Redemption prior to the Stock Purchase Date and the receipt of the
Redemption Price of the Pledged Notes by the Collateral Agent, the Collateral
Agent will, at the written direction of the Company, apply the Redemption Price
to purchase on behalf of the Holders of Normal Units the Treasury Consideration.
The Collateral Agent shall transfer the Treasury Consideration to the Collateral
Account to secure the obligation of all Holders of Normal Units to purchase
Ordinary Shares of the Company under the Purchase Contracts constituting a part
of such Normal Units, in substitution for the Pledged Notes. Thereafter, the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Treasury Consideration as it had in respect of the Pledged Notes
as provided in Articles II, III, IV, V and VI, and any reference herein to the
Notes shall be deemed to be reference to such Treasury Consideration, and any
reference herein to interest on the Notes shall be deemed to be a reference to
corresponding distributions on such Treasury Consideration. Upon the occurrence
of a Special Event Redemption and the satisfaction of all terms and conditions
related thereto as forth in the Indenture, including receipt of the Redemption
Price, the Collateral Agent shall be authorized to surrender the Notes in
accordance with the provisions of the Indenture.

              SECTION 6.4 CASH RECEIVED FROM HOLDERS OF NORMAL UNITS NOT
PARTICIPATING IN THE REMARKETING . If a Holder of Normal Units shall opt not to
participate in the remarketing in accordance with the Purchase Contract
Agreement and upon the receipt by the Collateral Agent of the cash paid by such
Holder, the Collateral Agent shall transfer such cash to the Collateral Account
to secure and be applied in direct settlement and satisfaction in full of the
obligations of such Holder to purchase Ordinary Shares of the Company under the
Purchase Contracts constituting a part of such Normal Units and shall deliver
the related Pledged Notes to the Purchase Contract Agent, free and clear of any
lien, claim and security interest created hereby. Thereafter, the Collateral
Agent shall have such security interests, rights and obligations with respect to
the cash paid by such Holder as it had in respect of the Pledged Notes as
provided in Articles II, III, IV, V and VI, and any reference herein to the
Notes shall be deemed to be reference to such cash paid by such Holder.

                                       15
<PAGE>

                                  ARTICLE VII

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

              SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. The
Holders from time to time, acting through the Purchase Contract Agent as their
attorney-in-fact (it being understood that the Purchase Contract Agent shall not
be liable for any representation or warranty made by or on behalf of a Holder),
hereby represent and warrant to the Collateral Agent, which representations and
warranties shall be deemed repeated on each day a Holder Transfers Collateral,
that:

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

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

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

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

              SECTION 7.2 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
AGENT, CUSTODIAL AGENT AND SECURITIES INTERMEDIARY. The Collateral Agent,
Custodial Agent and Securities Intermediary (each an "Agent") hereby represents
and warrants:

              (a)    The Collateral Agent, Custodial Agent and Securities
       Intermediary is a national banking association duly incorporated and
       validly existing under the laws of the State of _________;

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

                                       16
<PAGE>

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

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

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

              SECTION 7.3 COVENANTS. The Holders from time to time, acting
through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any covenant
made by or on behalf of a Holder), hereby covenant to the Collateral Agent that
for so long as the Collateral remains subject to the Pledge:

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

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

                                  ARTICLE VIII

                              THE COLLATERAL AGENT

              SECTION 8.1 APPOINTMENT, POWERS AND IMMUNITIES. (a) The Collateral
Agent, the Custodial Agent or the Securities Intermediary shall act as agent for
the Company hereunder with such powers as are specifically vested in the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, by the terms of this Agreement, together with such other powers as
are reasonably incidental thereto. Each of the Collateral Agent, the Custodial
Agent and the Securities Intermediary:

                                       17
<PAGE>

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

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

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

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

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

              (vi)   may perform any of their duties hereunder directly or by or
       through agents or attorneys appointed with due care, and shall not be
       responsible for any willful misconduct or gross negligence, on the part
       of any agent or attorney so appointed;

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

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

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

                                       18
<PAGE>

       action or the like which delay, restrict or prohibit the providing of
       services contemplated by this Agreement.

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

              (b)    No provision of this Agreement shall require the Collateral
Agent, the Custodial Agent or the Securities Intermediary to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder. In no event shall the Collateral Agent, the Custodial
Agent or the Securities Intermediary be liable for any amount in excess of the
value of the Collateral. Notwithstanding the foregoing, the Collateral Agent,
the Custodial Agent, the Purchase Contract Agent and Securities Intermediary,
each in its individual capacity, hereby waive any right of set-off, banker's
lien, liens or perfection rights as securities intermediary or any counterclaim
with respect to any of the Collateral.

              (c)    The Collateral Agent, Custodial Agent and Securities
Intermediary shall have no liability whatsoever for the action or inaction of
any Clearing Agency or any book-entry system thereof. In no event shall any
Clearing Agency or any book-entry system thereof be deemed an agent or
subcustodian of the Collateral Agent, Custodial Agent and Securities
Intermediary.

              SECTION 8.2 INSTRUCTIONS OF THE COMPANY. The Company shall have
the right, by one or more instruments in writing executed and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, to direct the time, method and place of conducting any proceeding
for the realization of any right or remedy available to the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be, or of
exercising any power conferred on the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be, or to direct the taking or
refraining from taking of any action authorized by this Agreement; provided that
(i) such direction shall be in writing and shall not conflict with the
provisions of any law or of this Agreement and (ii) the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall each receive indemnity
reasonably satisfactory to it as provided herein. Nothing in this Section 8.2
shall impair the right of each of the Collateral Agent, the Custodial Agent or
the Securities Intermediary in its discretion to take any action or omit to take
any action which it deems proper and which is not inconsistent with such
direction.

              SECTION 8.3 RELIANCE. Each of the Securities Intermediary, the
Custodial Agent and the Collateral Agent, in absence of bad faith, shall be
entitled conclusively to rely upon any certification, order, judgment,
instructions, opinion, notice or other communication (including, without
limitation, any thereof by telephone or facsimile) reasonably believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the correctness of
any fact stated therein), and upon advice and written statements of legal
counsel and other experts selected by the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be. As to any matters not
expressly provided for by this Agreement, the Collateral Agent, the Custodial
Agent and the

                                       19
<PAGE>

Securities Intermediary shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions given
by the Company in accordance with this Agreement.

              SECTION 8.4 RIGHTS IN OTHER CAPACITIES. The Collateral Agent, the
Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Purchase Contract Agent, any Holder of Units
and any holder of Separate Notes (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be, and the Collateral
Agent, the Custodial Agent and the Securities Intermediary and their affiliates
may accept fees and other consideration from the Purchase Contract Agent, any
Holder of Units or any holder of Separate Notes without having to account for
the same to the Company; provided that each of the Securities Intermediary, the
Custodial Agent and the Collateral Agent covenants and agrees with the Company
that, except as provided in this Agreement, it shall not accept, receive or
permit there to be created in favor of itself (and waives any right of set-off
or banker's lien with respect to) and shall take no affirmative action to permit
there to be created in favor of any other Person, any security interest, lien or
other encumbrance of any kind in or upon the Collateral and the Collateral shall
not be commingled with any other assets of any such Person.

              SECTION 8.5 NON-RELIANCE ON COLLATERAL AGENT. None of the
Securities Intermediary, the Custodial Agent or the Collateral Agent shall be
required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Units of this Agreement, the Purchase
Contract Agreement, the Units or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Purchase Contract
Agent or any Holder of Units. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility to provide the
Company or the Remarketing Agent with any credit or other information concerning
the affairs, financial condition or business of the Purchase Contract Agent, any
Holder of Units or any holder of Separate Notes (or any of their respective
subsidiaries or affiliates) that may come into the possession of the Collateral
Agent, the Custodial Agent or the Securities Intermediary or any of their
respective affiliates.

              SECTION 8.6 COMPENSATION AND INDEMNITY. The Company agrees:

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

              (b)    to indemnify the Collateral Agent, the Custodial Agent and
the Securities Intermediary and their officers, directors and agents for, and to
hold each of them harmless from and against, any loss, liability or reasonable
out-of-pocket expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable fees and
expenses of counsel) of defending

                                       20
<PAGE>

itself against any claim or liability in connection with the exercise or
performance of such powers and duties or collecting such amounts. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall each promptly
notify the Company of any third party claim which may give rise to the indemnity
hereunder and give the Company the opportunity to control the defense of such
claim with counsel reasonably satisfactory to the indemnified party, provided no
conflict of interest exists, and if the Company so elects to assume such
defense, the Company shall in good faith defend the Collateral Agent, the
Custodial Agent or the Securities Intermediary (in which case all attorney's
fees and expenses shall be borne by the Company). The Collateral Agent, the
Custodial Agent or the Securities Intermediary may have separate counsel and the
Company shall pay the fees and expenses of such counsel. No compromise or
settlement of any claims may be effected by any party without the other parties'
consent (which consent shall not be unreasonably withheld) unless (i) there is
no finding or omission of any violation of law and no effect on any other claims
that may be made against any of such other parties and (ii) the sole relief
provided is monetary damages that are paid in full by the party seeking the
compromise or settlement. The provisions of this Section 8.6(b) shall survive
the termination of this Agreement or the resignation or removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary.

              SECTION 8.7 FAILURE TO ACT. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent, Custodial Agent and the
Securities Intermediary shall be entitled, after prompt notice to the Company
and the Purchase Contract Agent, at its sole option, to refuse to comply with
any and all claims, demands or instructions with respect to such property or
funds so long as such dispute or conflict shall continue, and neither the
Collateral Agent, Custodial Agent nor the Securities Intermediary shall be or
become liable in any way to any of the parties hereto for its failure or refusal
to comply with such conflicting claims, demands or instructions. The Collateral
Agent, Custodial Agent and the Securities Intermediary shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the conflicting parties as evidenced in a writing,
reasonably satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, or (ii) the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be, shall have
received security or an indemnity reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be,
sufficient to save the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, may incur by
reason of its acting without bad faith, willful misconduct or negligence. The
Collateral Agent, Custodial Agent or the Securities Intermediary may, but shall
not be required, in addition elect to commence an interpleader action or seek
other judicial relief or orders at the expense of the Company as the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, may
deem necessary. Notwithstanding anything contained herein to the contrary,
neither the Collateral Agent, Custodial Agent nor the Securities Intermediary
shall be required to take any action that is in the reasonable opinion of its
counsel contrary to law or to the terms of this Agreement, or which would in its
reasonable opinion subject it or any of its officers, employees or directors to
liability.

                                       21
<PAGE>

              SECTION 8.8 RESIGNATION; REPLACEMENT OF COLLATERAL AGENT,
CUSTODIAL AGENT OR SECURITIES INTERMEDIARY. Subject to the appointment and
acceptance of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as provided below, (a) the Collateral Agent, Custodial Agent or
the Securities Intermediary may resign at any time by giving notice thereof to
the Company and the Purchase Contract Agent as attorney-in-fact for the Holders
of Units, (b) the Collateral Agent, Custodial Agent or the Securities
Intermediary may be removed at any time by the Company (with or without cause)
by notice to the Purchase Contract Agent and the Collateral Agent, the Custodial
Agent and the Securities Intermediary and (c) if the Collateral Agent, Custodial
Agent or the Securities Intermediary fails to perform any of its material
obligations hereunder in any material respect for a period of not less than 20
days after receiving written notice of such failure by the Purchase Contract
Agent and such failure shall be continuing, the Collateral Agent, Custodial
Agent or the Securities Intermediary may be removed by the Purchase Contract
Agent. The Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary pursuant to clause (c) of the immediately preceding sentence. Upon
notice of any such resignation or removal, the Company shall have the right to
appoint a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. If no successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be, shall have been so
appointed and shall have accepted such appointment within 30 days after any
notice of such resignation or such removal, then the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, may at the
Company's expense petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. Upon removal of the Collateral Agent,
Custodial Agent or Securities Intermediary, no fees paid to the retiring
Collateral Agent, Custodial Agent or Securities Intermediary pursuant to Section
8.6(a) of this Agreement shall be refunded. Each successor Collateral Agent,
Custodial Agent and the Securities Intermediary shall be a bank which has an
office or agency in New York, New York with a combined capital and surplus of at
least $50,000,000 or any affiliate of a bank holding company having such capital
and surplus. Upon the acceptance of any appointment as Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, hereunder by a
successor Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, such successor shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, and the retiring
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be, upon payment of any of its unpaid fees and expenses, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral Agent,
Custodial Agent or Securities Intermediary shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent, Custodial Agent
or Securities Intermediary hereunder. After any retiring Collateral Agent's,
Custodial Agent's or Securities Intermediary's resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Section 8.8, and Section 8.6 hereof, shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Collateral Agent, Custodial Agent or Securities Intermediary.
Any resignation or removal of the Collateral Agent hereunder shall be deemed for
all purposes of this Agreement as the simultaneous resignation or removal of the
Custodial Agent and the Securities Intermediary hereunder.

                                       22
<PAGE>

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

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

              SECTION 8.10 SURVIVAL. The provisions of this Article VIII shall
survive termination of this Agreement and the resignation or removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary.

              SECTION 8.11 EXCULPATION. Anything in this Agreement to the
contrary notwithstanding, in no event shall any of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or their officers, employees or
agents be liable under this Agreement to any third party for indirect, special,
punitive or consequential loss or damage of any kind whatsoever, including lost
profits or loss of business, relating to, arising from or in connection with
this Agreement, whether or not the likelihood of such loss or damage was known
to the Collateral Agent, the Custodial Agent or the Securities Intermediary, or
any of them, incurred without any act or deed that is found to be attributable
to negligence, bad faith or willful misconduct on the part of the Collateral
Agent, the Custodial Agent or the Securities Intermediary.

                                   ARTICLE IX

                                    AMENDMENT

              SECTION 9.1 AMENDMENT WITHOUT CONSENT OF HOLDERS. Without the
consent of any Holders or the holders of any Separate Notes, the Company, when
duly authorized by a Board Resolution, the Collateral Agent, the Custodial
Agent, the Securities Intermediary and the Purchase Contract Agent, at any time
and from time to time, may amend this Agreement, in form satisfactory to the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, for any of the following purposes:

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

                                       23
<PAGE>

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

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

              (iv)   to cure any ambiguity, to correct or supplement any
       provisions herein which may be inconsistent with any other such
       provisions herein, or to make any other provisions with respect to such
       matters or questions arising under this Agreement, provided such action
       shall not adversely affect the interests of the Holders.

              SECTION 9.2 AMENDMENT WITH CONSENT OF HOLDERS. With the consent of
the Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
duly authorized by a Board Resolution, the Purchase Contract Agent, the
Collateral Agent, the Custodial Agent and the Securities Intermediary may amend
this Agreement for the purpose of modifying in any manner the provisions of this
Agreement or the rights of the Holders in respect of the Units; provided that no
such amendment shall, without the consent of the Holder of each Outstanding Unit
adversely affected thereby,

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

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

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

       provided that if any amendment or proposal referred to above would
adversely affect only the Normal Units or the Stripped Units, then only the
affected class of Holder as of the record date for the Holders entitled to vote
thereon will be entitled to vote on or consent to such amendment or proposal,
and such amendment or proposal shall not be effective except with the consent of
Holders of not less than a majority of such class; and provided, further, that
the unanimous consent of the Holders of each outstanding Unit of such class
affected thereby shall be required to approve any amendment or proposal
specified in clauses (i) through (iii) above.

                                       24
<PAGE>

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

              SECTION 9.3 EXECUTION OF AMENDMENTS. In executing any amendment
permitted by this Article IX, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 8.1 hereof, with respect to the Collateral
Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the
Purchase Contract Agent) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent, if any, to the execution
and delivery of such amendment have been satisfied and, in the case of an
amendment pursuant to Section 9.1, that such amendment does not adversely affect
the validity, perfection or priority of the security interests granted or
created hereunder.

              SECTION 9.4 EFFECT OF AMENDMENTS. Upon the execution of any
amendment under this Article IX, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.

              SECTION 9.5 REFERENCE TO AMENDMENTS. Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Article IX may, and shall if required by the
Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Certificates so modified as to conform, in the opinion of the Collateral Agent,
the Purchase Contract Agent and the Company, to any such amendment may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Purchase Contract Agent in accordance with the
Purchase Contract Agreement in exchange for outstanding Certificates.

                                   ARTICLE X

                                  MISCELLANEOUS

              SECTION 10.1 NO WAIVER. No failure on the part of any party hereto
or any of its agents to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any party hereto or
any of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.

              SECTION 10.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by the
Securities Intermediary, the Collateral Agent, the Custodial Agent and the

                                       25
<PAGE>

Holders from time to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of the
Collateral Account, which law, for purposes of the Code, shall be deemed to be
the law governing all Security Entitlements related thereto. In addition, such
parties agree that, for purposes of the Code, New York shall be the Securities
Intermediary's jurisdiction. The Company, the Collateral Agent and the Holders
from time to time of the Units, acting through the Purchase Contract Agent as
their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in the Borough of Manhattan in New York City for
the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company, the Collateral
Agent and the Holders from time to time of the Units, acting through the
Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. The Company hereby designates and appoints CT
Corporation System, 111 Eighth Avenue, New York, New York 10011 as its
authorized agent upon which process may be served in any legal suit, action or
proceeding arising out of or relating to this Agreement which may be instituted
in any federal or state court in the Borough of Manhattan, The City of New York,
New York, and agrees that service of process upon such agent, and written notice
of said service to the Company by the Person serving the same, shall be deemed
in every respect effective service of process upon the Company in any such suit,
action or proceeding and further designates its domicile, the domicile of CT
Corporation System specified above and any domicile CT Corporation System may
have in the future as its domicile to receive any notice hereunder (including
service of process). If for any reason CT Corporation System (or any successor
agent for this purpose) shall cease to act as agent for service of process as
provided above, the Company will promptly appoint a successor agent for this
purpose reasonably acceptable to the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent. The Company agrees to
take any and all actions as may be necessary to maintain such designation and
appointment of such agent in full force and effect.

              SECTION 10.3 JUDGMENT CURRENCY. The Company agrees, to the fullest
extent that it may effectively do so under applicable law, that (a) if for the
purpose of obtaining judgment in any court it is necessary to convert the sum
due (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Purchase Contract
Agent could purchase in The City of New York the requisite amount of the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which a final unappealable judgment is given and (b) its
obligations under this Agreement to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment (whether or not entered in accordance with clause (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Agreement. For purpose of the
foregoing, "New York Banking Day" means

                                       26
<PAGE>

any day except a Saturday, Sunday or a legal holiday in The City of New York or
a day on which banking institutions in The City of New York are authorized or
obligated by law, regulation or executive order to be closed.

              SECTION 10.4 NOTICES. Unless otherwise stated herein, all notices,
requests, instructions, consents and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made in writing (including, without
limitation, by telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or, as to any
party, at such other address as shall be designated by such party in a notice to
the other parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when personally delivered
or, in the case of a mailed notice or notice transmitted by telecopier, upon
receipt, in each case given or addressed as aforesaid.

              SECTION 10.5 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders from time to time
of the Units, by their acceptance of the same, shall be deemed to have agreed to
be bound by the provisions hereof and to have ratified the agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.

              SECTION 10.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.

              SECTION 10.7 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.

              SECTION 10.8 EXPENSES, ETC. The Company agrees to reimburse the
Collateral Agent, the Securities Intermediary and the Custodial Agent for:

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

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

                                       27
<PAGE>

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

              SECTION 10.9 SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time hereunder, shall be absolute and unconditional
irrespective of:

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

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

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

              SECTION 10.10 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

              SECTION 10.11 INCORPORATION BY REFERENCE. Each of the Company, the
Collateral Agent and the Securities Intermediary agrees that the Purchase
Contract Agent is, in acting hereunder with respect to the Company, entitled to
all rights, privileges, benefits, protections, immunities and indemnities
provided to it under the Purchase Contract Agreement.

                                       28
<PAGE>

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

                                        XL CAPITAL LTD

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

                                              ADDRESS FOR NOTICES:
                                              -------------------
                                              XL Capital Ltd
                                              XL House
                                              One Bermudiana Road
                                              Hamilton HM11
                                              Bermuda

                                              Attention:
                                              Telecopy: 1-441-292-5280
                                              Telephone: 1-441-292-8515

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

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

                                        ADDRESS FOR NOTICES:
                                        225 Asylum Street
                                        23rd Floor
                                        Hartford, Connecticut 06103

                                        Attention:
                                        Telecopy:
                                        Telephone:

<PAGE>

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

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

                                       ADDRESS FOR NOTICES:
                                       225 Asylum Street
                                       23rd Floor
                                       Hartford, Connecticut 06103

                                       Attention:
                                       Telecopy:
                                       Telephone:

<PAGE>

                                                                       EXHIBIT A

          INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT

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

Attention: Corporate Trust Administration

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

              We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of March __, 2004 (the "Pledge Agreement"), among the
Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Normal Units] [Stripped Units] from time to time, that the
holder of Units listed below (the "Holder") has elected to substitute [$________
aggregate principal amount of Treasury Securities (CUSIP No. _______)]
[$________ aggregate principal amount of Notes or $__________ aggregate
principal amount of Treasury Consideration (CUSIP No. ___________)] in exchange
for the related [Pledged Notes or Pledged Treasury Consideration] [Pledged
Treasury Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has Transferred [Treasury
Securities] [Notes or the Treasury Consideration] to you, as Collateral Agent.
We hereby instruct you, upon receipt of such [Pledged Treasury Securities]
[Pledged Notes or Pledged Treasury Consideration], to release the [Notes or the
Treasury Consideration] [Treasury Securities] related to such [Normal Units]
[Stripped Units] to us in accordance with the Holder's instructions. Capitalized
terms used herein but not defined shall have the meaning set forth in the Pledge
Agreement.

Date: _____________________

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

                                       By: ___________________________________
                                           Name:
                                           Title:

                                      A-1
<PAGE>

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

Name:

Social Security or other Taxpayer
Identification Number, if any:

Address:

                                      A-2
<PAGE>

                                                                       EXHIBIT B

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

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

Attention: Institutional Trust Services

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

              The undersigned Holder hereby notifies you that it has delivered
to U.S. Bank Trust National Association, as Collateral Agent, [$_________
aggregate principal amount of Treasury Securities (CUSIP No. _________)]
[$_________ aggregate principal amount of Notes or $___________ principal amount
of Treasury Consideration (CUSIP No. _________)] in exchange for the related
[Pledged Notes or Pledged Treasury Consideration] [Pledged Treasury Securities]
held by the Collateral Agent, in accordance with Section [4.1][4.2] of the
Pledge Agreement, dated as of March __, 2004 (the "Pledge Agreement"), between
you, the Company and the Collateral Agent. The undersigned Holder hereby
instructs you to instruct the Collateral Agent to release to you on behalf of
the undersigned Holder the [Pledged Notes or the Pledged Treasury Consideration]
[Pledged Treasury Securities] related to such [Normal Units] [Stripped Units].
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.

Date: ___________________

Signature: ______________________________________

Signature Guarantee: _____________________________

Please print name and address of Registered Holder:

Name:

Social Security or other Taxpayer
Identification Number, if any:

Address:

                                      B-1
<PAGE>

                                                                       EXHIBIT C

              INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING

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

Attention: Corporate Trust Administration

                       Re: NOTES OF XL CAPITAL LTD

              The undersigned hereby notifies you in accordance with Section
4.5(d) of the Pledge Agreement, dated as of March __, 2004 (the "Pledge
Agreement"), among XL Capital Ltd, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and U.S. Bank National Association, as
Purchase Contract Agent and as attorney-in-fact for the Holders of Normal Units
and Stripped Units from time to time, that the undersigned elects to deliver on
the fourth Business Day immediately preceding the Remarketing Date commencing on
____________, 2007 $__________ aggregate principal amount of Notes for delivery
to the Remarketing Agent for remarketing pursuant to Section 4.5(d) of the
Pledge Agreement. The undersigned will, upon request of the Remarketing Agent,
execute and deliver any additional documents deemed by the Remarketing Agent or
by the Company to be necessary or desirable to complete the sale, assignment and
transfer of the Notes tendered hereby.

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

              With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Notes tendered hereby and that the undersigned is the
record owner of any Notes tendered herewith in physical form or a participant in
The Depository Trust Company ("DTC") and the beneficial owner of any Notes
tendered herewith by book-entry transfer to your account at DTC and (ii) agrees
to be bound by the terms and conditions of Section 4.5(d) of the Pledge
Agreement. Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

                                      C-1
<PAGE>

Date:  _________________

Signature:  ______________________________

Signature Guarantee: ______________________

Name:    __________________________________
                  (Please Print)

Address: __________________________________
                  (Please Print)

Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

A. PAYMENT INSTRUCTIONS

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

Name(s): __________________________________
                  (Please Print)

Address: __________________________________
                  (Please Print)

Zip Code:

Country:

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

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

(Special Identification or Social Security Number):

B. DELIVERY INSTRUCTIONS

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

                                      C-2
<PAGE>

Name(s): __________________________________
                  (Please Print)

Address: __________________________________
                  (Please Print)

Zip Code:

Country:

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

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

(Special Identification or Social Security Number):

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

Name of Account Party:

DTC Account Number:

                                      C-3
<PAGE>

                                                                       EXHIBIT D

                    INSTRUCTION TO CUSTODIAL AGENT REGARDING
                           WITHDRAWAL FROM REMARKETING

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

Attention: Corporate Trust Administration

                         Re: NOTES OF XL CAPITAL LTD

              The undersigned hereby notifies you in accordance with Section
4.5(d) of Pledge Agreement, dated as of March __, 2004 (the "Pledge Agreement"),
among XL Capital Ltd, yourselves, as Collateral Agent, Securities Intermediary
and Custodial Agent, and U.S. Bank National Association, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Normal Units and Stripped Units
from time to time, that the undersigned elects to withdraw the $__________
aggregate principal amount of Notes delivered to the Custodial Agent on
_________, 2007 for remarketing pursuant to Section 4.5(d) of the Pledge
Agreement. The undersigned hereby instructs you to return such Notes to the
undersigned in accordance with the undersigned's instructions. With this notice,
undersigned hereby agrees to be bound by the terms and conditions 4.5(d) of the
Pledge Agreement. Capitalized terms used herein but shall have the meaning set
forth in the Pledge Agreement.

Date:  _________________

Signature:  ______________________________

Signature Guarantee: ______________________

Name:    __________________________________
                  (Please Print)

Address: __________________________________
                  (Please Print)

Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

                                      D-1
<PAGE>

A. DELIVERY INSTRUCTIONS

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

Name:    __________________________________
                  (Please Print)

Address: __________________________________
                  (Please Print)

Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

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

Name of Account Party:

DTC Account Number:

                                      D-2Prepared and filed by St Ives Burrups

Exhibit 10.65

SEPARATION AGREEMENT AND GENERAL RELEASE

          This is a Separation Agreement & General Release (the “Agreement”) by and among Michael Hurt (“Hurt”), T.B. Wood’s, Inc., a Pennsylvania corporation (“T.B. Wood’s”), and TB Wood’s Corporation, a Delaware corporation (“Parent” and, together with T.B. Wood’s and Parent’s other direct and indirect subsidiaries, the “Group Companies”).

          Intending to be legally bound, Hurt, Parent and T.B. Wood’s agree as follows:  

	
          1.          Separation.  Hurt’s employment with T.B. Wood’s, Parent and the other Group Companies will terminate on November 14, 2003 (the “Final Date”).  Hurt will receive all earned and unpaid wages through the Final Date.  Subject to the terms of any employee benefit plan, all benefits and compensation of any kind, other than as expressly provided in this Agreement, will cease as of the Final Date.  Hurt acknowledges and agrees that the payments and benefits described in this Agreement are all that Hurt is entitled to receive from any of the Group Companies, and that none of the Group Companies shall have any liability
or obligation to Hurt in excess of such amounts. Effective as of the Final Date, Hurt hereby resigns as a director, officer and employee of each of the Group Companies.

	 
	
          2.          Termination of Obligations under Employment Agreement.  Hurt and T.B. Wood’s are signatories to an Employment Agreement dated February 5, 2003 (“Employment Agreement”), a copy of which is attached to this Agreement as Exhibit A.  Except as expressly provided for herein, the parties’ respective obligations under the Employment Agreement are hereby terminated effective as of the Final Date, including Hurt’s obligation to provide employment services to T.B. Wood’s under the Employment Agreement for the remainder of its term.  

	 
	
          3.          Separation Pay.  T.B. Wood’s will pay Hurt separation pay at the rate of his last base salary ($306,800 per annum ) and in accordance with T.B. Wood’s regular payroll cycle, less all legally required withholdings and deductions, beginning on the next regular payday following the Final Date that is at least eight days after the date on which Hurt returns a signed copy of this Agreement to T.B. Wood’s, and continuing for a period of twenty-four (24) months (the “Separation Payments”).  

	 
	
          4.          Stock Options. – Hurt is a party to the various option agreements attached hereto as Exhibit B (the “Option Agreements”) covering 212,500 shares of common stock of Parent (the “Option Shares”).   Effective as of the Final Date, Section 9 of each Option Agreement is deleted in its entirety and, accordingly, Hurt shall be entitled to exercise the applicable Option Agreements to acquire Option Shares during the time set forth in Section 3 of each Option Agreement.

	 
	
          5.          Consulting Services.  Hurt agrees that during the twenty-four (24) month period during which he receives the Separation Payments, Hurt will provide such consulting services as T.B. Wood’s and Parent may reasonably request of Hurt from time to time (which, in no event will exceed 10 days in any calendar quarter).  Hurt further agrees that, during the time Hurt is providing such consulting services:  

 

               a.      Hurt shall be an independent contractor, not an employee, of T.B. Wood’s or any other Group Company.  Hurt shall not hold himselfout as an employee of T.B. Wood’s or any Group Company, and Hurtshall not have the authority, express or implied, to bind T.B. Wood’s or any Group Company to any legal obligations.    

               b.      Hurt is solely responsible for paying hisown health and workers’ compensation insurance.  Hurt expressly agrees that, under no circumstances, shall he be entitled to participate in any employee benefit plan (including any pension and welfare benefit plan), sponsored or established by T.B. Wood’s or other Group Company (or any related entity), regardless of whether or not Hurtmay be subsequently adjudged or deemed to be an employee of T.B. Wood’s or other Group Company, notwithstanding the terms of this Section.  To the extent that, notwithstanding Hurt’s independent contractor status (as
acknowledged in this Section) and the provision set forth in the immediately preceding sentence of this paragraph, if Hurt has any rights of participation in any such plans, Hurthereby waives them, freely, knowingly, and voluntarily.  

	
          6.          Release of All Claims.  In exchange for the benefits described in Sections 2, 3 and 4, to which Hurt agrees he would not be entitled if he did not sign this Agreement, Hurt hereby releases T.B. Woods, all other Group Companies and all of the other “Released Parties” (as defined) from any and all claims, liabilities, and/or causes of actions (whether known or unknown, suspected or unsuspected) that Hurt may have or may claim to have against any of the Released Parties, arising at any time up to and including the date that Hurt signs this Agreement (“Claims”).  Hurt agrees that this general release includes,
covers, and extends to (without limitation) all Claims arising from or relating to his employment with T.B. Wood’s and the other Group Companies, the terms and conditions of his employment, and the termination of his employment.  Specifically, Hurt is agreeing to release (without limitation) the following Claims:  

               a.      all Claims arising under any law prohibiting or governing discrimination based upon any protected characteristic (such as age, race, sex, national origin, religion, and disability status), including (without limitation) Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and/or any other law prohibiting or governing employment discrimination (whether federal, state, or local law), including (without limitation) the Pennsylvania Human Relations Act; 

               b.      all Claims arising under any law governing the payment of wages, benefits, and other compensation, including (without limitation) all Claims arising under the Employee Retirement Income Security Act; 

               c.      all common law Claims, including (without limitation) all Claims for wrongful discharge/termination, invasion of privacy, defamation, breach of contract, interference with business or contractual relations, and infliction of emotional distress; and 

               d.      all Claims arising under any other law or cause of action (whether federal, state, or local) governing Hurt’s employment or service with T.B. Wood’s or any other Group Company (including without limitation as a director, officer, employee and consultant). 

 

                         “Released Parties” shall mean T.B. Wood’s and each other Group Company; each of its respective past, present, and future subsidiaries, parents, and affiliates; all of the foregoing entities’ predecessors and their successors and/or assigns; all of the foregoing entities’ officers, directors, owners, partners, employees, agents, representatives, insurers, benefit plans (including such plans’ sponsors, administrators, and fiduciaries), affiliates, and the like; and any other person/entity claimed to be jointly and/or severally liable with T.B. Wood’s or
through which it has acted, directly or indirectly, in its dealings with Hurt. 

                         Hurt represents and warrants that he has not filed any complaints against T.B. Wood’s or any Released Parties with any state or federal court or agency.  Hurt further agrees and covenants not to institute or join any lawsuit (either individually, with others, or as part of a class) pleading, raising, or asserting any claim(s) barred or released by this Agreement.  If Hurt does so and such claim(s) is found to be barred or released, in whole or in part, by this Agreement, Hurt shall reimburse the applicable Released Parties for all costs and reasonable attorneys’ fees (and/or applicable portion thereof) incurred in defending against any such
released claim(s); except, however, with respect to claims arising under the Age Discrimination in Employment Act.

	
          7.          Confidentiality.  Hurt agrees that he shall not disclose the contents of this Agreement, or the circumstances of his separation, to any person or entity (other than his attorney, accountant, advisor, and spouse, all of whom shall be bound by this confidentiality provision), unless required to do so by law.  Hurt further agrees that he shall not at any time in the future disclose any confidential, proprietary, or non-public information (in whatever form) relating in any way to the business of T.B. Wood’s or any other Group Company (“Confidential Information”), including without limitation any of the information
described in Section 4 of the Employment Agreement, to any other person or entity, except as specifically required by law.  Hurt shall immediately deliver to T.B. Wood’s all of the property of each Group Company in his possession, as well as any documents, files, papers, computer disks, or otherwise (and all copies thereof) containing any Confidential Information.  To the extent Hurt has any such Confidential Information in electronic or computer format, he shall delete it.       

	 
	
          8.          Competition.  Hurt agrees:  

               a.      that, during the twenty-four (24) month period described in Section 3, and except as consented to by T.B. Wood’s or Parent, Hurt will not act as an executive or provide any management or other advisory services to or for any business or portion of a business that sells or markets belted drives, coupling, AC inverters and drives, or any other product lines existing as of the date of this Agreement of T.B. Wood’s or any of the Group Companies which collectively account for more than twenty-five percent of the revenues of such business or portion of a business;

               b.      that he will not take any customer lists of T.B. Wood’s or any other Group Company after leaving T.B. Wood’s employ; and

               c.      that he will, for a period of twenty-four (24) months following the Final Date, refrain from soliciting or accepting, or attempting to solicit or accept indirectly by assisting others, any business from any of T.B. Wood’s or any other Group Company’s customers, including actively sought prospective customers, with whom he had material contact during his employment for purposes of providing products or services that are competitive with those provided by T.B. Wood’s or any other Group Company.  

 

	 
	
          9.          Remedies and Enforcement.  

	 
	
               a.          Hurt’s Default:

                         T.B. Wood’s obligation to make payments pursuant to Section 3 above shall terminate in the event that Hurt is in material breach of his obligations in this Agreement, without effect on Hurt’s obligation to continue to abide by the terms of this Agreement (including the release-of-claims provisions set forth in Section 6).  

                         Hurt acknowledges and agrees that the covenants set forth in Sections 7 and 8 are reasonable and necessary in all respects for the protection of T.B. Wood’s legitimate business interests.  Hurt acknowledges and agrees that, in the event Hurt breaches any of the covenants set forth in Sections 7 and 8, T.B. Wood’s and the other Group Companies shall be irreparably harmed and shall not have an adequate remedy at law; and, therefore, in the event of such a breach, T.B. Wood’s and the other Group Companies shall be entitled to injunctive relief, in addition to (and not exclusive of)
any other remedies (including monetary damages) to which T.B. Wood’s and the other Group Companies may be entitled under law.  

                         If any covenant set forth in Section 8 is deemed invalid or unenforceable for any reason, it is the parties’ intention that such covenants be equitably reformed or modified to the extent necessary (and only to such extent to) render it valid and enforceable in all respects.  In the event that the time period and geographic scope of any covenant set forth in Section 8 is deemed unreasonable, overbroad, or otherwise invalid, it is the parties’ intention that the enforcing court shall reduce or modify the time period and/or geographic scope to the extent necessary (and only to such extent
necessary) to render such covenants reasonable, valid, and enforceable in all respects. 

                         T.B. Wood’s and/or Parent’s breach (or claimed breach) of any term of this Agreement or any other agreement between the parties shall not constitute a defense to the enforcement of the covenants set forth in Sections 7 and 8 (excluding Section 8a) and shall not effect Hurt’s continuing obligation to abide by those covenants (excluding Section 8a).  

	
               b.          T.B. Wood’s Default

                         In the event T.B. Wood’s is in material breach of its obligations in this Agreement, which T.B. Wood’s fails to cure within 20 days of receipt by an officer of T.B. Wood’s of written notice thereof:

	
                    (1)          the amount due Hurt under Section 3 above shall become immediately due and payable in full and shall bear interest thereon from the date of default until the date of collection at the “prime” rate of interest as reported in the Wall Street Journal, plus four percent (4%); and

	 
	
                    (2)          Hurt’s obligation to abide by the provision of Section 8a above shall terminate.           

 

 
	
          10.          Miscellaneous.  This Agreement: (a) constitutes the total and complete understanding between Hurt and T.B. Wood’s relating to the subject matter hereof, and, except as expressly referenced herein, all other prior or contemporaneous written or oral agreements or representations, if any, relating to the subject matter hereof are null and void; (b) may be modified only by a writing signed by Hurt, Parent and T.B. Wood’s; (c) is not assignable or transferable by Hurt; (d) shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives,
successors, and assigns where permitted by this Agreement; and (e) shall be governed by the substantive law of the Commonwealth of Pennsylvania, the jurisdiction of whose courts the parties consent to resolve any disputes arising under this Agreement.  The invalidity or unenforceability of any clause of this Agreement shall not affect the validity or enforceability of any other clause.

[Signature Page Follows]

 

               This is a very important document, and Hurt should thoroughly review and understand the terms and effect of this document before signing it.  By signing the Agreement, Hurt will be releasing T.B. Wood’s and the other Group Companies from all liability to him.  Therefore, Hurt should consult with an attorney before signing the Agreement.  Hurt has twenty-one (21) days from the date of the distribution of  this Agreement to consider whether to sign it.  If Hurt has not returned a signed copy of the Agreement by that time, T.B. Wood’s and Parent will assume that Hurt has elected not to sign the Agreement.  If Hurt signs the Agreement, Hurt will
have an additional seven (7) days following the date of Hurt’s signature to revoke the Agreement, and the Agreement shall not become effective or enforceable until the revocation period has expired.  Any revocation must be in writing and must be received by T.B. Wood’s and Parent within the seven (7) day revocation period.  

               By signing below, Hurt agrees to be legally bound by the terms of this Agreement and acknowledges that he has carefully read and completely understands the terms of this Agreement and is signing it knowingly, voluntarily, and without duress, coercion, or undue influence.  

	 	T.B. Wood’s, Inc.
	 	 
	/s/Michael Hurt	By: /s/Joseph C. Horvath
	Michael Hurt	       Joseph C. Horvath, VP/CFO
	 	 
	Dated: November 7, 2003	Dated: November 7, 2003
	 	 
	 	TB Wood’s Corporation
	 	 
	 	By: Joseph C. Horvath
	 	       Joseph C. Horvath, VP/CFO
	 	 
	 	Dated: November 7, 2003

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